Nearly 60% of parents are still supporting their adult children—Suze Orman says to cut them off!

According to the report, parents are shelling out money for day-to-day expenses, such as groceries, as well as big-ticket items, like housing (that is, help with rent or mortgage, or letting the grown-up kiddies live at home), a wedding or even helping with grandchildrens' education.

As of October 1, 2023, the average net worth for baby boomer households was $1,344,195, while for millennials, the sum was only $485,790, according to Statistics Canada.

You might say that with such great wealth comes great responsibility. But some experts, including personal finance guru Suze Orman, take a different view.

Younger generations under financial pressure

It is not particularly surprising that younger Canadians are looking to their parents to try and stay afloat during a cost of living crisis.

In a poll conducted by Canadian Credit Union Association (CCUA) millennials and Gen Z are more likely to report poorer financial health conditions and express concerns about their financial future compared to their older counterparts. Fifty-five percent admit that they have delayed major life decisions, such as purchasing a home or undergoing renovations, due to monetary constraints. Additionally, only 22% of younger Canadians under the age of 55 lack adequate emergency savings to cover six months of expenses, pointing to a vulnerability in financial security.

Younger Canadians also have an increased lack of confidence in financial institutions and personnel, with only 46% saying that they are satisfied with their dedicated financial advisor, and 57% saying they feel that their financial advisor does not understand their individual needs and concerns.

The barriers to accumulating wealth and staying comfortable have also proven to be cumbersome in comparison to past decades. According to Chartered Professional Accountants of Canada reporting, tuition has increased three times faster than inflation since 1985, nearly tripling the average student debt over 30 years. The average age of first-time home buyers has also increased by four years, as the down payment for a home has doubled relative to family income compared to 1980, forcing them to stay home longer and save. Moreover, few employers in the private sector are offering generous pension packages, or any at all.

Supporting kids can hurt parents

Even if parents don’t mind giving their kids a helping hand, 62% say they can't save enough for retirement becuase they are supporting their adult children and/or grandchildren.

For most people, withdrawing 4% of their retirement nest-egg each year — also known as the 4% rule — would allow them to enjoy a steady income for 25 to 30 years. That’s quite a bit of money to save – especially if you’ve pouring your extra income into your kids.

So which is more important to you: Yours or your kids’ financial future?

Suze Orman says stop

Personal finance celebrity Suze Orman has heard this all before – and she’s not a fan of it. She wants parents to prioritize their own wealth. She's previously advised parents to say this to their adult kids:

“I am no longer your bank account! I'm getting to the point where I need my money to be able to support myself. You are old enough now to go out and figure it out. So don't come to me for money.”

Orman also encourages you to cut your expenses so you can aggressively save and reap the rewards of interest you can earn by investing in savings vehicles aimed at retirement. For example, an RRSP yields interest and has the added benefit of reducing your taxes until you need it when you retire — a win-win.