A close friend of mine recently confided in me about how all he does is give money to his kids. Whether it’s money for gas, a school lunch or needing new clothes or shoes, he’s constantly under financial siege from his children to meet their needs. They are high school and college-aged and not yet fully independent. Hence, they need help from Mom and Dad from time to time. He commented that he felt like the Bank of Dad and the ATM was open every day. My advice to him was to encourage them to get a part-time job during the school year or seek full-time employment during the summer to pay for those expenses when they go back to school next Fall.
In a recent article in The Hill, surveys revealed that 40% of millennials say their parents still pick up one or more of their monthly bills. These 26 to 41 year olds still rely on Mom and Dad to help out with their rent, their mortgage, car payments or their insurance. Further, according to Pew Research in July 2022 half of adults between 18 and 29 were living with their parents. That’s down from 52% in 2020, but much higher than 38% in 2000. Rising inflation, stagnant wages and skyrocketing housing costs have created challenges for this generation.
It has also created a challenge for the parents. Many are caring for their parents AND their children at the same time. AARP reports that the number of family caregivers has increased in the U.S. by 20 percent since 2015. There is a total of 22 million Americans that care for a parent and their average household income is $67,500. 40% of those care for their parent in their own home. Further, NerdWallet estimates that parents who choose to cover a child’s expenses into adulthood can sacrifice as much as $227,000 in lost retirement savings. That’s a heavy burden for parents in what’s known as the “sandwich” generation.
But there is a way forward for parents that find themselves in this situation with their children. If you’re helping your kids as they move towards independence, set an end date when you’ll stop supporting them. Encourage them to further take financial responsibility for their expenses and create and maintain a budget. If you have younger children, teach them how to manage money and be responsible. There are many resources (and apps such as Greenlight) that educate kids about how to budget, spend and save. Giving your kids the gift of fiscal responsibility is not only one that will benefit them, but it can also benefit you.