Yahoo Finance Should You Cut Off Your Kids? Here’s How Much Money Gen Z Is Asking for in 2024
A 2024 Bank of America Better Money Habits study found that 54% of Gen Z adults rely on financial support, with 46% saying they receive that financial assistance from parents or other family members. Due to the current economic climate, with stubborn inflation and expensive housing prices, it isn’t a surprise that Gen Z adults lean on financial help from their families to get by.
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But your kids asking for financial assistance doesn’t always mean you should give it. Here’s a look at how much Gen Z asks for — and when parents should consider cutting off their children financially.
How Much Gen Z Relies on Family
The survey discovered that 32% of the participants receiving some sort of financial assistance were getting $1,000 or more, while 44% were getting less than $500 monthly.
Those in Gen Z who had financial help used the money for the following:
Groceries and toiletries: 57%
Rent and utilities: 53%
Cell phone: 53%
Health insurance and payments: 49%
The survey also found that 30% of Gen Z would like to save money, but they don’t earn enough. To make it worse, 57% of Gen Z don’t have even a three-month emergency fund.
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Economic Factors Are Contributing to Gen Z’s Requiring Assistance
“It’s no surprise that 46% of Gen Zers receive financial assistance from family, and that figure absolutely highlights the growing economic pressures on young adults,” said Erika Kullberg, an attorney, personal finance expert and founder of Erika.com. “High living expenses, a competitive job market and high inflation across the board all contribute to this financial dependence.”
Today’s young adults face financial issues that make it challenging to save money or try to get ahead. Many are relying on their families to make it through challenging times.
“Financial dependence on parents is not unique to Gen Z, but the amount of dependence and length of dependence are certainly more pronounced than in previous generations,” said Matthew Benson, a CFP and owner of Sonmore Financial. “Some of this is attributable to economic circumstances, like entering the workforce in a high inflationary environment and trying to buy a home — or rent a home or apartment — with high property values and high interest rates relative to the last 15 years.”
Financial experts agree that higher housing prices and soaring inflation make everyday expenses far too expensive for young people trying to grow in their careers. These economic challenges are forcing young adults to rely on assistance for longer than they may want to.
Kullberg elaborated, “At the same time, that lack of dependence can be somewhat overstated — it’s only natural that parents will support their young adult children, to a degree. But the underlying economic outlook is certainly a challenge for Gen Zers.”
As parents decide whether to continue supporting their children, they can’t ignore the struggles that young people are facing in 2024.
Social Media Plays a Role in Spending
Another factor that can’t be ignored is the role of social media on spending habits and lifestyle expectations. The younger generation has grown up connected to social media and friends, where they may view unrealistic expectations.
“Gen Z has grown up with social media, and their financial behaviors reflect that,” noted Benson. “According to a 2023 Deloitte study, 51% of Gen Z report that social media makes them want to buy things they can’t afford.”
As a parent, it’s crucial to determine if your financial assistance is helping out with necessities like groceries or if your children are trying to live unrealistically based on their current income.
Gen Z Has More Opportunities for Making Money
Another consideration is the amount of resources that younger people have access to these days that could help them increase their incomes. As a parent, you may want to try to inspire your children to see if they’ve considered utilizing the tools that they have access to.
“There are almost an endless number of avenues that Gen Zers can and do explore in terms of entrepreneurship, and in particular digital and online work, including freelancing, side hustles, social media monetization and more,” noted Kullberg.
Every Family Relationship Is Different
“Parents absolutely can consider gradually reducing their young adult’s financial dependence on them in a way that is supportive, considerate but still firm,” said Kullberg. “That balance will be unique to every parent-child relationship.”
Don’t ignore the role of personal circumstances in making your financial decisions — every family dynamic is unique. For example, cutting off financial support for children still helping their parents with chores and everyday tasks may be difficult. Or you may simply have the means and desire to help your child when they’re going through a difficult time financially.
When Should Parents Cut Off Financial Support?
While every family relationship is unique, some techniques are helpful when it comes to cutting off financial support.
Setting Boundaries Helps
As a parent, you can help your children make the right moves when it comes to gaining financial independence by letting them know exactly how far your help will extend. You don’t want them to rely on you longer than necessary.
“What does help is setting clear expectations and boundaries, on both sides, and for parents to strongly encourage their young adult children to practice budgeting and increase their financial literacy,” Kullberg said.
Give your children the resources to learn about money management basics and encourage them to seek information on their own. You may also want to set up a timeline, so they know when to stop relying on support.
Retirement Savings Should Be Prioritized
“Many Gen Z individuals rely on their parents for financial assistance due to rising living costs and student loan debt,” said Jim Davis, CFP and senior wealth advisor at Aspen Wealth Management. “While this support can provide short-term relief, it’s crucial for parents to balance this with their own financial security. Ensuring a stable retirement should be a priority to avoid becoming financially dependent on their children later in life.”
If you’re behind on your retirement planning, you may need to cut off your financial support to your children and get serious about your goals for your golden years. Don’t compromise your lifestyle in retirement because you supported your adult children longer than you should have.
Davis concluded, “Ultimately, prioritizing one’s own retirement savings ensures long-term financial stability and prevents future dependency on the same children they once supported.”
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This article originally appeared on GOBankingRates.com: Should You Cut Off Your Kids? Here’s How Much Money Gen Z Is Asking for in 2024
