Jessica Dickler -
CNBC
As the cost of living skyrockets, many adults are turning to a family safety net: mom and dad.
Nearly a third of millennials and Generation Z, age 18 and older, receive financial support from their parents, according to a survey by personal finance website Credit Karma.
The platform surveyed more than 1,000 adults in October.
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More than half of the parents with adult children stated that their children live with them.
Another 48% said they pay for their children's cell phone plan, car payments or other monthly bills.
According to the report, nearly a quarter of those surveyed give them a periodic allowance, pay part or all of their rent, or have them as authorized users on their credit card.
"What used to be paying your child's cell phone bill every few months has now become a much larger set of expenses for many parents," said Courtney Alev, Credit Karma's consumer financial advocate.
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During the pandemic, the number of adults returning to live with their parents—often referred to as “boomerang children”—temporarily reached an all-time high.
Most said they initially moved with their parents out of necessity or to save money.
Soaring college loan bills and rising housing costs have financially strangled those just starting out.
Rising cost of living and skyrocketing rents make the transition difficult.
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The number of households with two or more adult generations has quadrupled in the past five decades, according to another Pew Research Center report based on census data from 1971 to 2021. According to their estimates, these households now make up 18% of the population. US.
Finances are the main reason families are doubling, according to Pew, due in part to rising student debt and rising housing costs.
Today, 25% of young adults live in a multigenerational household, up from 9% five decades ago.
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In most cases, young people between the ages of 25 and 34 live in the home of one or both of their parents.
A smaller proportion live in their own home and have a parent or other elderly relative living with them.
Not surprisingly, when two or more generations share the home, older parents pay most of the costs.
According to Pew, the typical person between the ages of 25 and 34 in a multigenerational household contributes 22% of the total household income.
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For parents, however, supporting older children can be a considerable burden at a time when their own financial security is in jeopardy.
In an economy that has seen the highest rate of inflation since the early 1980s, the cost of living has risen sharply.
According to Credit Karma, 69% of parents who help their adult children say it causes them financial stress.
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“It is essential that parents do what they can to take care of themselves financially first, before offering financial support to their adult children,” Alev said.
“As with anything else, budget your income and expenses, factoring in savings, paying off debt and, if possible, contributing to a retirement fund,” he advises.
“Once this is done, see how much you have left to help your adult children and set that expectation with them.
You can even consider setting a deadline so they know when they have to fend for themselves again," she explained.
