Multiple factors are leading adult children to seek financial support further into adulthood.
While many baby boomers and Gen Xers moved out and supported themselves financially at a young age, things have 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, insights from financial experts on the driving factors and tips for parents.
Nearly Half of U.S. Parents Support Their Adult Children
Almost half of parents in a recent survey by Savings.com report financially supporting at least one adult child, providing an average of $1,442 per month.
Most 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 also providing support to millennial adult children. The top expenses include groceries, 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 these adult children help with household expenses, those who do contribute an average of $186 per month.
Reasons Financial Independence Is Delayed
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 for Supporting Young Adults Towards Financial Independence
Supporting adult children can impact the budgets and financial plans of parents, so it’s important to do so carefully.
“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.”
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.
“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.