June 19, 2024

NORDchinaz

The Business & Finance guru

Amid inflation, nearly 1 in 3 adults get financial help from parents

This is why Americans can't manage their money

As the cost of living skyrockets, many adults are turning to a familiar safety net: mom and dad.

Nearly a third of millennials and Gen Zers, over the age of 18, get financial support from their parents, according to a new survey by personal finance site Credit Karma. The site polled more than 1,000 adults in October.

More than half of parents with adult children said their kids are living with them. Another 48% said they pay for their kids’ cell phone plan, car payments or other monthly bills. Nearly a quarter also said they provide their adult children with a regular allowance, pay some or all of their rent or have them as an authorized user on their credit card, the report found. 

“What used to be paying your kid’s cell phone bill every few months has now turned into a much more extensive set of expenses for many parents,” said Courtney Alev, Credit Karma’s consumer financial advocate.

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63% of Americans are living paycheck to paycheck

Multigenerational households can be a way to save

During the pandemic, the number of adults moving back in with their parents — often referred to as “boomerang kids” — temporarily spiked to a historic high.

Most said they initially moved in with their parents out of necessity or to save money. Hefty student loan bills from college and soaring housing costs have put a financial stranglehold on those just starting out. The surging cost of living and sky-high rents are making it harder to move on.

The number of households with two or more adult generations has quadrupled over the past five decades, according to a separate report by the Pew Research Center based on census data from 1971 to 2021. Such households now represent 18% of the U.S. population, it estimates.

Finances are the No. 1 reason families are doubling up, Pew found, due in part to ballooning student debt and housing costs.

Now, 25% of young adults live in a multigenerational household, up from just 9% five decades ago.  

In most cases, 25- to 34-year-olds are living in the home of one or both of their parents. A smaller share live in their own home and have a parent or other older relative staying with them.

Not surprisingly, older parents are also more likely to pay for most of the expenses when two or more generations share a home. The typical 25- to 34-year-old in a multigenerational household contributes 22% of the total household income, Pew found. 

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