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As Adinah Caro-Greene plans her financial future, there’s one variable that may have had less impact on previous generations: her children.
The employee benefits broker said she sees rising education, housing and health care costs creating financial challenges for her Gen Z sons and peers. Part of the Bay Area resident’s long-term financial goal is to pay off in full the rental property he can inherit and potentially live in.
“Life is especially difficult for children right now,” said Caro-Greene, 45. “Seeing how difficult life is for my son’s generation inspires me to try my best.”
Carlo Green is not alone. A Bank of America survey of about 2,500 adults released earlier this year showed that a majority, or 53%, of Gen X parents are concerned that their children may need financial support as adults. In comparison, the proportion of parents of all generations is only 37%.
Generation X is a “sandwich” generation, facing the financial pressure of supporting retired parents and adult children at the same time. Most Americans are grappling with runaway inflation in the wake of the pandemic, but parents in this age group are particularly concerned about whether their relatives will be able to survive without financial assistance.
The “worried” generation
Tom Thiegs, a family wealth coach at U.S. Bank Ascent Private Capital Management, said Generation X has grown up in less than ideal economic conditions, which can exacerbate uncertainty. Notably, he noted that they have witnessed four of the five largest stock market crashes in history during their lifetimes.
They were the first to mainly use He said 401K plans are for retirement, not pensions. Now, Tiegs said, this group is also questioning whether Social Security and Medicare will last long enough for them to enjoy the benefits of the systems they helped support into adulthood.
The clients Tiegs spoke to were “concerned,” but not to the point of “paralysis,” he said, explaining that these clients had been through recessions before. Instead, he notes that Gen Xers have a mindset of being ready for any unexpected blow.
“It’s not just doom and gloom for Gen X,” he said. “There’s also this understanding that we’re going to be able to solve this problem.”
Gen In fact, a Bank of America survey found that 79% said their children were able to “successfully” manage their finances.
Instead, Tiegs said, this financial stress stems from factors beyond the control of the parents or children. He pointed out that in addition to rising prices for daily necessities such as groceries, rising housing costs are also contributing to Gen Z’s greater financial instability.
mom and dad’s bank
Carol-Green said it’s common for parents she knows to donate money to their young children, especially given the high cost of living in the San Francisco area. She said it was a particularly difficult time because she describes herself as The job market is tough for those entering the white-collar workforce.
Expenses can add up for even the youngest people in corporate America. one Savings.com Survey A report released this year found that parents who provide financial support to their children spend an average of $1,384 per month. When only considering Generation Z offspring, that number jumps to $1,515.
That could raise questions about how long or to what extent parents should pay for their children’s adult lives, said Marguerita Cheng, a mother and certified financial planner. The answer, she says, is both simple and deeply personal.
“I would never tell you not to help your child,” said Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. However, “it’s important to have boundaries or limits on giving.”
Cheng said parents should avoid helping their children lest they themselves deplete their savings and find themselves in trouble in retirement. She also said parents can try to remove the stigma around discussing money and decisions like living at home after college.
For those in a position to help, she finds clear guidelines can be a helpful tool. For example, parents might set a cap on how much money should be given to a child who moves, or spread the funds gradually over a predetermined time frame.
Based on his experience with Generation X, Tiegs found that this generation views their money and how to use it differently. It’s an equation that increasingly includes children and other family members, he said.
“Their view of money has become more holistic,” Tiegs said. “It’s not just about balancing your checkbook, it’s about knowing what I want in my life long-term.”
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