Mired in debt, majority of young adults financially dependent on parents: Pew
Despite being better educated, working more, and earning higher incomes than their counterparts from three decades ago, more than half of young adults between the ages of 18 to 34 are financially dependent on their parents, with many still living at home, unmarried, childless and mired in debt, a new study from the Pew Research Center shows.
The findings from the study published last Thursday were collected from two surveys conducted Oct. 24 to Nov. 5, 2023, using Pew Research Center’s American Trends Panel. One survey included 3,017 adults with at least one child aged 18 to 34, while the other included 1,495 young adults aged 18 to 34, with at least one living parent.
Researchers found that only 45% of young adults reported being completely financially independent from their parents. That share decreases the younger the adult and increases the older the adult. Some 67% of young adults in their early 30s, for example, said they are completely financially independent from their parents, while only 16% of the cohort in the 18 to 24 age group said they are completely financially independent from their parents.
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Close to half, or 44%, of young adults said they received financial help from their parents in the past year. And the top two areas they needed financial help with from their parents were to pay household expenses and their cellphone bill or subscriptions to streaming services.
The data from the study showed that young adults today are more likely to be working full-time compared to their parents’ generation.
Though the share of young adults 18 to 24 doing full-time work today compared to their parents’ generation was not found to be significant, the share of young adults doing full-time work in the 25 to 29 age group increased from 65% in 1993 to 70% today. The share of young adults working full time in the 30 to 34 age group increased from 68% to 73% over the period.
While the share of men doing full-time work stayed the same over the period, the data showed that the share of women doing full-time work was responsible for a large share of the increase in young adults doing full-time work.
The study showed that the advances made by young adults today in higher education, wages, and access to full-time work have been hamstrung by student debt and mortgages.
Using data from household heads from 1992 and 2022, researchers found that young adults today are much more likely than young adults in the early 1990s to have outstanding student loans.
While in 1992, the median amount owed on student loans (adjusted for inflation) ranged from $6,000 to $7,000, in 2022, young adults ages 25 and older carried $16,000 for those 25 to 29, and to $20,000 among those 30 to 34.
Although the number of young adults with mortgages has not increased over the period, researchers found that the debt load of young adults has skyrocketed.
Young adults 18 to 24 in 1992 carried an average of $39,367 in mortgage debt compared to $117,000 in 2022. For 25- to 29-year-olds, the average mortgage debt in 1992 was $105,671 compared to $165,000 in 2022. The average mortgage debt for 29- to 34-year-olds increased from $120,174 in 1992 to $190,000 in 2022.
The study found that it has also become more common for young adults today to be living with their parents than it was for them 30 years ago. In 1993, 53% of 18- to 24-year-olds lived with their parents compared to 57% today.
While 18% of young adults 18 to 24 were married three decades earlier, less than half of that cohort or 7% was found to be married in 2023.
“Young adults today are also less likely to have a child living in their household than their counterparts in 1993. These declines can be seen across all age groups (13 percentage points among those ages 30 to 34, 17 points for those ages 25 to 29, and 9 points among adults younger than 25),” researchers noted.
A recent study by Experian showed that two-thirds of young consumers are ashamed at having to ask their parents for financial help, particularly millennials. Some 70% of them felt this way.
When asked if their parents are good financial role models, 27% said they weren’t citing reasons such as their parents didn’t teach them about personal finances, never talked with them about money or had bad spending habits.
Some 80% of young adults in this study argued that having an established credit history is a significant factor to being less financially dependent on their parents.
“Credit can be a financial tool to help us achieve many of the things we want in life, including financial independence from our parents,” Christina Roman, consumer education and advocacy manager at Experian said. “We have resources available to help consumers lead more financially empowered lives. Our goal is to connect consumers with tools and education to help bring financial power to all.”
The study indicated that while they crave financial independence from their parents, Gen Zers and millennials have a hard time achieving this goal, partly because of their spending habits and inability to deny themselves.
“More than half (57%) say they have a hard time saying no to themselves when making an impulse purchase for something they want but don’t need. This was especially true for millennial males, with 62% stating they struggle at least somewhat with impulse purchases,” the researchers noted.
A majority, 61%, of Gen Zers and millennials said they prefer spending money on life experiences like traveling the world rather than saving for retirement.
Some 57% of the cohort did note, however, that they planned to cut back on online entertainment subscriptions to save money.
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