Money is Tighter for Millenials: 40 Percent of Adults Age 26-41 Rely on Some Parental Financial Support

Young people lack any room for financial mistakes.


The U.S. economy has been in a strange place since the Covid pandemic struck in 2020. Over the past year, the nation has struggled with record-high levels of inflation, prompting the Federal Reserve to raise interest rates. However, unemployment has remained low despite rising interest rates and growing layoffs in the tech industry. The January 2023 jobs report showed an astonishing 517,000 new jobs added, defying expectations. It’s a tough world out there, with analysts struggling to explain why Americans are predicting an impending recession and seeing strong GDP growth and new job numbers.  

But despite high levels of growth, it is undeniable that much of the “growth” is inflationary. And Millenials, born between 1981 and 1996, are struggling financially compared to their Gen X predecessors. New survey data reveals that 40 percent of Millenials receive at least one form of financial support from their parents, with 24 percent receiving rent assistance and 17 percent receiving mortgage (home loan) assistance. While most readers would not be surprised that Gen Zers in their early twenties were still receiving financial assistance from parents, it may be surprising that Millenials in their thirties are still needing such help.

Rising Costs of Living Mean Young People Need More Financial Literacy

Unfortunately, high inflation has sapped Millenials’ real wages, or purchasing power. The rising cost of living, especially when it comes to housing costs and college expenses, means that young people have less room for error when it comes to financial literacy. While previous generations may have had more “wiggle room” for young people to learn about money management as they entered adulthood, today’s high costs mean that any initial money mistakes for those in the 18-25 age bracket tend to compound.  

Younger Millenials and members of Gen Z, due to more of their wealth and income going to expenses like rent and college tuition, are facing a higher rate of inflation than older consumers. This trend will likely continue, as housing costs and college tuition rates have outpaced inflation for decades. And with the Fed still raising interest rates, young people exiting high school and entering the world of credit, debt, rent, and mortgages are facing greater financial stresses than the previous generation.  

With no room for error, high school graduates need a solid financial literacy education. More of them will have to borrow money for higher education than in previous generations; it is no longer feasible to “work one’s way” through college like in the 1960s and 1970s. With even auto prices highly inflated compared to previous decades, young people will have to know how to budget carefully, compare buying options, and manage their credit scores. Gone are the days when ambitious young people could go out in the world and “bootstrap” their way to financial success.

Hopefully, states will recognize the increasing financial challenges faced by Gen Z and push to include standalone personal financial literacy classes as part of the required high school curriculum. If even 40 percent of Millenials are not fully financially independent, what fate might befall Gen Z if states do not act to ensure financial literacy? This not only would hurt them, but also their parents, who would be forced to assist their struggling children long past the traditional beginning of adulthood. Boomers and older Gen Xers, even though they had an easier financial path when younger, are now facing a retirement crisis that is made worse due to being supporters of the boomerang generation – adult children having to live back at home. Some are even also caring for aging parents at the same time, giving them the name sandwich generation, draining any retirement savings.

About the Author

Owen Rust

Owen Rust teaches AP Economics and AP Government in Texas, and has also taught Personal Financial Literacy, which Texas high schools must now offer! He has a Master's degree in Finance and Economics from West Texas A&M University and is passionate about young people learning how to take charge of their financial and investing goals. Outside of teaching, Owen is also a writer who writes about politics, government, education, economics, and finance and investing.

Last updated on: February 6, 2023