From allowances to bills: 1 In 2 parents finance their adult kids
More young adults are relying on their parents for financial support, with 50% of parents assisting their grown children, up from 47% last year and 45% in 2023, according to a Savings.com report.
Parents contribute an average of $1,474 monthly toward expenses, marking a three-year high.
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Most Americans are feeling the squeeze as inflation and tariffs impact everyday products, such as fast food, board games, clothes and home goods. Parents, especially, are overwhelmed.
But new survey data shows that while having kids is expensive, children are good motivators for parents to get their finances in order.
In a recent survey of 2,500 Americans by BMO Financial Group, 71% of parents with children under 18 said they felt overwhelmed by their financial responsibilities, compared with 54% of respondents without children at home. But 60% of parents set a yearly budget compared with 37% of respondents without children. Parents were also more likely than non-parents to set financial goals, have a written financial plan and have a professional financial advisor.
“Parents today report feeling significant financial pressure − but they’re also stepping up in powerful ways to take control of their family’s financial plans,” Paul Dilda, who is in charge of consumer strategy at BMO, said in a recent news release.
Parents are feeling the pressure − but planning can help
In the survey, 83% of respondents said the cost of raising kids had “gotten out of control,” and 77% of parents said that they felt pressure to keep up with other families by spending more than they should. Social media plays a role, too, with 80% of parents saying content from parenting influencers fuels their financial anxiety.
Another survey of 3,000 parents by Ameriprise Financial, a financial services company, produced similar findings. More than 7 in 10 respondents said they experienced parental guilt that resulted in overcompensating with small perks or overspending on their children.
Nearly 9 in 10 parents said they planned to pay for some portion of their children’s college education, the Ameriprise survey found, and 57% those parents said they would probably or definitely help their children financially after they left the nest.
Many parents are forced to think in terms of trade-offs, the study found, weighing the importance of family trips against retirement savings or their children’s college funds.
“Our research confirms what most parents in the throes of caregiving are thinking: balancing family finances while juggling shifting priorities can feel challenging,” Deana Healy, who oversees financial planning at Ameriprise, said in a news release.
But it is possible to attain financial confidence, Healy said, even for parents. The trick? Careful planning.
“Parenting brings so much joy. But it can come with so many expectations and competing priorities, especially when it comes to managing family finances,” Healy said. “Our advice: be clear with your financial priorities today, so you don’t lose sight of the future goals you’re working so hard to achieve for yourself and your family.”
Parents in the survey said they supported their children in making smart financial decisions by opening savings accounts for them, encouraging them to save for short-term goals and involving them in family financial decisions. More than half of parents in the survey paid their kids an allowance, and 96% of parents used the Tooth Fairy to give their children an extra few bucks (average Tooth Fairy payout is $5 per tooth, the study found).
Vanguard also found that parents are spending more than they expected on their kids, and those financial losses are compounded by not putting savings in high-yield accounts. High-yield accounts “build a financial buffer for everyday expenditures and moments when it’s needed most,” Matt Benchener, Managing Director of Vanguard’s Personal Investor business, said in a news release.
Madeline Mitchell’s role covering women and the caregiving economy at USA TODAY is supported by a partnership with Pivotal and Journalism Funding Partners. Funders do not provide editorial input.
Reach Madeline at memitchell@usatoday.com and @maddiemitch_ on X.