Episode 80: Providing Adult Children with Financial Support

Nine out of ten parents give their adult children financial support. What they spend, why they spend it, and where the money goes are listed below.

Nearly 37% of parents with adult children assist with grocery expenses, nearly 25% with rent, 10% with mortgage payments, and nearly half offer sporadic financial assistance. Welcome to raising adult children in a time of high inflation and pricey housing.

A recent informal survey of parents with children aged 21 and older, conducted by Rob Carrick of the Globe & Mail, found that 91.5% of respondents gave their children some type of help.

The findings offer both a reflection on the financial independence of millennials and members of Generation Z as well as a glimpse into how parents view their responsibility to provide for their adult offspring.

Where it's financially possible, many people are offering assistance. 3,095 people responded to the study, which was promoted in the Carrick on Money e-mail newsletter and documents the volume and scope of parental financial support.

Only 6.6% of parents who offered financial assistance estimated the sum to be $1,000 or less. Nearly 25% estimated the cost to be between $1,000 and $5,000, 64% estimated it to be between $5,000 and $50,000, and the remaining respondents estimated it to be greater than $50,000 annually. Room and board was the most prevalent kind of financial assistance, with 47% of parents providing it. When asked why an adult kid still stays at home, 39% of respondents cited the astronomical cost of purchasing a home or living in a rental property. 11% of parents reported that their adult child who lives with them is putting money aside for a down payment on a house. In addition, difficulties in getting employment (7%) as well as health-related problems (6%) and school loan debt (4%) were highlighted. According to about 3% of respondents, it's common in their culture for children to live with their parents until they get married or buy a house. The survey's findings show a significant change in the difficulties young adults and their parents have with money. Millennials frequently moved back home after the Great Recession of 2008–2009 since it was difficult for them to obtain full-time employment as opposed to temporary occupations. While the labour market is robust today (evident in the comparatively low number of young adults who remain at home while looking for employment). Housing is the more serious issue. Moving back in with parents is a wise financial decision for a young person who is having trouble paying rent or a mortgage. Living at home can free up money for savings, even if parents are collecting rent. But it's evident that parents, millennials, and members of Generation Z are suffering as a result of rising housing expenses. The number of parents who contribute to rent and mortgage payments, as well as the amount of money parents spend on down payments for their adult children, serve as examples of this. Overall, 41% of parents claimed to have helped with down payments. This may help to explain why 34% of survey respondents reported using their retirement resources to assist their adult children. The findings also indicate that parents have grown weary of waiting for their adult offspring to become financially independent. A little over 12% see this happening this year, while 56% are looking to the following few years. The remainder predict long delays or never.

Here are a few instances of situations showing that this is much more complicated than simply helping adult kids with housing costs:

• Caring for aging parents in addition to adult children - Having multiple children, all in need of assistance
• Paying for pet expenses such as food and vet bills
• Paying for medications, treatments, and dental bills

Last but not least, a statement that probably describes many parents who provide assistance: "My kids could survive on their own, but we have enough to be able to help them out."