So, most people feel like a grownup by the time they’re 18, but these days young adults might not become financially independent until years later.
And even then, parents and their children could disagree on what exactly financial independency means.
While young adults said 21 is a good age to start paying some of their own expenses, older generations are more likely to think that their kids should be completely financially independent by that age, that’s according to a new report by Bankrate.
Young adults in the millennial and Generation Z age groups are encountering financial obstacles that their parents did not experience during their younger years. These include increased levels of student loan debt and lower wages compared to their parents when they were in the same age range.
Moreover, inflation has made it even more difficult for them to achieve financial independence, with high costs of food and housing adding to the challenge. As a result, a significant proportion of parents with children over the age of 18, about 68%, are now making financial sacrifices to provide support for their children.
From buying groceries to paying for cell phone plans or covering health and auto insurance, parents are spending more than $1,400 a month, on average, helping their adult children make ends meet, and that’s according to a separate report by Savings.com.
When offering financial assistance can backfire
To assist their adult children, parents may face significant financial challenges that can jeopardize their own financial security. This situation is akin to the emergency rule on an airplane where one needs to put on their oxygen mask first before assisting others. When parents extend financial support, it could lead to a negative impact on their own savings, investments, and financial well-being.
Based on a report, about 50% of parents who provide financial assistance to their adult children have done so at the expense of their emergency savings or their capacity to repay debts. Slightly fewer respondents revealed that supporting their children has had an adverse effect on their retirement savings. Therefore, parents need to strike a balance between providing support and ensuring their own financial stability.
So where to draw the line?
Determining the extent to which parents should financially support their adult children can be challenging. It’s crucial to ensure that any financial assistance provided fits within the parents’ budget and that everyone involved understands the guidelines. It may be helpful to specify a precise amount or duration of support.
Nonetheless, it’s crucial to keep in mind that the relationship between parents and adult children should be reciprocal whenever possible. Parents provide a lot of assistance, but adult children should also recognize that they will be responsible for taking care of their parents in the future. This can be achieved by having open communication about finances and expectations. By being transparent about expectations and financial resources, both parents and children can avoid misunderstandings and work together towards a brighter financial future.
