Ep.9 - Supporting Your Parents

It is often said that millennials get support from their parents, either by living at home rent-free or having their lives subsidized by their parents. The article "Many Millennials Still Live With Their Parents Even After the Recovery", quotes census data noting that 1 out of every 3 millennials still lives at home. Am I shocked?

Not at all

I have no doubt about the truthfulness of this statistic. However, it doesn't tell the whole truth. While this is happening to 1/3 of  millennials, the opposite is happening at the same time, where millions of millennials either already are or will soon need to financially support their parents.



Providing financial support to parents impacts one's own ability to achieve financial freedom.  Personally, my wife and I pay some of our parents' bills every month. I know I am not alone in this, because I am surrounded by others who are just like me.  What exactly do I mean by others like me? I mean millennials with immigrant parents.

According to Pew Research,  "11% (of millennials) are U.S.-born children of at least one immigrant parent. That share is higher than for Gen Xers (7%) or Boomers (5%)". That's 1 in every 10 millennials. Many older millennials are already supporting their parents. This may not be true for every immigrant family, but anecdotal stories from friends around me make me believe this is typical for millennials with immigrant parents.  


The burden of providing financial support to parents also disproportionally impacts two other large groups, minority households and working class households. 

Three Groups Provide Financial Support.png

Minority households, specifically African Americans, are disproportionally affected.  We know net worth through homeownership is a proven wealth builder and savings compeller. According to the Federal Reserve, " in 2013, the average homeowner boasts a net worth ($195,400), that is 36 times that of the average renter ($5,400)."

African Americans had a late start in accessing homeownership, a very late start.  Two significant historical factors impacting African Americans are 1) the broken promise of the G.I. bill and 2) redlining. The first factor systemically made housing benefits unavailable to African Americans soldiers. At the same time White soldiers were able to reap the benefits, helping to create a White American middle class and allowing larger segment of White Americans to pass on wealth through homeownership. The second fact, redlining,  made financing options close to impossible for all African Americans for decades. If you want to learn more, check out  "How Homeownership Became the Engine of American Inequality" from the New York Time. This provides a much more nuanced explanation of what I briefly (and inadequately) laid out here. 

Working-class households, especially those with manufacturing and retail jobs, are affected as well. 5 million jobs have been destroyed since 2000.  The effects whole towns and cities. When parents can't find adequate replacements for these jobs that in the past came with benefits, millennial children have to step in and provide financial support. This impacts a millennial's ability to save and achieve personal freedom and can create a generational cycle that is hard to break.  


SO What is an African american working class millennial with immigrant parents to do? 

YOU ARE NOT ALONE:   The first thing you should know is that you are not alone. Millions are in the same boat. This may not be a topic that comes up easily at work or even with your closest friends, but you should know it is a VERY common financial burden for millennials with immigrant parents.

MEANINGFUL SACRIFICE:  From time to time, you may feel a lot of stress because you can't buy the things YOU want, when you need to set aside money for your parents. Whenever you have that stress, just imagine the joy you get from buying the thing you want, and stack it against the joy you get by providing peace and love to your parents.  The chances are, it is a meaningful sacrifice, that very few things can trump.

MANAGE YOUR EXPECTATION:  You need to make peace with yourself that this is going to be long term support, instead of a quick fix. They key is to permanently make room in your budget and automate this payment, so you don't see it, thus you don't think about it as much.

PRIORITIZE NEEDS OVER WANTS:  It is important to put your financial support behind where it's needed most. It is not beneficial to pay for everything or to sprinkle a little support here and there. The best way to support your parents is to separate needs from wants. The most common types of needs are housing, utilities, food, and healthcare. You should focus on providing support for possibly one of these areas by creating a budget with your parents. This can be a tough conversation with parents. Have the conversation and make it clear how you will provide support. 

PAY BILL DIRECTLY:  It is much better for you to pay your parents' bills directly. This creates full transparency and you see the purpose of your support. By doing it this way, you won't ever have doubts whether your parents use the money wisely or not.



This should not leave you depressed. Financial freedom may still be possible. We are getting practical in the next few episodes. I am creating a section called "Practical Finance", where I will touch on topics that are actionable instead of thought-provoking, like how to create a budget and how to read your medical bill.  See you next Friday!

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