Should college graduates be financially independent? Parents and young adults disagree

Personal finance

More than 4 million new college graduates will head out into the world this month, but it could be years before they pay their own own way.

Most people feel like a grownup by the time they’re 18 — and certainly once they have a college degree — but many young adults do not become financially independent until they are well into their 20s.

While older generations are more likely to think that their kids should be completely financially independent by the time they turn 21, young adults say that’s is a good age to start paying some of their own expenses, such as card card bills and travel costs — although they believe covering health insurance, student loan bills or rent should come even later, according to a report by

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“There’s definitely a disconnect between parents and adult children,” said Ted Rossman, Bankrate’s senior industry analyst.

Young adults face financial challenges

In part, millennials and Gen Z face financial challenges that their parents did not as young adults: On top of carrying larger student loan balances, their wages are lower than their parents’ earnings when they were in their 20s and 30s.

Inflation has made it even harder for those trying to achieve financial independence. Soaring food and housing costs pose additional hurdles for young adults just starting out.

Now, 68% of parents with children over age 18 are making a financial sacrifice to help support them, according to Bankrate’s report.

Parents are sacrificing their own financial health

From buying groceries to paying for cell phone plans or covering health and auto insurance, parents are spending more than $1,400 a month, on average, helping their adult children make ends meet, a separate report by found.

For parents, however, supporting grown children can be a substantial drain at a time when their own financial security is in jeopardy. 

Paying those bills “can also put your own retirement and other financial goals at risk. You can get loans for a lot of things, but retirement isn’t one of them,” Rossman said.

About half of parents with adult children said that support has come at the expense of their own emergency savings or ability to pay down debt, while slightly fewer said supporting their children has been detrimental to their retirement savings, Bankrate found.

Kids have to realize that the quid pro quo here is that they’re going to be expected to take care of their parents.
Laurence Kotlikoff
president of MaxiFi

“It’s hard to know exactly where to draw that line,” Rossman said. Make sure the assistance works within your budget and be clear about the parameters — at the very least, discuss it, he advised. “It might help to attach a specific dollar amount or timeframe.”

“Everybody is everyone else’s lifeboat when it comes to hitting an iceberg,” Laurence Kotlikoff, economics professor at Boston University and president of financial planning software firm MaxiFi, told CNBC recently.

However, “it has to go both ways,” Kotlikoff said. “Parents are providing a lot of support, and the kids have to realize that the quid pro quo here is that they’re going to be expected to take care of their parents.”

Having an open dialogue can help, he added. “Once that conversation gets going, it can continue for the next 40 years.”

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