A recent report by Savings.com has revealed that 50% of parents are providing financial support to their adult children. The survey, which polled more than 1,000 parents of adult children in February, found that parents are shelling out about $1,474 a month, on average, to help their kids with expenses such as food, cellphone plans, health and auto insurance, and even rent. This marks a three-year high in parental financial support and highlights the increased financial challenges faced by young adults today.
Many experts argue that it’s harder for young adults to achieve financial independence due to soaring costs of living, among other challenges. “Adulting is expensive,” the report notes. Despite the fact that Gen Zers are more likely to have a degree and work full-time compared to their parents at the same age, roughly one-third of adults ages 18 to 34 in the U.S. still reside in their parents’ homes.
“Housing is a big issue, and parents are helping more and more with rent and home purchases,” said a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. However, supporting grown children can come with a significant long-term cost.
Parental support’s financial impact
More than 60% of parents reported that they have sacrificed their own financial security for the sake of their kids, a jump from previous years. About 18% of parents supporting adult children said these financial contributions could continue indefinitely. “They don’t see an end in sight,” said Beth Klongpayabal, the study’s lead data analyst.
Financial advisors suggest that parents should prioritize their own retirement and emergency funds first. “We are careful to make sure parents don’t gift so much to put themselves in peril,” said McClanahan, a certified financial planner. She also recommends that parents set clear parameters to ensure the money provided to their children is used wisely.
The report underscores the importance of financial literacy and the need for young adults to develop money management skills early on. As the cost of living continues to rise, the dependency on parental support may have long-term implications on both personal and economic levels.
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