Time to Leave the Nest? The High Price of Financing Adult Kids

Time to Leave the Nest?
The High Price of Financing Adult Kids

There’s no question that living costs have skyrocketed in recent years. Circumstances like an unpredictable housing market, inflation and now tariffs are seriously affecting family budgets—and in some cases, delaying when adult kids “leave the nest” and become financially independent. Houses, groceries, cars, student loans and other costs have caused plenty of people to reshuffle their spending habits to make ends meet. But are these rising expenses enough to justify older parents sacrificing their retirement savings—and delaying or missing their own life milestones—to help their grown kids stay financially afloat?

There’s a concerning trend of parents who give their grown kids financial support, and often without any strings attached. In fact, nearly 50% of parents report assisting their grown children with some aspect of living costs. And on average, these parents are spending $1,474 each month to help with their adult kids’ living expenses, covering things like groceries, cell phone bills and even paying for vacations. That’s more than double what most parents put into their own retirement accounts each month!¹ While this might seem like a generous thing to do, I actually see this as a huge problem—and one that we need to talk about. Aside from a few special, temporary circumstances when it makes sense to help adult kids cover their expenses or let them live at home, this behavior has got to stop.

Before I explain situations when it might make sense and be helpful for an adult child to move back home, or for an older parent to help their grown kids cover monthly expenses, here’s the big point I want to make clear: Adult kids have more time and more opportunity to make money and get their financial lives on track than older parents.

Adult kids have decades ahead of them to learn valuable job skills that will improve their job opportunities and increase their income. They have more time to invest in the stock market, ride out market fluctuations, and experience compound growth. They have more time to meet and marry a spouse to build a life with and work together to hit big life milestones, like buying a house and raising a family of their own.

While older parents probably have more savings than their kids, they simply don’t have the same amount of time to make strategic, long-term money moves. This means each financial decision carries a lot more weight. At this stage of the game, it’s important that parents keep contributing to their retirement, spending responsibly, and giving to causes they care about if they’re able to do so. But when supporting an adult child puts the parents’ retirement contributions at risk or limits their ability to pay for services or valuable lifestyle choices (like healthcare or traveling to spend time with other adult children), that’s a big problem. Not only does inappropriate giving hurt the parents’ money situation, but it can prevent the adult child from maturing into an independent, confident adult. After all, learning how to manage money and navigate the challenges of living on their own is a huge step to becoming a healthy adult.

If adult kids do need financial help, here are some wise ways older parents can protect their finances while also practicing generosity:

1. Agree on a financial assistance timeline. Will parents pay for rent until the child’s student loans are paid off? Will parents pay for car insurance if the child applies to a certain number of jobs each week?
2. Put conditions in place so parents benefit from the agreement too. Have kids contribute to the household or help their parents in other ways.
3. Make a written agreement that explains who pays for what, for how long, and what the consequences are when the agreement isn’t respected.
4. Parents should only contribute what they can comfortably afford. In other words, make a budget and stick to it! (I recommend checking out the free EveryDollar budget app to get started.)
5. Practice generosity in a way that doesn’t involve spending money. This could look like offering childcare while adult kids take on extra jobs or giving them hand-me-down furniture when they move into a new apartment or house.

Now, let me be clear. I don’t have a problem with parents helping their kids get back on their feet during tough times. For example, when adult children move back home as a temporary solution to save on rent while they save up a down payment or work hard to pay off student loans. Stressful situations like a job loss, medical emergency, divorce or even the aftermath of natural disasters are valid reasons to assist your adult child with basic expenses or let them move back home—for a time. In those cases, helping kids becomes an act of generosity, not a form of enablement or self-sacrifice.

Every situation is different, so it’s up to you to figure out what makes the most sense for your family and your circumstances. Just remember to prioritize your future first.

* Rachel Cruze is a two-time #1 national bestselling author, financial expert, host of The Rachel Cruze Show and co-host of Smart Money Happy Hour. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people how to avoid debt, budget and win with money at any stage in life. She's an energetic and thought-provoking speaker and has been speaking to audiences as large as 10,000 since the age of 15 when she began making appearances with her father, Dave Ramsey. She has appeared on Good Morning America, Today, Live With Kelly and Ryan, CNN Tonight, Fox and Friends and the Rachael Ray Show and has been featured in the Woman’s Day, Success and Real Simple magazines. Rachel believes it’s possible for anyone to turn around their finances, win with money, and build a life they love. Follow Rachel on YouTube, Instagram, TikTok, Facebook and X.