Over half of Gen Z & millennials are financially dependent on their parents: Survey

According to a new survey by Experian and Atomic Research, more than half of Gen Z and millennial consumers are financially dependent on their parents. GenWealth Financial Financial Advisor Teresa Arrigo details steps younger people can take to improve their financial situation.

Video Transcript

RACHELLE AKUFFO: Younger demographics like Gen Zers and millennial consumers are looking to establish more financial independence from their parents. But according to a new survey by Experian and Atomic Research, more than half of Gen Z and millennials still depend on a parent to pay their bills. So how can young Americans pave their own path for financial success?

Let's bring in Teresa Arrigo, GenWealth Financial Advisor to weigh in. Thank you so much for joining us this morning. So first off, set the stage for us, how did they get into this position?

TERESA ARRIGO: I think there are a few factors that have contributed to this challenge that many are facing. I think if people are like me having solid role models and education opportunities as they were growing up was lacking.

I mean, my family, we didn't talk about money in the house. And so they may have some trouble just understanding what to do. You know, it could be that maybe their parents were avoiding it because they don't want to sound like they're bragging or they didn't want to share their mistakes. But there are so many great opportunities for your kids to learn if you're honest about that.

And, you know, if your family is tight-lipped, you may feel uncomfortable reaching out for help. And if you find yourself in that situation, I would encourage you to say nobody's going to get you to your goals if you don't take that first step and reach for them.

RACHELLE AKUFFO: That's interesting because--

TERESA ARRIGO: Another thing that kind of beaten that is the daily decision-making. You know, we all every day have to make financial decisions and decide whether we're going to spend our money on this or that. And if you don't have some sort of framework, which we call a budget-- I know it's not a popular word-- that helps you align your spending with your values, then you could get in a pickle pretty fast.

And Teresa though, I mean, it does seem like there are a lot of tools to get a better handle on your financial literacy. I mean, a lot of us grew up, our parents didn't really talk about it. As you mentioned, it could be a privacy thing or they didn't want to burden their children.

But when we do still, we hear all these things, these AI tools, ways to automate it. Why then is that not correlating to the results that we should be seeing here?

TERESA ARRIGO: Because I think when you take something that's very personal and you try to use universal methods, sometimes it just gets lost in translation. There's a lot of information on the internet, not always a lot of wisdom. And your goals are unique to use. So if that tool or that software or that person you're going to is giving you just broad strokes, it may not feel like you can really apply it to your life and you just lose motivation.

RACHELLE AKUFFO: And so I want to ask you about some of the key findings because some of it is about sort of earning the money and some of it is about how you're spending your money as well. Talk about that dynamic.

TERESA ARRIGO: So a lot of people think that this is an income problem, that people are struggling to live. You know, we're living paycheck to paycheck because we don't earn enough. But what we have found in meeting rooms with clients is that it's often a spending problem, either overspending or impulse spending, as well as what we call lifestyle inflation.

So I know people who are lawyers and doctors who lived paycheck to paycheck. And I know people who are doing great, that make less than $50,000 a year. If you build healthy habits or you start incorporating those into your life, you'll find that the check goes further if you just manage it better.

RACHELLE AKUFFO: And I want to ask you about credit scores because a lot of people wonder, is that something they should start establishing very early on or should it be closer to the time where they're going to need to make a major purchase and it becomes more relevant? Talk about some of the findings from the study on credit scores and how they're faring.

TERESA ARRIGO: So a lot of people want to have good credit, but a lot of people don't understand how to build it. Credit is important if you're going to buy a home, especially with interest rates where they are right now or buy a vehicle if you don't have cash to pay for it. But a lot of people because they're staying on mom and dad's record, they're not building their own credit score.

And we actually did a podcast on this just recently. And so what we found was there are a lot of miscommunications out there. A lot of people think that they need to carry a balance, which is not accurate. That does not build up your credit score quickly. What builds it up is consistency-- using it, paying it off consistently and not having late bills. And this extends to medical bills. Utility companies often will share your score, report to crediting companies as well.

So there are a lot of things you can do to build that. But really, it's about having things that are in your name that you're paying on time consistently and not being stretched too thin.

RACHELLE AKUFFO: And it certainly doesn't help that the cost of living if you're trying to pay rent or trying to move into a new house. Yeah, you probably would be more likely to stay at home with your parents. So if there were some top tips though, in really sort of gaining your financial independence and how to work through that so that you can be less reliant on your family members, what do you recommend?

TERESA ARRIGO: First thing I would recommend is educate yourself. Again, I mentioned, there's a lot of information, not a lot of wisdom, so make sure you vet your resources. But take some time to understand what options you have to-- what things are out there.

Next thing I do is align your decision-making with your values. So we've got some tips here about removing your cards from shopping websites so that you're not as likely to make those impulse purchases, requiring a cooling off period if you tend to overspend before you buy an item. If you have access to an employer plan, it is a beautiful tool. Please, please, please contribute to get your match. And then create your budget and stick to it.

RACHELLE AKUFFO: And I know it's tough to do. It's one of those things where simple doesn't necessarily mean easy, but at least if people have a roadmap, they can start somewhere. A big thank you there to Teresa Arrigo, GenWealth Financial Advisor. Thank you so much.

TERESA ARRIGO: Thank you.