Bringing up money has traditionally been a taboo topic, causing many to shy away from it. We found that Americans would rather talk about anything besides money. Unfortunately, money conversations are necessary to have with loved ones when finances get tight and options are scarce.
Borrowing money from close friends and family can be an ideal (and sometimes the only) option when factors like bad credit push other alternatives out of reach. A Gallup poll found that Americans borrowed $88 billion in the past year to cover medical expenses. A lack of funds and rise in overall debt drives people to borrow from wherever they can to cover major expenses like these.
We recently found that 2 in 5 people wouldn’t loan money to anyone, but we wanted to know how those stats could change if the roles are reversed. We asked 1,000 Americans who they were most comfortable borrowing money from. You can read our key findings below.
- Nearly 3 in 5 Americans are most comfortable borrowing money from parents
- Women are more comfortable borrowing from parents than men
Americans Are by Far the Most Comfortable Borrowing Money From Parents
Regardless of age and gender, parents are the number one choice for all Americans in regards to borrowing money. This is likely because parents are willing to do a lot to financially assist their adult children. Parents have several reasons to do this, including wanting to give their kids a better life and believing they are investing in their child’s future.
Guilt is an additional reason fueling their eagerness to help. Student Loan Hero found that 2 out of 5 parents feel guilty for not saving more for college. Regardless of if children are aware of their parents’ motivations, the foundation of support their parents provide enables comfort and cuts out (at least some) of the uneasiness of asking for money.
Americans across all generations have their own reasons to turn to parents. Younger adults are likely living at home and already receiving financial assistance while older adults are struggling to pay down debt while paying for everyday expenses.
Women Are More Comfortable Borrowing From Parents Than Men
Women’s comfort with their parents may stem from their longer stays at home. Studies find that a high number of young women are living with family. The amount of women living at home hasn’t been this high since the 1940s. Although young people are known for living at home, women in particular face a unique set of issues that sometimes keeps them in the nest. Student loan debt is one major stressor that has a domino effect.
Studies found that parents are more likely to have college savings for all-boy households than all-girl households. Since women have a bigger financial disadvantage than men, they tend to take out more loans and take a longer time paying them off — this is due to the combination of high debt and lower wages thanks to the gender wage gap.
The lack of savings prior to college, high student loan debt accumulated during college, and the lower average salary after college make it difficult for women to pay off student loans. Women are likely most comfortable turning to their parents for help since they are more sympathetictowards student loan debt in comparison to other types like credit card debt and auto loans.
Debt, Borrowing Money and Your Credit
There are lots of options to consider when tackling debt. Borrowing from loved ones, withdrawing from retirement accounts and other types of borrowing can create short-term relief in exchange for long-term consequences. These can include unrecoverable savings and ruined relationships. You should consider all of your options before making any big financial decision. In addition to managing debt, you should also look into how your debt affects your credit score. The costs of bad credit alone can slow down your debt-repayment strategy since you might only have bad credit loans available to you.
To begin taking your financial health into your own hands, you should first take a look at your credit report. Chances are that you may have some inaccurate credit items on your report that are decreasing your score, like late payments that were never late. Lexington Law can help you review, identify and dispute these discrepancies to ensure your report is fair and accurate. Learn more about how we clean your credit report and how this repairs your credit.
This trust study was conducted for Lexington Law using Google Consumer Surveys. The sample consists of 1,000 respondents, with an average margin of error of 4.2 percent. This survey was conducted April 2019.