Amid widespread job losses and sudden financial turmoil in 2020, many adults found a likely safety net: their parents.
A year and a half later, nearly a third of millennials, between the ages of 25 and 40, still receive financial support from their parents, according to a new survey by personal finance site MagnifyMoney.
From paying for their cell phone plan or covering auto insurance, 55% of parents with adult children said they provide financial support to their kids at least occasionally, the report found. MagnifyMoney polled more than 2,000 adults in September.
During the pandemic, the number of adults moving back in with their parents temporarily spiked to a historic high.
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Last year, 52% of millennials were living in their parents’ home, according to the Pew analysis of Census Bureau data, surpassing the previous high hit in 1940, when 48% of young adults lived with their parents.
The share of young adults living with their parents jumped across the board for men and women, all racial and ethnic groups and in every geographical region, Pew found.
Further, many of the adults who didn’t move back in with their parents still turned to them for monetary support.
According to a separate CreditCards.com poll, almost half, or 45%, of parents with adult children helped their kids financially throughout the coronavirus crisis.
Without having your children be responsible for their financial future, you are never teaching them how to fish …Stacy FrancisCEO of Francis Financial
Of those parents, the average amount they gave was $4,154.
“We are seeing more parents giving money to their children, especially during Covid,” said certified financial planner Stacy Francis, president and CEO of Francis Financial in New York.
“The challenge is, without having your children be responsible for their financial future, you are never teaching them how to fish, you are only giving them fish and they will be reliant on that for the rest of their life.”
For years, those starting out have been struggling under the weight of hefty student loan bills from school, now at an all-time high, in addition to soaring housing costs, which put a severe strain on most recent graduates’ financial circumstances.
During the pandemic, an uneven job market took an added toll on this demographic, in particular. And even as hiring picks up, the unemployment rate among 25-to-34-year-olds remains higher than the national average.
For parents, however, supporting grown children can be a substantial drain at a time when their own financial security is at risk. From medical coverage to auto insurance, groceries and Netflix, those added costs can derail the best made retirement plans.
Of course, not all parents can afford to help and, in some circumstances, the financial support goes the other way.
Roughly 21% of those polled by MagnifyMonday said they are currently providing financial support to their parents, often in the form of rent or utility payments.
To become financially independent, Francis recommends taking immediate steps to live within your means and slashing expenses, if necessary.
“Think about your spending from March 2020 to March 2021,” she said. “We had the highest savings rate in decades — we can do it, we did it.”
“It does show that while it’s not easy to reduce your spending, almost all of us did,” Francis said.