Some people say it’s more challenging nowadays for young people to stand on their own two feet. Alongside expensive food and housing, millennials and Gen Z face money hurdles their parents didn’t have at their age. Their pay is lower when inflation is considered, and they’re dealing with more considerable student loan debts, according to recent studies.
Supporting Adult Children
Many parents are pitching in to support their adult children. This can mean buying groceries, paying for things like phones and insurance, or helping out with other expenses.
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A study from Savings.com found that about half of parents with kids over 18 give them some money. On average, these parents are giving about $1,384 each month.
A Different Generation
In other areas of life, young adults seem to be doing okay financially. They are more likely to finish college and work full-time jobs compared to their parents when they were the same age. This is especially true for women, who are not only getting more education but also making more money.
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However, even though many of these adult children still live with their parents, a discovery was made. A study by Savings.com discovered that 61% of them don’t help out with any of the household expenses.
Financial Advice for Parents
Supporting adult children can put a strain on parents’ finances. This is especially true when they need to focus on their own retirement savings. A recent study by Savings.com revealed that 58% of parents have prioritized their adult children’s financial needs over their own, compared to 37% in the previous year.
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Carolyn McClanahan, a financial planner, advises parents to first secure their own financial future. After doing this, they can then decide how much they can afford to help their adult children financially.
Setting Monetary Boundaries For Adult Children
McClanahan, who is part of CNBC’s Advisor Council, advised parents. She advises parents to decide on limits and a timeframe before giving money. She asked them to consider their plans, like retirement or paying off debt.
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“It’s important to set boundaries and find a middle ground,” she said. McClanahan also recommends prioritizing saving for retirement and an emergency fund before anything else.
A Promise to Parents
Isabel Barrow, director of financial planning at Edelman Financial Engines, made a suggestion. She suggests a deal for parents and their adult kids.
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“Parents will help their kids out with money. However, this is only if their kids also take steps to secure their financial future. It is like putting 10% of their paycheck into a retirement account”. “If they’re earning, working, they can save. That should be their promise to you,” Barrow explained.