(6/1/11) Fifty-nine percent of parents are financially supporting adult children when they are no longer in school, reports a survey from a partner well-known to credit unions. The statistic reflects how the current economic and job landscape is presenting a bigger challenge than expected -- for those who should be leaving the nest as well as their parents.
Commissioned by the National Endowment for Financial Education
(NEFE), in cooperation with Forbes.com
, the poll was conducted by Harris Interactive in May. NEFE has worked with many credit unions in making classroom financial education presentations the past several years through its High School Financial Planning Program.
Credit unions noting the intergenerational living trend can help their members -- both the adult children and their parents -- by addressing the impact the trend can have on the parents' finances, and by educating them on ways to encourage independence.
In the survey, 65% of adult children -- ages 18 to 39 who are not in school -- believe the financial pressures faced by their generation are tougher than those experienced by previous generations. Parents agree, with 32% of parents indicating their own generation had it easier than their children's generation.
"This doesn't surprise me. The job market is terrible for people my age. We all got our college degrees but there was no place to go. Even the fast food joints say we're overqualified," said one 29-year old member of University of Wisconsin CU, Madison, Wis., who has lived the past year with his parents.
When he was laid off two years ago, he had saved enough money to stay afloat for eight months. He told News Now
that he has turned in more than 2,000 resumes since he lost his job. He gets by on sporadic temp work but "hunting for a job is
my full-time job." He worries about emergencies even though "I can make a dollar last longer than anyone I know. I have a 12-year-old car; no health insurance; and I absolutely hate depending on my parents."
His parents aren't too happy either. They decided to foot the bill for catastrophic health insurance for their son. "He's taking care of his car insurance and his basic bills -- the phone bill and his student loan and day to day expenses -- and he helps out a lot in other ways, but he can't swing the health insurance, too, on what he makes," said his mother.
According to the survey, 43% of parents providing the financial support do so because they are "legitimately concerned" with their child's financial well-being, while 37% said they struggled in the past and do not want their children to struggle the same way.
"Parents are continuing their involvement longer than we expected," said Ted Beck, NEFE president/CEO. "The general sentiment is that financial pressures are higher for this generation. But if parents are going to financially support their adult children, they should first have a serious talk about their kids' expectations so that everyone protects their financial futures."
He noted it is a mistake for parents to make sacrifices such as taking on extra debt or delaying retirement to help their adult child because they are putting their own financial future in jeopardy. For tips on how parents can encourage independence if financially helping their adult children, visit www.smartaboutmoney.org
Parents, the survey found, are providing support in these ways:
- 50% are providing housing;
- 48% are helping with living expenses;
- 41% are aiding with transportation costs;
- 35% are providing insurance coverage;
- 29% are handing out spending money; and
- 28% are helping with medical bills.
Among the children at home, 42% said they contribute in non-financial ways, such as cooking, cleaning or child care, but 75% financially contribute to the household with:
- 52% chipping in toward groceries/other food expenses;
- 34% helping with utilities;
- 31% putting gas in the family car; and
- 29% helping with the rent or mortgage.
Read "Tips for Parents To Encourage Independence if Supporting Adult Children"