Parents are sacrificing financial wellness to support adult children
Oliver Rossi | DigitalVision | Getty Images
Many American parents financially support their adult children at the expense of their own financial well-being.
Almost half, or 45%, of parents with adult offspring gave money to their children during the coronavirus pandemic, and of those 79% said the funds would otherwise have been used on their own personal finances, according to a survey by CreditCards.com .
It wasn’t just a fool switch, either. Those with an annual household income of less than $ 40,000 averaged $ 1,403, while those with a household income of $ 40,000 to $ 80,000 averaged $ 2,170. Parents with annual household incomes greater than $ 80,000 gave their children an average of $ 8,530.
“This is preventing them from paying their own credit card debt,” said Ted Rossman, senior industry analyst at CreditCards.com. “It affects your ability to save for the future.”
In fact, parents who reported money that would normally have been used for their own finances said they would have used the money elsewhere to pay off their own debts, meet daily expenses, and increase their emergency savings, as well as put money on them retirement.
Most of the money parents gave their children was used for food and housing, and also included a cell phone or WiFi plan, a car, debt repayment, and entertainment.
It’s only natural for parents to want to help their children, especially during a pandemic, said certified financial planner Lawrence Sprung, president of Hauppauge, Mitlin Financial in New York. However, you should be careful to set a precedent, especially with your younger adult children.
“Ultimately, we want to help our children become self-sustaining members of society and not rely on mom and dad every time they make a mistake,” said Sprung.
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He suggested that an agreement be reached on how the aid should be repaid, especially with older adult children. Also add some educational guidance to help your children prepare for the future and avoid finding themselves in a similar position again, he said.
However, getting a loan may not always be the smartest idea, Rossman said. He suggests giving it a gift if you can afford it so as not to harm your relationship in the future.
A 2019 survey by Bankrate found that of the 60% of Americans who lent cash to a loved one, 46% lost money and / or saw their relationship with the borrower damaged.