The “Parent Economy” Is Struggling, Too

We’re a nation obsessed with generations.

From the Silent Generation through Baby Boomers, Gen Xers, and Millennials, we’re now focused on Gen Z. This is true not only with music, fashion, and politics – but finances, too.

For example, just in the past few weeks, I learned…

• “Nearly half of Gen Z doesn’t know what affects their credit score,” says a new USAA report. And roughly 1 in 5 have never checked their credit score.
• Though 90% of Gen Z want to own a home someday, 62% fear they never will,” says another new report, this one from the real estate platform Clever. “About 1 in 5 (21%) even believe World War III is more likely to occur than buying a home in the next five years.”
• Perhaps because they’re so cash-strapped now, 58% of Gen Z don’t feel the need to save a lot now, compared to 39% and 29% of Millennials and Gen X respectively,” says new research from the online savings platform Raisin.

Such studies are important, but I wish some of those researchers would direct more of their questions at parents. Whatever generation they are, parents suffer more than most people when the economy is dire.

This is an important issue for me not only as president of Debt.com, but as the biological father of two children, the foster parent of 15 children, and the adopted father of four children. The hard truth is that when parents suffer financially, their children can suffer physically, emotionally, and intellectually.

Thankfully, there is some research into this topic...

Family finances are getting hit hard

Families are resilient. They’re known for stretching a budget. But what happens when it breaks?

In August, a Yahoo Finance/Marist Poll survey had more bad news than good. Pollsters asked adults how their family finances were trending over the past year:

• A plurality, 40%, said their finances are about the same as they were this time last year.
• Only 27% said their finances had improved.
• A full third, 33%, said “their family’s finances have deteriorated in the last year.”

Those numbers get worse when you consider how much they’re making now. For obvious reasons, the families that earn the most are likely to say things are going well. When you look at households earning below $50,000 annually, almost half (47%) report their finances have suffered over the past year.

Children are in their parents’ debt

Another August poll asked 2,000 parents about their finances right now. Those results aren’t any better:

• “Six in 10 (59%) parents have gone into debt to provide for their children.”
• “Nearly half (48%) of parents in debt say it's becoming unmanageable."
• “63% of indebted parents feel their financial situation limits their ability to provide for their children.”

Debt also means parents aren’t providing for themselves. I’ve heard too many horror stories of parents neglecting their own healthcare – and mental health counseling – to provide for their children.

That might not show up on a bank balance, but it has long-term consequences for the country.

Parents can make progress

The most positive of August’s trio of parental polls comes from BMO, the nation’s seventh-largest bank. While “79% feel anxiety about their overall financial situation,” pollsters also asked what steps they’re taking to lessen that anxiety.

Wide majorities of parents are keeping a monthly household budget, setting long-term financial goals, and seeking financial advice online.

Because family is so important to me, I’ve made it very important for Debt.com to understand family financial problems and work hard to fix them. Don’t make the call for me or even you. Do it for your family.