Ask Chuck: When adult children depend on parents for money

Dear Chuck,

Our adult son, age 30, still relies on us for money. We send him about $1000/month to cover shortfalls caused by inflation. We are debating whether we are enabling or empowering.

Supportive Parents

Dear Supportive Parents,

You are among millions of families in the same predicament. Many Millennials (adults between the ages of 27 and 42) and Gen Zers (adults between 18 and 26) are still financially dependent upon their parents. Let's examine the data and trends; then I will offer my advice.

Adults still supported by their parents

A recent Axios survey conducted by The Harris Poll in June reports that 1/3 of Millennials and over 60% of Gen Z consumers rely on parents for some financial support. Sixty-five percent admit the need is due to overspending on non-essentials. A majority of those surveyed believe it is better to treat themselves instead of holding off; they say they deserve more expensive purchases “after surviving the last few years.” Forty-three percent are trying to keep up with friends.

According to recent census data reported in Knowledge at Wharton, nearly half of 18-to-29-year-olds are living with their parents — the highest number since the Great Depression era from 1929–1941. The main reason is the delay of marriage and families. Plus, income is not keeping up with housing costs.

A Pew Research Center study published in the New York Post reveals that more than half of those aged 18–34 depend on some form of allowance from their parents; only 45% are completely independent. A Harris Poll commissioned by DailyPay shows that only 1/4 of Gen Zers are able to pay all of their bills on time. Rather than having parents send money, many choose to live with them. One in five adults ages 30–34 have parents helping with household bills.

In 2022, Matt Schulz, chief credit analyst at Lending Tree, told the New York Post, “We’re likely to see young adults continue to put off important financial and personal milestones because they just can’t afford them. They’ll keep waiting longer to marry, have kids, buy a house or start a business…” Some can’t. Others won’t.

According to a survey conducted by Experian, published in the Business Insider, more than half of Millennials and Gen Zers are financially dependent on their parents. Seventy percent of Millennials feel ashamed when asking their parents for financial support. Sixty percent of the younger group feel the same way.

Set boundaries now

In 2020, Northwestern Mutual published an article for parents who were helping young adults during the Covid-19 crisis. They listed five important things to consider when providing financial support:

• Safeguard your nest egg.
• Set ground rules early on.
• Hold your kids accountable.
• Course-correct when necessary.
• Ditch the guilt.

Provide an off ramp

Parents often provide money for food, cell phones, housing, transportation, insurance, medical expenses, and student loans. For the good of both parents and their children, a level of accountability and a cut-off date can motivate the younger generation to live within their means. I recommend that parents and their children learn to apply biblical financial principles. They are timeless and grant freedom and protection. Crown offers online training, budget coaches, and many other resources. Learning to track spending and create a budget is essential for discovering where money goes and reaching financial goals. For help, go to “How to Make a Budget” and “The Easy Guide to a Budget You Love.”

An alternative to giving financial assistance is setting up a family loan. You can find more on the topic at Crown, Bankrate, and NerdWallet.

Empowering or enabling?

Every family is different. It is common for adult children in other nations to live at home while working and contributing to household expenses. Here in our own country, it can be beneficial for both parents and their children. Open dialogue, proper boundaries, and mutual respect are necessary to make this a comfortable living situation. 

It is important to realize that some parents provide in ways that others cannot. Unfortunately, some jeopardize their financial future by continuing to pay for things their children should cover. Wise parents allow their children to grow up and take responsibility for their spending habits. This provides the young adult with a means to gain much-needed dignity. Of course, there are exceptions. Even I have stepped in to help on occasion. The point is that there is a time to let go.  When it becomes a dependency and an expectation, you have reached the point of enabling. You and your spouse can probably agree when that point has been reached. Then agree to make a plan to bring it to a peaceful end.

Thankfully, many young adults are self-sufficient and stepping in to help their parents and grandparents. What we see happening in America is a wake-up call for families. Parents must set an example by managing their own finances wisely. Children observe how we work, give, save, spend, and invest. The manner in which we live day to day speaks louder than words.

If credit card debt is holding your young adult children or you in bondage, a valuable and trusted resource is Christian Credit Counselors. They can help consolidate debt to get on the road to financial freedom.