Welcome to the bank of mom and dad.
Amid the rising cost of living, ballooning student debt and stagnating wages, it comes as no surprise that Gen Z and millennials are relying on their parents more than past generations.
The word “relying” might be an understatement — according to a new report, 50% of parents are financially assisting their adult children to keep them afloat in today’s economy.
After surveying 1,000 parents of US adult children, a report conducted by Savings.com revealed that parents were doling out an average of $1,474 a month — about $1,800 for Gen Zers and $900 for millennials every 30 days.
What is this recurrent allowance going towards? To help adult children pay for things like groceries, cell phone bills, rent, health insurance — and yes, even vacations.
Putting the high cost of living aside — I hate to point fingers — but Gen Z isn’t very smart when it comes to their finances.
Reportedly, the generation born between 1997 and 2012 are drowning in almost $100,000 of personal debt. Wild to think how high that number is if many are receiving monthly payments from their parents.
The Savings study also pointed out that 47% of parents are willing to sacrifice their future financial plans if it means helping their grown-up children.
However, while parents have the best intentions of protecting their kids from the financial burdens of the world, they’re now coming to terms with the fact that this arrangement isn’t allowing them to save for their future.
This is because out of the working parents surveyed, most of them admitted to contributing over two times more money to their grown children than to their retirement funds.
Well, parents are finally wising up.
Within the next two years, about 26% of parents said they plan to put an end to the monthly deposits they give their offspring, while 28% will let this arrangement carry on a bit longer for the next three to four years before completely stopping it.
If these arrangements are coming to an end for some, hopefully, millennials will learn to cope — as their generation has serious “money dysmorphia.”
This means that those born between 1981 and 1996 are so obsessed with showing off their riches that they bury themselves further into debt, according to a Wells Fargo study.
It seems that many of these grown-up children will soon have to sink or swim.
