Smart SpendingSmart Spending

Gen Y's parents shell out cash, but remain hopeful

41% are helping support young adult offspring, but they still expect their kids to do as well or better than they did, survey finds.

By Teresa Mears Apr 28, 2010 4:04PM

Even though more than 40% of “sandwich generation” parents are providing financial help to young adult children, they still expect those children to do better financially than they did.


Is there some disconnect there?


According to the Charles Schwab 2010 Families & Money Survey, which polled 1,000 parents of children ages 23 to 28, a total of 41% are still providing financial help to their offspring -- though 86% say they were financially independent by 25.


Not surprisingly, college loan debt and unemployment were the top two reasons parents cited for their children’s financial dependence, with 32% of parents citing student loans and 31% citing joblessness. However, 25% of parents cited overspending and 19% identified consumer debt as reasons their children couldn’t support themselves.

A recent story about Generation Y and finances in USA Today noted that young adults leave college with an average of $23,000 in student debt, up 24% since 2004. They also have suffered high rates of unemployment or underemployment.


But many of their financial problems may be of their own making, the story observed. It quoted a 21-year-old college senior who said, "I work at a part-time job, have incredible debt and get food stamps. I'm still short on rent every month.” She added: “My friends all want the newest and best things. They spend money on them any chance they get."

Some young people believe they can make a lot of money and afford large purchases, even when they can’t.


"They have high, unrealistic expectations," Lee Jenkins, author of "Lee Jenkins on Money" and a managing partner of Atlanta Capital Group in Atlanta, told the newspaper. “And many of them don't manage money very well."


According to the Schwab survey, many of the parents still think their children will do well in the long term, with 49% expecting them to do better than their parents did and 33% expecting them to do just as well.


Interestingly, the parents rated themselves pretty much the same on fiscal fitness today as they rated themselves as young adults: About half found themselves a little bit “fiscally flabby.” About 37% rated themselves fiscally fit now vs. 31% who said they were fiscally fit as young adults.


Are the parents paying the price for their own mistakes?

If they didn’t make their children do chores when they were young, they might be. The survey found that young people who had done chores as children were more fiscally responsible than those who hadn’t.


Helping out their kids instead of saving for retirement can really hurt parents in the long run, Jeff Brown wrote at

Suppose an assortment of parenting costs come to $500 a month for five years, starting when the parents were 45. If that money was invested instead at an 8% annual return it would grow to $36,707 in five years, according to the Savings, Taxes & Inflation Calculator. Over the next 20 years that sum could grow to $171,000. How many 70-year-olds wouldn’t like to have that?

Whose fault is it? Are young people staying dependent longer because of the economy? Or is that just an excuse? Did their parents fail to teach them financial responsibility, or are they just spoiled and not willing to delay gratification?


Related reading:



Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.