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To get by these days, more young adults turn to a likely source for help: their parents.
For the first time, 50% of parents with a child older than 18 provide them with at least some financial support, according to a new report by Savings.com. That’s up from 47% last year and 45% in 2023.
From buying food to paying for a cellphone plan or covering health and auto insurance or even rent, these parents are shelling out about $1,474 a month, on average, the report found — a three-year high.
“Adulting is expensive,” the report notes.
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Many experts contend it’s harder today for young adults to make it on their own.
In addition to soaring everyday expenses and housing costs, millennials and Generation Z face other financial challenges their parents did not at that age.
Not only are their wages lower than their parents’ earnings when they were in their 20s and 30s, after adjusting for inflation, but they are also carrying larger student loan balances, many reports show.
But by other measures, young adults are doing well.
Compared with their parents at this age, Gen Zers are more likely to have a college degree and work full time. Plus, many millennials have more saved for retirement than they did just a few years ago, after reaping the benefits of positive market conditions.
Yet, roughly 1 in 3 adults ages 18 to 34 in the U.S. live in their parents’ home, according to U.S. Census Bureau data.
“Housing is a big issue and parents are helping more and more with rent and home purchases,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.
60% of parents risk their own financial security
In addition to the monthly expense, supporting grown children can come with a long-term cost.
More than 60% of parents said they have sacrificed their own financial security for the sake of their kids, also a jump from previous years, Savings.com found. The site polled more than 1,000 parents of adult children in February.
Further, about 18% of parents supporting adult children said those 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, you should set aside money for your own retirement and emergency fund first, McClanahan said. She also suggests parents set parameters to help ensure children are using the money they gift wisely.
“We are careful to make sure parents don’t gift so much to put themselves in peril,” said McClanahan, who also is a member of CNBC’s Advisor Council.