Nearly half of Gen Z adults now rely on financial support from their parents, a significant increase compared to other generations. From groceries to cellphone bills and beyond, parents are assisting with a variety of expenses for these young adults. A recent study revealed that parents who support their adult children spend an average of $1,474 on them every month.
This number rises to $1,813 for parents of Gen Zers, in contrast to $863 for parents of millennials. This indicates that parents spend more on adult children younger than 18 and newly independent. Providing this financial assistance, however, has come at a cost for parents.
Working parents now average $673 in monthly retirement savings contributions while spending $1,589 on financial support for their adult children. As a result, they are more anxious about securing a comfortable retirement. The study highlights the expenses parents are covering for their adult children.
These include:
Groceries and food: 87% of parents provide support, averaging $220 monthly. Cellphone bills: 73% of parents, averaging $63 monthly. Health insurance: 69% of parents, averaging $165 monthly.
Rent or mortgage: 66% of parents, averaging $653 monthly. Tuition and school expenses: 57% of parents, averaging $1,198 monthly.
Parents’ financial support for Gen Z
Leisure and vacations: 56% of parents, averaging $190 monthly. Many parents of Gen Zers also help with car payments (49%, averaging $218 monthly) and discretionary spending (47%, averaging $126 monthly). This financial assistance adds up to thousands of dollars for many parents of adult children.
As a parent, you want to support your children financially and otherwise. However, if this is holding you back from achieving your own goals, it may be time to create a plan for moving forward. You can ease your children into financial independence by gradually reducing the amount you provide.
For example, start by stopping support for discretionary spending and travel. Tell your children to plan to pay their own phone bill and health insurance within a year. Some families also place conditions on the support they offer.
For instance, you might be willing to help an adult child pay off their car if they use it to drive to work. Or you could help a child pay off past-due credit card bills as long as they are not accumulating more debt. Preparing your Gen Z children for financial independence is about setting clear expectations.
You can do this by asking your children to meet certain conditions or by informing them when your support will end so they can prepare accordingly. While it’s natural to want to support your children, ensuring that they can stand on their own financially is crucial for their development and your financial well-being. By implementing a strategic approach to financial independence, parents can help their children thrive while also securing their own future.
Image Credits: Photo by Kenny Eliason on Unsplash
