A new report reveals that 50% of parents now provide financial support to adult children over 18. This marks the first time the share reached this level, up from 47% last year to 45% in 2023. On average, parents are spending about $1,474 per month to assist their grown children, a three-year high.
This support often covers expenses such as food, cellphone plans, health and auto insurance, and even rent. The report notes that “adulting is expensive,” and many experts argue that achieving financial independence is more challenging for today’s young adults than previous generations. When adjusted for inflation, young adults are not only earning less than their parents did at the same age, but they also face larger debt burdens.
However, the report also highlights that young adults are faring well in some aspects.
Half of parents give financial support
Compared to their parents, Gen Zers are more likely to have college degrees and full-time jobs.
Additionally, many millennials have benefited from positive market conditions in recent years, allowing them to accumulate more wealth. Despite these advantages, roughly 33% of adults ages 18 to 34 still live in their parents’ homes, according to U.S. Census Bureau data. Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida, states, “Housing is a big issue, and parents are helping more and more with rent and home purchases.
The report also found that over 60% of parents are risking their own financial security to support their adult children, which has been increasing over the years.
Furthermore, about 18% of parents who provide this support believe these financial contributions could continue indefinitely. “They don’t see an end in sight,” said Beth Klongpayabal, the study’s lead data analyst. As a general rule, McClanahan advises parents to prioritize their own retirement and emergency funds before offering substantial financial assistance to their children.
She also suggests setting clear parameters to ensure the money is used wisely, stating, “We are careful to make sure parents don’t gift so much to put themselves in peril.”
Photo by; Kindel Media on Pexels