Amid widespread job losses and the sudden financial turmoil of 2020, many adults have found a potential safety net: their parents.
A year and a half later, nearly a third of millennials, ages 25 to 40, are still receiving financial support from their parents, according to a new survey by personal finance site MagnifyMoney.
The report found that by paying for a cell phone plan or car insurance coverage, 55% of parents with adult children said they financially support their children at least occasionally. MagnifyMoney polled more than 2,000 adults in September.
During the pandemic, the number of adults who temporarily returned with their parents rose to a historic level.
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Last year, 52% of millennials lived at their parents’ home, according to a Pew analysis of Census Bureau data, surpassing the previous high in 1940, when 48% of young adults lived with their parents.
Pew found that the proportion of young people living with their parents jumped across the board for men and women, all racial and ethnic groups and in every geographic region.
Moreover, many adults who no longer live with their parents still turn to them for financial support.
According to a separate CreditCards.com survey, nearly half or 45% of parents with adult children have helped their children financially during the coronavirus crisis.
Among these parents, the average amount they made was $4,154.
“We are seeing more parents giving money to their children, especially during the Covid period,” said certified financial planner Stacy Francis, president and CEO of Francis Financial in New York.
“The challenge is that without your children being responsible for their financial future, you never teach them how to fish, you just give them fish and they will depend on that for the rest of their lives.”
For years, freshmen have been struggling under the weight of huge student loan bills from the school, which are now at an all-time high, as well as rising housing costs, which have put severe strain on the financial conditions of recent graduates.
During the pandemic, the unequal labor market has had an additional impact on this demographic, in particular. Even with increased employment, the unemployment rate for people aged 25-34 remains higher than the national average.
However, for parents, supporting adult children can be a huge drain at a time when their financial security is at risk. From medical coverage to auto insurance, groceries, and Netflix, these extra costs can derail the best retirement plans.
Of course, not all parents can help, and in some circumstances, financial support goes in the opposite direction.
Nearly 21% of those surveyed by MagnifyMonday said they currently provide financial support to their parents, mostly in the form of rent payments or services.
To become financially independent, Francis recommends taking immediate steps to live within your means and cut expenses, if necessary..
“Think about your spending from March 2020 to March 2021,” she said. “We had the highest savings rate in decades – we could do it, we did it.”
“It shows that while it’s not easy to reduce your spending, nearly all of us have,” Francis said.
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