When a loved one asks for money, it's hard to say no. A new study from the Pew Charitable Trusts quantifies just how often Americans pull out checkbooks for family and friends.
About a quarter of U.S. households gave or lent a median of $1,000 to friends or family in the past year, according to the study, which was based on interviews with more than 7,800 households. This flow of money— among friends, parents, children, and other relatives—represents a "hidden dimension of the financial system," said study author Diana Elliott, a research manager at Pew. "Transfers of money across household lines are really important for keeping families afloat."
While black households were the likeliest to both give and receive financial help, the urge to help is fairly widespread across all demographics.
It's not always easy to be generous. Of those who provided financial help in the past year, three in five givers described the act as a "burden." Not surprisingly, the poorest households were likeliest to find giving a burden, at 70 percent, but almost half of those making $85,000 or more also said their generosity was a burden.
Single mothers are especially likely to rely on help—and to give it. Half of all single-mother households either gave or received economic help, the study found, compared to 30 percent of two-parent households. Three quarters of single moms find it a burden to be so generous, but they also appear to know they might need help in the future. "In essence," Elliott said, "they're investing in their networks because of the prospect of future need."
Wealthy families have the resources to set their children and grandchildren up for success. About 15 percent of Americans have received inheritances, according to the Pew study.
Using a data set from the University of Michigan, Pew also looked at how parents help their children while they're still alive. It compared adult children from 2005 to 2013 with their parents' economic situations in the 1980s. One in 10 adult children received help with a home purchase, Pew found, while 31 percent got financial help with their education. Those lucky recipients came from disproportionately wealthy families and also became much wealthier than those who didn't get help with college or with a down payment.
That's the clearest distinction drawn by Pew's data: When poorer family members help each other out, they get a safety net to tide them over through emergencies. When wealthy families do the same, the rich get richer.