Millennials–those aged 18-37–have proven to be a distinct and unique generation—especially in the area of finances. And according to the U.S. Census Bureau—they have surpassed Baby Boomers making them the largest living generation in the U.S. A study conducted by CreditCards.com and cited by USA Today revealed that 74 percent of parents financially support their grown millennial children in some way. TD Ameritrade’s 2017 survey revealed millennials collect an average of $11k in parental support per year.
Let that sink in. Baby Boomers are giving away over $10K in cash and services to their grown children. Most of the assistance (84 percent) goes toward helping with daily living expenses. And 70 percent of that money is spent helping kids pay down debt—most notable student loans.
These numbers are especially disconcerting for Boomers who are in or very close to retirement. Because every dollar counts. And while millennials are not intentionally trying to financially ruin their parents here are four ways they are doing just that.
Millennials grew up with constant access to technology and social media which contributes to their constant need for feedback and approval. They love attention. Motivaction International conducted a survey and found that this generation is the most attention-starved generation ever. And, they compete for attention in ways other generations do not.
Millennials are not racing up the corporate ladder. Instead, they are competing for “likes” and followers. They strive to be social media influencers and to embody what their generation considers successful. They may not live in mansions or drive exotic cars but their idea of luxury and success can be just as expensive. They often chase freedom and internet fame and pass on opportunities that can facilitate financial stability. They chase fluidity and seek self-expression. Self-expression comes at a cost and most often, it doesn’t pay well. They are paid in “likes” while their parents pay their cell phone bill and car insurance.
The millennial generation is not a nine-to-five group. They are drawn to startups, side-gigs, and freelancing. They value their free time. The problem with that is time is money. It is the paradox of the ages. If you chose to prioritize family you sacrifice income. When you choose to provide economic stability and give your family expensive things, you sacrifice spending time with them. Boomers and Millennials are on opposite ends of the spectrum on this issue. And regret from past experiences may be why some Boomers support their children’s decision to chase their dreams despite the cost. But that guilt can be expensive.
It’s not uncommon for a Millennial to remain on one job for only two or three years before moving on. Millennials are always looking for the next best thing. They also seek unconventional ways to make money. Which again, isn’t a bad thing—when done strategically. However, the unconventional usually comes without health care, a 401(K) and financial stability. It is hard to get this younger generation to comprehend and digest the fact that taking a job to make ends meet does not equate to selling your soul for a dollar.
It is also normal for millennials just out of college to hold out for their dream job. Or they start their own thing (making little or no money) in lieu of taking an entry-level position. According to Forbes, the average “entry-level” job paid new graduates about $50,000 annually in 2016. The average grad in his/her twenties can expect to spend just over $350 per month on student loan payments for at least 10-12 years. The longer they put off getting a job that pays a decent salary, the longer their repayment period will be. And guess who will have to help continue footing the bill while they chase the “unicorn” job?
Baby Boomers are a generation that epitomizes grit and determination. They are hard workers and often forsake happiness and their own personal fulfillment to provide for their family—and yes, to acquire nice things. But they understand and grasp that sacrifice is a necessary part of life. Millennials aren’t trying to hear that.
Millennials believe that they can and should be happy–now. And that thinking isn’t bad—if it’s balanced. Millennials want to have free time to hang with friends, vacation with their family and live life on their own terms. The problem with this is everything in life comes at a cost. It costs time, money or energy. In order to have one thing, you have to sacrifice another, at least for a while.
Since millennials aren’t willing to concede their happiness for any length of time, their Boomer parents are picking up the slack. They are compelled to foot the bill while their kids chase happiness and find themselves. They value experience over tangible objects—like money—and can be unwilling to make concessions that are financially sensible.
Living At Home Longer
An increasing number of young adults live with their folks. According to Market Watch, in 2014, 31 percent of adults aged 25- 29 lived in a multigenerational household. And that number has steadily increased. The percentage of 18-34-year-olds living with their parents has surpassed all other living arrangements.
These adult children do save money on housing and living expenses, but their parents are the ones who absorb the added expense. Fidelity Investments and Stanford Center on Longevity conducted a study of Boomers supporting adult children. Their research found that 76 percent experienced a significant spike in expenses.
The added cost of supporting adult children is more than just financial. The study also revealed that 68 percent of those surveyed reported feeling more stressed, 53 percent were less happy and another 53% have less leisure time since the return of their “boomerang kids.”
Ending the boomerang effect
Before you overextend yourself into supporting grown, mentally and physically able-bodied adult children, there are a few things you should consider.
- What caused the debt or hardship? If it’s a medical condition, major life event such as a divorce, job loss or catastrophe then, of course, you want to help your kids. But if the cause of the hardship is poor decision-making or laziness—your help enables the behavior and can further cripple your kids.
- What are your motives for helping? Responding out of fear and/or guilt is the quickest path to bad decisions. Even though your kids are grown, you are still their number one role-model. You have to love them enough to do the right thing. And sometimes that means saying “no,” or placing limits on how long they can live with you and how much help they can receive.
- Can you afford to help them? This, by far, is the most important question. If you don’t have the means and/or the resources to help them, don’t do it. Think about the airplane model. You have to put your own oxygen mask on before you help others. You have to ensure that you are financially ok and in a position to help or you risk hurting your child and yourself. And when you do help, it should only help at the level at which you are able.
Part of parenting is teaching children how to be resilient, creative, innovative and resourceful. Sometimes, the best way to teach them these things is by letting them go.