You would think parenting ends at 18, or when the child graduates from college or university with a degree and bright future in tow thanks to Mum and Dad’s emotional (and financial) support since birth.
Not so, according to a new survey by CreditCards.com and BankRate.
Nearly 3 in 4 parents (74 percent) help their adult kids with student debt and living expenses.The most common expense is the cell phone bill, followed by others like transportation (eg. car repairs, gas), rent and utilities.
— Yahoo Finance (@YahooFinance) December 11, 2017
More than half (52 percent) even help them pay off their student loan debt.
“Some parents have a hard time letting go, and they continue to over-function for their children for longer than is necessary,” said Debbie Pincus, a New York-based psychotherapist and author of “The Calm Parent.”
“It makes it more difficult for children to get on their feet because they don’t have to.”
Older parents, ie. those aged 55 and above, were significantly likelier to help their adult kids with debt payment compared to younger parents (aged 35-54). Married couples and men are also likelier to be more financially generous with their adult kids.
The survey, conducted by YouGov, polled 1,092 American adults with children aged 18 and above. According to CreditCards.com, by extrapolating the data based on 234.6 million adults living in the US, this shows that 49 million parents are still helping their kids out financially.
Millennials: Freeloaders or Victims of recession?
They’ve been accused of freeloading and lazy for moving home to stay with their parents, not being able to buy homes and with this survey’s findings, there will be more slurs about their lack of financial independence.
But don’t be too quick to put on your smug cap.
Paul Golden, spokesman for the National Endowment for Financial Education (NEFE) said many young adults have been slow to emerge from the Great Recession – particularly those who tried to start their careers after the economy cratered.
“The recession was a big thing,” Golden said. “Younger adults were not able to find jobs – or high-paying jobs – and so they were back in with mom and dad.”
Compared to their baby boomer parents, millennials earn less (a whopping US$10,000 less as this study found) and own a net worth half than what those in their parents’ generation had when they were their age. They’ve also got another big debt weighing down, something their parents never did: Astronomical student loans.
The average monthly student loan debt payment for a borrower aged 20-30 was $351 as of 2015.
Nicole Peterkin, a financial planner and author of “If You Love Your Family, Save Like It” said: “Parents are seeing their kids take out loans of $100,000 or $200,000, and they feel guilty that they’re starting their lives that way”.
Being too generous isn’t going to pan out well for the parents either, CreditCards.com senior industry analyst Matt Schulz told Yahoo! Finance.
“In helping their kids, parents can get themselves into some trouble. The vast majority of Americans are going to struggle with retirement savings. That money isn’t going into your retirement accounts in the future. It’s important that parents don’t do so blindly without understanding what the potential ramifications are for their own futures,” Schulz said.