While many baby boomers and Gen Xers moved out and paid their own bills at a young age, things have since changed.
Today, many parents are financially supporting their adult children well beyond the age of 18. Sometimes into their 30s.
Here’s a look at the current trends. Plus, hear from financial experts on the driving factors and tips for parents.
Almost Half of U.S. Parents Support Their Adult Children
Almost half of parents in a recent survey by Savings.com say they’re financially supporting at least one adult child, on average providing $1,442 per month.
The majority of survey respondents support Gen Z adult children who are 18 to 24 years old. But it’s not just Gen Z — 36% of parents are providing support to millennial adult children. The top expenses include groceries and food, cellphone bills and rent or mortgage payments.
A majority (57%) of adult children receiving support from their parents are also living with them. While less than half of the adult children help with household expenses, those who do contribute an average of $186 per month.
[Financial Pros and Cons of Living With Your Parents]
Why Financial Independence Is Coming Later
Various factors are causing adult children to seek financial support further into adulthood.
“Today’s economic landscape is vastly different from that of previous generations. Tuition costs have skyrocketed, and housing prices in many urban areas have become prohibitive,” says Dennis Shirshikov, a finance professor at the City University of New York and head of growth at Awning, a real estate investment platform.
“Factor in wage stagnation, and you’ve got a cocktail that necessitates extended financial support from parents. It’s not uncommon for young adults to live at home longer to save money or pay down student loans,” Shirsikov says.
The approach younger generations are taking to work is another contributing factor.
“There’s also the influence of the gig economy, which may offer flexibility but often lacks the financial stability and benefits of traditional full-time employment,” Shirsikov says.
Tips on Supporting Young Adults and Their Financial Independence
Supporting adult children can take a toll on the budgets and financial plans of parents, so it’s important to do so with caution.
“The often-used phrase ‘secure your own oxygen mask before helping others’ rings true here. Understanding how much you, as a parent, can give is the most important step,” says Emily Boothroyd, a wealth manager and partner at Merit Financial Group, “After determining your capacity for helping, the next step is to assess the true need.”
[READ: Help Your Kids With Finances Without Jeopardizing Your Own]
Along with setting boundaries, it can help to implement a plan with steps that direct your child toward financial independence.
“Taking an offramp approach may be easier and encourage dialogue,” Boothroyd suggests, such as, “I’m going to continue to give you $500 a month for the next three months, then I am reducing the help to $300. You can decide where to cut back or how to add income between now and then.”
If your child is still young, financial experts also recommend a focus on financial literacy.
“The earlier you start teaching your children about money, the better. They need to understand that money gives them choices and this can be done while they’re still in grade school,” says Steven J. Weil, an enrolled agent authorized to represent taxpayers before the IRS and the president of RMS Accounting.
[READ: Ways to Teach Kids About Money.]
“Many parents open custodial bank accounts for their children or involve them in family budget discussions as they get older. These are effective methods for teaching financial literacy, which is crucial for future independence,” Shirshikov adds.
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Why Is Financial Independence Coming Later for Gen Z and Millennials? originally appeared on usnews.com
