Just in time for parents who are welcoming home graduates to their not-so-empty nests this summer, we find out that, collectively, our wealth has plummeted. The Post’s Ylan Q. Mui reported yesterday that the U.S. Federal Reserve said American families’ median net worth fell by 39 percent in three years, wiping out nest eggs and retirement savings.
More limited finances are always a burden for families. This is especially true for those who have a new curveball, in the form of an adult child who needs support. Add a new weight to that burden: Mothers and fathers tend to have two very different ideas about what form that support should take, according to a new survey
The survey of about 1,600 baby boomers and family members of boomers found that mothers are more likely to talk about finances with their adult children, while fathers are more likely to quietly slip the kids money.
Commissioned by Ameriprise Financial, it also found that the vast majority of parents have provided or are providing financial support to their adult children. It’s just that mothers may sit down and talk about the issues while fathers are more likely, for instance, to go ahead and pay for a car or co-sign for a loan.
“Women and men may be predisposed to help family members in different ways — which can cause disagreements and add to family tension if plans aren’t discussed up front,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.
I asked Baca more about the differences and about the underlying reasons for them. Here’s our Q&A:
Were you surprised by the gender differences the survey turned up?
Yes and no. I wasn’t surprised that such a large percentage of both men (95%) and women (92%) say they’ve provided some kind of financial support to their adult children, but I was a bit shocked at how strongly boomers’ support for family members follows stereotypical gender roles.
For instance, the numbers show that fathers are more likely to have helped their children buy a car and pay for car insurance. This is similar to fathers from the “silent generation” who were also more likely to help their children purchase the same kinds of things.
Another big difference was that more fathers than mothers say they’d help their adult children with credit card debt than contribute to their own retirement savings.
What are some of the repercussions to this trend besides family tension? Like more dependency or a child developing the idea that money conversations always mean conflict?
Supporting adult children can really have positive and negative repercussions. On one hand, providing necessary support to an adult child who is facing a large, unexpected expense or who is transitioning into our out of college is a way for parents to demonstrate that they care. This generosity can send a strong message and reinforce family bonds. On the other hand, providing financial support to an adult child long-term can have detrimental effects on both the parent and the child. You may unintentionally indicate that you don’t believe your child is capable of being independent, and it could even enable a lack of financial responsibility and accountability or create a cycle of dependence.
Additionally, providing excessive support can erode a parent’s own financial health. Regardless of the circumstances surrounding the financial support, parents should do their homework and assess how the short- or long-term support they’re giving their children may affect their own financial goals, and what trade-offs may have to be made as a result.
Do you have a sense that these gender differences are different than previous generations? If so, why might that be?
When it comes to the roles fathers play financially, the findings are strikingly similar, as I mentioned above. But in general, it’s difficult to assess the general roles that male or female grandparents, parents and children play when it comes to finances.
What we do know is that much has changed in the economic and cultural climate that may be creating new money dynamics within today’s families. For example, previous generations often married and had children earlier in life than individuals today — which created unique financial pressures. These people also came of age during a time period when they likely enjoyed more secure employment prospects and were not, on average, saddled with the large student loan debt that many of today’s young people are facing.
Historically, we know that many American parents have provided some degree of financial help to their adult children, and since fathers of the silent generation were usually the primary breadwinners, it makes sense that they would help more with specific purchases.
The baby boomers are a generation that, in general, saw more balance between the careers of mothers and fathers, so it’s interesting that the same trends appeared. Both female and male boomers who fall in the “sandwich” generation are now facing more pressure than ever by the need to support not only children who are facing student debt and a tough job market, but also aging parents who are living longer.
Any advice for parents who are this summer welcoming home an adult child?
It’s absolutely important that parents set clear expectations with their child who is moving back home. How long are they welcome to stay? Will they be required to pay rent or chip in for groceries? In what other ways do you expect them to contribute to the household? Take the lead on setting ground rules. If your child has concerns, listen to them, but find a compromise before they move in — and consider putting it in writing.
If finances are tight, explain to your child what you are able to help them with, and be honest. Your child may not like or expect your response, but you’ll be setting a good example by demonstrating that responsible financial decisions aren’t always easy. Keep in mind that helping your child pay for essentials (such as auto insurance, or keeping them on your health insurance) can be appropriate for a limited time period. Handing over a regular allowance for luxuries or entertainment is usually not. Once they’ve gotten on their feet, consider charging them rent, and if you’re able, set aside this money for a security deposit or down payment once they find a place of their own.
Do you support an adult child? Does your support “style” fit the gender mold?