Parents today aren’t just caregivers; they’ve become lenders, landlords, and lifelines.
The so-called “Bank of Mom and Dad” has quietly turned into one of the world’s biggest financial institutions, propping up adult children across the globe as they try to find stable ground in an economy that’s increasingly out of reach.
A $47 Billion Powerhouse
In the United States alone, a 2019 study found that American parents funded over $47.3 billion in housing costs for their children.
That amount would’ve ranked them as the seventh-largest mortgage lender in the country. But it doesn’t stop with real estate.
Parents are also helping with daily essentials, handing out an average of $1,474 a month to cover food, rent, gas, phones, even vacations, according to a survey by Savings.com, as explained in a recent episode of How Money Works.
Millennials, now well into their 30s, are still tapping into parental support to the tune of $900 a month on average.
And Gen Z is leaning even harder. A Bank of America report, cited by CNBC, found that 46% of Gen Z adults (ages 18 to 27) rely on some form of financial assistance from family.
Among those surveyed, 52% said they don’t make enough to live the life they want.
“The high cost of living is certainly impacting Gen Z,” said Holly O’Neill, president of retail banking at Bank of America.
Parents Are Paying the Price
This generosity isn’t without sacrifice. Surveys show many parents are giving more to their adult children than they’re putting toward their own retirements.
In fact, almost half of surveyed parents admitted to making financial sacrifices to support their kids, with retirement accounts being the most common source of funds.
The risks are growing. Reverse mortgages, where homeowners over retirement age borrow against their home equity, have become increasingly popular as a way for parents to raise quick capital.
While these loans offer early inheritance to children, they also come with high interest rates and long-term consequences.
Once the house is sold or the borrower dies, the debt gets paid back with whatever proceeds are left, sometimes leaving little behind.
Living at Home, Drowning in Debt
More than 50% of Americans aged 18 to 29 still live with their parents. And even those who manage to move out are often paying more than they can afford.
Two-thirds of Gen Zers spend over 30% of their income on housing, while nearly a quarter shell out more than half.
At the same time, 15% of Gen Z have already maxed out their credit cards, making them the most financially strained generation by some measures.
A New York Fed report in May confirmed that delinquency rates are climbing fastest among the youngest borrowers.
Early Inheritance, But With Strings
Many parents aren’t just helping with rent and groceries, they’re handing over serious money earlier in life instead of waiting to pass it down after death.
A University of Pennsylvania survey found that 70% of people preferred receiving $250,000 at age 30 over $1 million at age 50.
But these gifts often come with strings attached. The Savings.com survey found that 77% of parents who gave money to their kids had some kind of expectation, like how their kids live, who they date, or what job they choose.
A System That Favors the Lucky
The bottom line? Starting out today is expensive. Getting a job often requires a car. A car requires a loan.
College means more loans. Renting a place requires deposits, furniture, and a paycheck that hasn’t even arrived yet.
Kids who have even modest help from parents, a place to crash, a borrowed car, or a bailout plane ticket get a big head start in life compared to those without help.
That makes it harder for people to move up financially.
And it’s not just affecting the present. With more parents putting off retirement and more young adults delaying parenthood due to cost, this system is burdening both generations and making it harder to plan for the future.
According to Columbia Business School economist Brett House, lack of access to homeownership is “a massive challenge for wealth accumulation among Gen Z.”
If being the Bank of Mom and Dad becomes a permanent expectation, starting a family may become financially out of reach for millions.
“Many Americans are stuck somewhere between continued sticker shock from elevated prices, a lack of income gains, and a feeling that their hopes and dreams are out of touch with their financial capabilities,” said Mark Hamrick, senior economic analyst at Bankrate.
The growing reliance on parents isn’t sustainable. It’s not fair to those who don’t have parental help, and it’s putting strain on families who do.
Until the cost of simply growing up becomes more manageable, the Bank of Mom and Dad will remain open for business, whether it can afford to be or not.