Young people today have faced financial crises, a tough job market and exorbitant tuition fees — it makes sense that they may need financial help from their parents.
But a new study has found that the help parents are providing is hitting new heights, and may have worrying consequences.
Savings.com surveyed 1,000 parents of adult children and found that the average amount they give per month is $1,474. Moreover, this year’s survey marked a 6% increase in the total amount compared with last year. (1)
White some support may be necessary, USA Today suggests that parents — and even grandparents — are risking their own financial health in some cases. (2)
Here’s what you need to know if you’re supporting your adult children, and how to pull back on financial support if you’ve overextended.
Half the parents surveyed for the Savings.com study said they provided regular financial assistance, with 83% of those respondents saying they help with groceries and 65% saying they help with phone bills.
Shockingly, nearly half (46%) of the parents who help out financially said they pay for vacations.
Another worrying finding of the study is that nearly half of the parents who say they financially support their children are sacrificing their own financial security.
Parents in the workforce who financially support their adult children said that they give 2.3 times more to their kids than they contribute to their own retirement accounts every month.
A separate survey from TheSeniorList.com found that 96% of grandparents financially help their grandchildren, according to a survey of 1,200 Americans 55 and over. The survey found that among grandparents who offer support, the average they spent per year was $3,917. (3)
Another concerning metric from this survey: 11% of grandparents said they had dipped into their retirement savings or accounts to help their grandchildren.
It makes sense to want to step in if your child, or grandchild, grown as they may be, can’t afford to put food on the table, or pay their phone bill.
But paying for a vacation, or giving money with no strings attached, especially when it comes at the expense of your own retirement savings, is a behavior that could be a sign of financial enabling.
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Experts suggest having a clear plan regarding your contributions to your children, what purpose they serve, and how long you will be giving support.
For example, if an adult child has to move in with you because they cannot afford their living expenses, experts recommend that you require them to contribute to the household, whether through paying rent or helping with household expenses.
Setting a timeline for how long they need support is also a good measure. When expectations aren’t clear, there can be room for misunderstandings or conflict.
Be sure to watch out for signs that your offers of help have not become a crutch. Financially enabling a family member will hurt your relationship, and your child’s ability to develop skills to stand on their own two feet.
If your child expects cash regularly, cannot learn to live within their means, or says no to offers of help other than cash, you may be financially enabling them.
Setting boundaries around financial help lets your adult children know that they are responsible for their own financial lives and futures.
Helping your child with finances also extends to their financial literacy: they should know how to build a budget, learn the importance of paying bills on time, and learn how to save for the future.
Parents can also consider attaching stipulations to loaning money, such as laying out a repayment plan and, if you choose, interest.
If cash handouts are impacting your ability to take care of your own finances or save for your retirement, consider whether you can actually afford the help you are giving. To set boundaries going forward, consider:
Having a tough conversation with your child about their help you have already given and its impact on your own financial health.
Reviewing how much assistance you have already given and outlining a plan for repayment.
Explaining a timeline for when you need to stop loaning or giving them money, for your own financial health.
Speaking to a financial advisor or connecting your child with a professional advisor who can help them with financial planning.
If you have an adult child living with you who is not contributing financially and is draining your own finances, set a deadline for them to move out. With their own financial plan and budget, they will learn independence and you will regain your financial stability.
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Savings.com (1); USA Today (2; TheSeniorList (3).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
