The cost of raising a child in the United States has surpassed $300,000 for the first time this year, not including college tuition, prompting more and more young families to seek financial assistance from parents or grandparents.
According to the latest survey from the Bank of Montreal (BMO) Real Financial Progress Index, nearly two-fifths (37%) of parents with young children expect to receive support from their own parents or grandparents in the coming year or plan to actively seek financial help. Among these respondents, 47% indicated that relatives would provide cash to supplement daily living expenses, while about a quarter (26%) of parents expect family members to contribute to their child’s 529 education savings plan or other savings accounts.
Robin Growley, Head of BMO’s U.S. Consumer Product Business, stated, “Families trying to deal with the rising cost of parenting are indeed heavily relying on help from extended family.”
The survey revealed that parents receiving family support save an average of $1,915 per year on childcare and temporary care, and $1,443 on groceries.
Gisele Ayora, a 36-year-old marketing professional and mother of three children, received a significant amount of support from her in-laws, who purchased a $600,000, six-bedroom home in Manahawkin, New Jersey for her family. They requested the couple to pay around $1,700 per month, roughly equivalent to the rent they previously paid for a two-bedroom apartment, about half of the mortgage payment.
Ayora is currently separated from her husband and receives less financial support, living with her mother to reduce housing expenses. She stated, “That’s just how people get by.”
Lindsey Stanberry, founder of the personal finance website The Purse, mentioned that family assistance has a similar effect to receiving a portion of inheritance early when young families need money the most. She pointed out that the Baby Boomer generation holds considerable wealth, while their adult children face high housing and childcare costs.
For grandparents with tighter budgets, providing support may squeeze their retirement planning. 59-year-old Haron Marlee estimates spending $24,000 a year on diaper costs for her grandchildren, and covering expenses like gas and car insurance for her adult daughter.
Initially planning to work part-time and focus on her own health after moving from New Jersey to St. Johns County, Florida, Marlee eventually resumed fixed temporary caregiving and bartending jobs. She remarked, “These burdens have completely changed my financial situation and retirement plans.”
Lorie Jones, principal of Fearless Financial Advisors in Colorado, stated that about 20% to 25% of her clients continue to fund a significant portion of their adult children’s expenses, even until the children reach their late 20s. She added, “I have to tell some parents, ‘You have to take care of yourself first,’ you need to prioritize your retirement lifestyle.”
Marlee suggested that parents financially supporting adult children should establish clear rules and boundaries, and set an end date for the assistance. She reached a formal agreement with her daughter later on: her daughter helps with cooking and cleaning in exchange for temporary rent-free housing.
Marlee’s daughter has since begun contributing to household expenses and rent. Marlee concluded, “You can’t jump into the rapids with your kids, you just have to pull them out.”