A recent survey conducted by Pew Research Centre discovered that around 60% of young adults are still receiving financial support from their parents. As the cost of living increases, it significantly affects how young people cope with their finances. However, is there a point where parents should stop providing financial support and allow their young adult children to learn how to become financially independent?
Adults Aged 18-34 Turn to Parents for Financial Help
A recent Pew Research survey revealed that approximately 60% of individuals aged 18 to 34 continued to rely on financial help from their parents in 2023.
Financial Independence Seems Likely in Time
Additionally, and good news for parents is that around 75% of young adults who acknowledge they are not entirely financially independent believe it is extremely or very likely that they will achieve financial autonomy.
Older Adults Less Likely to Need Support
In total, 44% of individuals aged 18 to 34 with at least one living parent reported receiving financial assistance from their parents within the last year. Among adults under 25, this percentage was 68%, while among those aged 30 to 34, it decreased to 30%. The survey findings indicate that young men and women are equally prone to acknowledge receiving financial support from their parents.
Top Expenses Are Household and Cellphone Bills
The primary areas where young adults report receiving financial assistance from their parents are household expenses and cellphone and streaming bills. Whereas 28% of young adults indicated receiving help with their household bills, while 25% mentioned receiving help with their cellphone bills.
Rent and Education Also a Struggle
The survey also highlighted that rent or mortgages, medical expenses and education were also a struggle for younger adults.
Almost 20% of Young Adults Needed Help With Rent or Mortgage
The recent survey indicates 17% of young adults needed help with their rent or mortgage, 15% needed help with medical expenses, and 11% needed help with the cost of education. Adults under 24 were far more likely to need help from parents than older adults aged 25 to 34.
Parents With Higher Incomes Gave More Financial Help
According to the Pew Research Center report, it was noted that parents with higher incomes were more inclined to provide support to their adult children. With 65% of parents with upper incomes and 61% with middle incomes stating they offered financial assistance to their children, compared to 52% of those with lower incomes.
Most Parents Say They Face No Negative Impact
Most parents said that financially supporting their adult children did not harm their finances. More than 64% of parents who financially supported their children stated it had little to no impact.
About a Third of Young Adults Live with Their Parents
The report also highlighted the increasing number of young adults living at home with their parents. “Among those ages 18 to 24, 57% are living in a parent’s home, compared with 53% in 1993,” the report stated.
Parents Say It Has a Positive Impact on Relationships
Parents also expressed support for their children living at home for an extended period. The majority of parents reported a positive impact on their relationship with their child, with 45% describing it as very positive, while 29% said it had somewhat positive impact.
Most Young Adults Contribute to Parents Household Expenses
The report stated that more than half of young adults who live with their parents say they contribute financially. With 65% of young adults indicating they would help with household expenses such as groceries or utility bills, and 46% said they contribute money toward the rent or mortgage.
Survey Finds Financial Support Can Cause Mental Stress
Contradictory findings arise from another survey. According to a recent study by Intuit Credit Karma, 76% of parents who provided financial assistance to their adult children indicated a negative effect on their own finances. Additionally, 60% mention experiencing mental stress due to this financial support.
Some Parents Postpone Their Retirement
The survey also revealed numerous parents had made sacrifices to aid their adult children, with 52% reducing their living expenses, 27% delaying retirement, and 39% experiencing difficulties affording essential necessities such as groceries and utility bills.
Supporting Adult Children Can Have a Negative Impact
According to Credit Karma, numerous parents felt a duty towards their children as they struggled with their finances, particularly in the current economic conditions. However, the survey revealed that supporting their adult children could also have an adverse effect on their own financial situation as well as their mental health.
High Housing and Education Costs Creating Challenges
Courtney Alev, a consumer financial advocate at Credit Karma, commented on the findings. In the report, she stated, “Achieving financial independence as a young adult can be challenging, especially as they face high housing and education costs.”
Parents Should Not Get Rid of Their Own Financial Goals
She added, “There’s nothing wrong with providing financial support to your adult children if they’re in need, but if it begins to have a negative impact on your own finances, it is probably time to set some guardrails.”
Parents Need to Assess Their Own Financial Situation
She also stated parents should be “clearly communicating any expectations tied to the financial assistance” that they provided while at the same time ensuring they were assessing their own “financial situation.” Alev warned parents about not giving up on their own financial goals to help their children financially, for example, “pulling from retirement savings.”
Help Young Adults Build up Credit Rating
Alev proposed alternative methods for parents to assist their children in attaining financial independence, such as adding them as authorized users on a credit card to help build their credit score or letting them stay at home.
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