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How Much Financial Help Should Parents Give 20-Somethings?


How much financial support should 20-somethings get from their parents?An article in yesterday’s Wall Street Journal spotlighted 20-somethings — including one 28-year-old attorney — who are still on their parents’ cell phone plans and Netflix accounts.

At least through my mid-twenties, I got the impression most of my peers still received some kind of financial help from the bank of mom and dad – whether it was something relatively small like a mobile family plan – or something bigger like car or health insurance. This was true even after many of them were working, some in well-paying jobs.

And in well-heeled circles, it’s not uncommon to hear of parents making major contributions to their adult kids’ financial foundations, like helping with the down payment on a home.

Personally, I’m indebted to my parents for all they sacrificed to ensure I graduated from college with far less student loan debt than lots of students take out. I also lived at home for a number of months in my early twenties while I got on my feet. (In hindsight, staying with them longer would’ve drastically helped my financial situation, but my own desire for independence led me to move out quickly.)

But not everybody has parental support. Lots of people put themselves through college never mind expect parental support after graduation. Some parents aren’t in the picture, others can’t afford it, and some choose to cut off adult kids in an effort to force them to make it on their own.

I see both sides.

It’s getting harder and harder for a new graduate to immediately get a job and turn a few thousand in savings into a place to live, a car to drive, and all the other necessities to establish adult life. Impossible? No. But difficult. Assuming you can land the job, you’ll still need to have some savings and/or good credit to get started.

And then there’s health insurance. Obamacare now requires health insurance companies to let adult children stay on their parents’ policies until they turn 26. Because health insurance is such a critical part of being financially secure, I don’t see any reason for a 20-something to go without health insurance if they are under 26 and have parents willing to keep them on a family policy (even if it means you chip in towards the premiums.)

On the other hand, I learned some difficult financial lessons on my own that I might not have if I simply borrowed from the bank of mom and dad anytime money got tight. In the short run, turning to parents for money might stave off some overdraft fees or credit card interest. But if parental support delays you from learning how to budget, manage credit, and invest, it might do more harm than good.

What do you think? How much financial assistance do/did your parents provides during your twenties? Do you think it’s appropriate? If not, when should 20-somethings be “cut off”?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. It’s a good question, but a personal one! I do tend to think that parents and children should sever financial ties once the child is gainfully employed for the first time – with possible exceptions for MUTUALLY beneficial arrangements.

    I had a lot of financial ties to my parents like the ones you listed in my early 20s – health insurance, cell plan, living with them for a time – but I paid for them. I paid my share of the family cell plan and I paid my parents rent while I lived with them. They insisted I stay on their insurance plan even though my workplace offered one because it was no additional cost to them to keep me on and their plan was better. So I didn’t see those as points of dependency, and when it made sense I did switch away to other services (paying less than what I had been, in some cases). I don’t think it hindered my growth at all, although I do sometimes wish that I had made a more clean break with them post-college.

    My siblings, however – now into their mid-20s – still live with and are almost completely dependent on my parents, and my parents’ willingness to provide for them has definitely hampered their growth and maturation (as well as damaged my parents’ finances).

  2. Great post. I know that in my experience, I had to forcefully stop my parents from paying for certain things for me. Car insurance and the shared family cell plans were the last two things to go, the latter was only just over a year ago as I was nearing 27 and had been married for over 2 years. In a lot of ways, it seemed as if my mom looked at it as me attempting to cut her out of my life. Granted, I haven’t lived at home since high school and I’ve been moving further away (first 550 and now 850 miles away), but I needed to pay for these things myself. Doing so let me and my wife put together a household budget with all of our expenses, not just all of our expenses that we were required to pay for.

    Like you, I probably at times did more harm than good financially (especially in college) in attempting to untangle my finances from my parents, but the good it did for me personally was worth it. I value my independence and having to rely on someone for something even so trivial as the 15 dollars a month for a cell phone didn’t sit well with me. I understand that not everyone can be as fortunate as I know I was to have my parents willing and able to help me financially, but it is extremely valuable to act as if they aren’t there to help, even though if life came completely crashing down they would be.

    Ultimately, I think parents will always want to give their children money if they are able (even if the parents are going on 80 and the ‘children’ have grandchildren of their own.) I think the best course of action is to avoid delaying adulthood for children by cushioning the fact that there are bills to pay and while money may not buy happiness, it can certainly stave off misery.

  3. I’m lucky that my parents paid for most of my college. After the 3rd year though, they couldn’t afford to give me any more, which is OK, they went above and beyond what a lot of parents do. My uncle then loaned me $24k for the rest of my college, which I paid back as fast as could, and I got it all paid back in under a year. Again, he went above and beyond and I’m really grateful for his help. (Although in hindsight, I wonder if it would’ve been better to build some credit by having some student loans)

    I graduated college about 2 years ago and have been working at a great job, making great money since then. I still live with my mom while I try to save up to buy a house. She’s happy to have me around and actually doesn’t want me to move out. She still pays my car insurance and cell phone bill, but I pay her $200 a week to cover those as well as other bills/expenses. I also fix and maintain her cars, mow the lawn, and do other yardwork chores, so I definitely earn my keep.

    Thanks to my family I am 100% debt free and financially independent, and on my way to living independently, too.

  4. I am 24 and successfully launched into the world. I can’t tell you how important my parents were with their kind gift of paying for college. Without that, id still be in a heap of debt! Now, the only thing I rely on them for is my cell phone. I pay them back every month, its just that you can’t beat the family plan deal, Haha.

  5. What a gift if parents can still support their 20-something children and pay for their college education. I had no assistance with college tuition or any other financial support since I was 18, not because my Mom didn’t want to help but she simply couldn’t. I am 25 now and about to graduate with my masters with very minimal student loans, I have no credit card debt, and my husband and I have saved over half of our goal for a house down payment. And he only started a job this year! So it can totally be done! My mom taught me so much more than I could have learned from her simply paying my bills or giving me money for college. I would not have had it any other way.

    • David E. Weliver says:

      Congrats, Angela. That’s quite an accomplishment and I’m sure it hasn’t been easy. Thanks for sharing!

  6. I was definitely more eager to sever financial ties with my parents than they were. I just wanted to know I could survive on my own. Whereas my mom (me being her only child) wanted me to be comfortable. I was lucky to graduate with no college debt because my mom saved for most of my childhood.
    While in college, and even after I started working, they asked for little-to-nothing financially (while I was living at home the whole time) because they simply didn’t need my help paying for things. I worked all the way through college and didn’t have to pay for much besides my own spending (leisure/gas/dining out). They paid for insurance/cell phone while I was in college.

    My mom told me this much later, but she knew I was a saver and a planner, so she let me figure out what to do with the cash I was building up. (Side note: I still remember walking into the bank with my mom at 7 years old to open my savings account with the $100 I had saved :)
    At 25, I finally decided it was time to get out of the house and bought my own condo. My mom told me after my closing that she felt like she’d accomplished everything she’d hoped for as a parent.

    So now, in my late 20s, my parents in their late 50s… I’m financially independent, and they’re traveling the world waiting to grow old, because “there’s nothing left to do” (their words).
    I can only hope to be in a similar position as a parent someday to raise a financially responsible child and still be able to give them more than they ask for (even when they never ask).

  7. I think there should definitely be a limit on what and how long parents provide for thier kids, and under what circumstances. My mom paid my car insurance while I was in college, but couldn’t afford to pay for anything else. After I moved out she downsized to a 1 bedroom apartment, so I never moved back in with her after leaving for college at 18. I had some debt from college, but now have fully paid that off and have a solid career and savings. I have friends, who also have college degrees, who lived with their parents for years (for more than a decade after graduation). Their parents paid for everything for them during college (tuition, room and board), and most things after college, including a room and a car. They never took a career seriously, and intermitantly took addtional college classes in new fields they never followed. Now they are my age and just starting out, like they are 22 again. I always felt thier parents should have kicked them out sooner (that’s what it finally took), or at least made them pay a market rate rent and utilities. I think it would have forced them to analyze and take action on thier situation sooner. I do think teaching financial independence and savings starts from a young age (I saw someone else mention making a savings acccount as a kid- something I also did), but paying for everything for your kids as adults does them no favors. In terms of college or vocational training though, I think parents should help if they are financially able to. My parents made so little money I qualified for grants, which really helped pay tuition and for books, and some living expenses. But I did have to cover a big chunk of my living expenses while in college. There’s a fine line between teaching your kids financial life lessons, and creating a situation where they will be straddled with overburdensome college debt.

  8. Helicopter parenting and the financial enabling of young adults by Baby Boomer parents is extremely unhealthy all the way around. Young adults are not learning independence, self-sufficiency, hard work, and how to sacrifice and make hard choices. Parents are throwing away their retirement savings for young people whose entire career is ahead of them – or it would be, if the young adult’s personal growth had not been stunted.

    My parents paid $20 a month for my cell phone when I was in college, and that was about it. I couldn’t afford a car, so I used public transportation. I had roommates and ate a lot of pasta. I was extremely driven to not be dependent. I learned a lot about frugality, cheap entertainment, and budget cooking.

    I am disappointed with my college-educated friends in their mid-to-late twenties who are still living at home, depending on their parents because they can never seem to keep a job. Jobs mean you actually have to work, but their parents taught them their whole life that everything should be easy.

  9. I think the answer is – it depends.. Depends on how hard you are trying to set yourself up for success. Like, if you are in grad school and living at home, that’s a positive step and you probably don’t have enough money to live entirely on your own.

    Depends on how well off your parents are. If they can give you help, it’s not necessarily a bad idea. As long as you pay as much as you can, of course. Simply living at home and not working and not going to school is just lazy.

    Depends on your past. If you are divorced, or lost your job, or lost a business, you might need help.

    I’ll be finding out pretty soon. My oldest is 19, lives at home and goes to community college, works PT but doesn’t give us much. But has used the money he earns to start a PT business too, in his college major. So I lay off him, and hope his real life learning amounts to at least as much as his college learning, and he does well for himself in life. So I’m willing to “invest” him more than I would a deadbeat kid.

  10. Denise D. says:

    I don’t think there’s anything wrong with college students or those in their early 20s remaining on their parents’ cell phone plans or getting some financial help. I’ve probably been more independent than many people my age (I’m 29), but I appreciate everything my parents and my in-laws have done for my husband and me. They helped us pay for our educations when we were in our late teens/early 20s, which gave us a strong foundation for our careers. I know they would give us a lot more if we let them–my dad keeps offering to give us money for a downpayment for a house, and we keep turning him down. And my in-laws have offered to pay for everything from my husband’s tuition (he went back to school in his mid-20s, and we paid for it out of our own pockets) to a new television when our old one died. Except for some assistance in paying for our wedding, we’ve turned them down. I would rather that our parents focus on saving for retirement.

    I do have friends who’ve moved back in with their parents, and I know that if they could live on their own, they would. (Most of them have a lot of student loan debt and low-paying jobs.) Unless your circumstances are extreme, though, I think that asking for financial support by the time you’re pushing 30 is a bit much. If you’re approaching a point in your life where you might be getting married or having kids of your own, why ask your parents to pay for your cell phone bill? I guess I just feel like there are certain things we should do on our own–buying a house or a car, for example, or paying for cell phone service. So, financial support in your early 20s? Sure, within reason. But once you’re in your late 20s, I think you should be finding a way to handle those things on your own. The Great Recession definitely set a lot of people back, so I’m not judging anyone who is getting a late start. I just think that at a certain point, you need to find a way to leave the nest and spread your (financial) wings.

  11. The best parenting move is helping your child out before they have to face the financial pressures of adulthood. It’s the whole ‘give a man a fish and feed him for a day, but teach him how to fish and feed him for life’ cliche. My parents taught me about budgeting, investing, saving, and general finance in high school. I had a plan going into college and after graduating. I was able to pay for school and get a job out of school. I never needed help from my parents, even though it was there as a safety net. If people would just be proactive instead of reactive, there would be less problems.

  12. My experience with my parents have been a great one. Like you, my parents helped me tremendously with college tuition. I still live with my parent and other than that I pay for all my expenses. Car, Cellphone, Credit Cards, Insurance, Trips, Text books, etc. I think that depending on your plans with life, staying in your parents nest can be acceptable, in some cases.

  13. It’s not clear that remaining on a parent’s cell phone plan means the parent is paying for them. These families may simply be taking advantage of the discounts offered under a family plan with the 20-somethings paying the parents for their share of the cost. That doesn’t sound dependent to me; it sounds shrewd. Why spend more than you need to on cell phone service?

  14. chelsea lewis says:

    I really enjoy the topics that are covered on your blog. Instead of just talking about finance MoneyUnder30 addresses topics that are happening in real time. I appreciate that you don’t think that 20-somethings are just selfishly living off their parents because they believe that their parents are pushovers. As a recent graduate that still lives at home I feel that if it were possible to sell a major organ on the black market in order to make enough money to move out.

  15. I think a lot of this depends on how long you are relying on your parents. If you just graduated from college and got your first job, I see no problem with living and relying on your parents for a few months. However, I also think that both the child and the parents need to have a good understanding of how long this period will last. If you can manage to save a bunch of money the first 3-4 months after college, you can really put yourself in a much better position – saving towards the deposit on an apartment, building an emergency fund, buying a new wardrob (that part may seem silly, but I know that when I graduated, I definitely didn’t have enough professional clothing).

    I agree though with some of the commenters about being financially independent. I was very lucky that between scholarships and my parents that I didn’t have any student loans. When my husband graduated, it was with a decent amount of loans (not a scary amount, but enough that it does impact our budget). We were lucky enough to live a house owned by family rent free for the first two and a half years that we were married. It was empty at the time, and we were responsible for all of the utilities, as well as the general maintenance (yard work, snow clearing,…). Overall, it was a mutually beneficial arrangement. We haven’t relyed on either set of our parents for anything other than the occassional dinner out since then. Whenever they try to pay for anything more than that, my husband and I both feel uncomfortable. My in-laws always try to pay for hotel rooms when we need to travel for family functions ( it only happens 1 or 2 times per year), but sometimes it feels like since they paid for our room, they are entitled to dictate more of our time.