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As Adinah Caro-Greene charts her financial future, there's one variable that may have carried less weight for previous generations: her child.
The employee benefits broker said she saw how rising costs of education, housing and health care created economic challenges for her Generation Z son and his peers. Part of a Bay Area resident's long-term financial goals is to fully pay off a rental property that he or she can inherit and potentially live in.
“It's uniquely difficult for kids now,” said Caro Green, 45. “Seeing how difficult it is for my son's generation encouraged me to do whatever I could.”
Caro Green is not alone. A majority — or 53% — of Generation This compares to only 37% of parents across all generations.
Generation X is the “sandwich” generation, facing the financial pressures of simultaneously supporting parents in retirement and children as they reach adulthood. Most Americans are struggling with the hyperinflation that has followed the pandemic, but parents in this age group are uniquely focused on whether their relatives will be able to get by without financial help.
An “anxious” generation.
Gen. He specifically noted that they witnessed four of the five largest stock market crashes in history during their lifetime.
They were among the first to use 401k plans for retirement instead of pensions, he said. Now, this group is also wondering whether Social Security and Medicare will stick around long enough for them to reap the benefits of the systems they helped support throughout their adult lives, Thiggs said.
He added that the clients Thiggs talks to are “concerned,” but not to the point that makes them “paralyzed,” explaining that these clients have gone through periods of economic recession before. Instead, he observed a mindset among Generation X of being prepared to roll with any unexpected punches.
“It's not just doom and gloom for Generation X,” he said. “There is also this understanding that we will be able to discover.”
Generation X parents don't necessarily worry that they'll be on the hook for their children's poor financial choices. In fact, the U.S. Bank survey found that 79% said their children were able to manage their finances “successfully.”
Instead, this economic pressure stems from factors beyond the control of the parents or children, Thiggs said. Beyond rising prices for everyday necessities like groceries, he pointed to rising housing costs as a factor that has left Generation Z in a more financially precarious position.
Mom and Dad Bank
Caro-Green said it's common among parents she knows to give money to their young children, especially given the high cost of living in the San Francisco area. It's a particularly difficult time, she said, because of what she described as a tough job market for those entering the white-collar workforce.
Expenses for even the smallest American businesses can add up. A Savings.com survey published this year found that parents who financially support their children spend $1,384 a month on average. When looking only at Generation Z offspring, that number rose to $1,515.
That can lead to the question of how long, or to what extent, parents should pay their children's bills into adulthood, according to Margarita Cheng, a mother and certified financial planner. She said the answer is simple and very individual.
“I would never tell you not to help your child,” said Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. But “it is important to have limits or boundaries on giving.”
Parents should avoid helping their children to the point that they themselves will deplete their savings and struggle for retirement, Cheng said. She also said parents can try to remove the stigma around discussing money and the shame around decisions like living at home after college.
For those who have the means to help, I've found that clear guidelines can be a helpful tool. For example, a parent may set a cap on the amount of money they will give to a child who is moving, or distribute money gradually over a predetermined time frame.
Looking at the experiences of Generation X, Thiggs found that the generation thinks differently about their dollars and how they use them. It's an equation that increasingly includes children and other family members, he said.
“They have expanded to a more holistic view of money,” Thiggs said. “It's not just about balancing your checkbook, but also understanding what I want in my life long-term.”
