MARATHON COUNTY, Wis. (WAOW) — Parents don’t want to see their kids struggle, so helping out their young adult children with expenses is a normal thing.
But at what point does it potentially become a risk to parents and their financial savings? Also, is this actually hurting young adult children?
According to a new Bankrate study, 50% of parents say they’re pulling from multiple savings accounts, including retirement funds, to help fund their young adult kids.
“When I was growing up at 18 you were expected to pay your own bills,” Baby Boomer and parent Cheryl Falkowski said. “So I had a job right out of high school and I took care of all of my own stuff.”
Today’s young adults are faced with bills like internet and cellphone bills, subscription services, college tuition and student loans, to name a few.
“You go 40 to 50 years ago, you didn’t have an internet bill,” Kevin Bahr, a University of Wisconsin-Stevens Point Business Professor said. “You didn’t have a cellphone bill and you’ve got that nowadays, so just the cost of living has gone up. In America, expenses have really gone up and if you look at real income growth for middle and lower-income families that has not increased.”
A financial advisor says, regardless of expenses, parents shouldn’t put their own personal finances at risk.
“I would look at what situation are you truly in,” Buska Retirement Solutions, Inc. Financial Advisor Zach Kyhos said. “Are you in a financial spot to help your kids, or if you’re going to start helping your kids, is it going to get you into a troubled spot? So, if you start spending money elsewhere than trying to save and build up your retirement accounts, or your savings now rather than saying, ‘Hey I may work an extra two years to make up for this,’ you might not have that opportunity.”
Many young adults feel like times have changed drastically since say the Baby Boomer generation, and the overall cost of living has increased.
“It’s almost impossible for us, at this time, to pay for everything we need to pay for, go to school which is what people expect us to do a lot of the times, and have a job,” UWSP student Maddie Swanger said. “When you have all of those things on your plate, it can make it nearly impossible to make enough money, make those payments, and also live a healthy, sustainable life.”
“I do understand the idea of trying to get the student to pay more of their own way to maybe get a sense of financial stability, but throwing all of that on them at one time may not necessarily be the best for the student,” UWSP student Brendan Gallert said.
According to Bankrate, parents should stop paying for their young adult child’s cellphone bill at age 19, with other bills like car payments, car insurance, subscription services, credit card bills and travel costs at age 20. Housing costs at age 21, and two other bills including student loans and health insurance by the age of 23.
One of the bigger expenses that parents are now helping their young adults with is student loans.
“I guess as a parent from little on you know that those expenses are going to be there, so I don’t know if it’s a matter of trying to budget throughout the years so that you are prepared when that college tuition bill comes,” Cheryl Falkowski said.