Published in: Banks | Aug. 22, 2019

You Won't Believe When the Average Millennial Reaches Financial Independence

By:  Lyle Daly

We are committed to full transparency as part of our mission to make the world smarter, happier, & richer. You should know that offers on The Ascent may be from our partners - it's how we make money. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.


Here’s a hint -- it isn’t during their 20s.

woman holding empty piggy bank upside down

Image source: Getty Images

It’s not exactly a secret that millennials are taking longer to leave the nest than previous generations. They live at home longer, and many of them continue receiving financial support from their parents even after they move out.

What will surprise you is just how long the typical millennial takes before they reach complete financial independence. As it turns out, most millennials still need help from their parents well into adulthood.

The long road to financial independence

In our study on the financial independence of millennials, 63% of respondents were at least somewhat dependent on their parents for money. Those who were completely financially independent, meaning they didn’t rely on their parents at all for money, were 31 years old on average.

While most millennials aren’t relying on their parents for everything, they are accepting financial help at a stage when adults have traditionally been buying homes and starting families. In some cases, they’re even getting help from their parents during and after buying a home.

It begs the question of whether this is due to a fault of millennials or circumstances largely outside their control.

What keeps millennials reliant on their parents?

Millennials have received plenty of criticism for the amount of support they receive, even being referred to as the "boomerang" generation for the way they move out, and then return home later.

However, they don’t necessarily deserve all the blame. There are three big reasons why millennials need financial support for so long:

  • A high cost of living, especially in major metropolitan areas
  • Slow wage growth
  • Student loan debt

All those factors combine to make it more challenging for millennials to be self-sufficient. After all, it’s not as if millennials enjoy living on their parents’ dime. When we asked, 72% said that they’d like to become financially independent as soon as possible.

The costs that parents are helping with also indicate that this isn’t a matter of millennials looking for a free ride. Here are some of the most common expenses that parents either fully or partially paid for:

  • Phone bill
  • Auto insurance
  • Health insurance
  • Groceries
  • Mortgage or rent
  • Out-of-pocket medical costs

Some millennials were getting help from their parents for non-essential expenses, such as video streaming services. But what happens far more often is that parents help with basic living expenses.

How to become financially independent

Although it’s fine for your parents to lend you a hand if you need it, you obviously don’t want to depend on them forever. So if you’re a millennial who is currently reliant on your parents, it’s important to have a plan for becoming independent.

Here are the basic steps you’ll need to follow to make this happen:

  • Get a consistent source of income.
  • Make a budget so you know approximately how much your monthly living expenses would be on your own.
  • Build an emergency fund with three to six months’ worth of living expenses.

The first step can be the most challenging, but once you complete it, the rest is just a matter of time. Keep in mind that it’s good to have steady income even if you’re going to school, as working during college can help you minimize your student loan debt and even save some money.

While you won’t know what all your exact expenses will be, you can estimate them based on your current bills and the cost of living in your area. This will give you an idea of how much income you need to support yourself. Ideally, your essential expenses shouldn’t cost you more than 50% of your income.

Finally, you should make sure that you have a solid emergency fund in case you ever deal with a loss of income or a large, unexpected bill. When your parents are helping support you, it gives you the perfect opportunity to boost the balance in your bank account while you have fewer expenses.

A tough time for millennials

Millennials haven’t had it easy, especially since many came of age during the recession. On a positive note, quite a few have been able to rely on their parents for a helping hand. By putting together a smart financial plan, the millennials who do currently get support from their parents will be able to work their way towards financial independence.

Savings account rates are skyrocketing -- Earn 23x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 25x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2019.