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Jeffrey Anvari-Clark, University of North Dakota

(THE CONVERSATION) About 1 in 5 American adults regularly provide unpaid care or financial assistance their adult relatives or friends. And about 1 in 7 young adults between the ages of 25 and 34 live with their parents.

But the true scale of support among Americans is deeper and broader.

From parents covering the cost of unexpected car repairs to colleagues raising funds for their peers’ medical expenses, Americans are helping each other in countless ways.

Like a social assistance scholar researching these patterns of what I call “financial interdependence,” I often see transactions that challenge a common American narrative that most people in this country manage their own spending.

A long tradition

The practice of sharing money with friends and loved ones has deep roots in American society. Many Native American communities have traditions of sharing food and other resources with each other.

In the 19th century, mutual aid societies formed everywhere from Philadelphia to Florida. Many of them helped free black people from economic hardship. These organizations provided everything from unemployment assistance to funeral expenses.

Today’s informal support networks resonate these historical patterns.

In particular, many immigrant communities maintain traditional practices of collective saving and borrowing money. Mexican-American families they often participate in “tandes,” which pool their savings to meet financial goals or meet urgent needs. Similarly, West African and Caribbean communities in the US organize “susu” groups.while many Chinese American communities form “hui” associations..

Local “hometown associationsIn addition, they often provide both financial and social support to their members—helping immigrant communities in the U.S. and people back home.

Everyone does it

These mutual support arrangements are widespread and work at all income levels, although they take different forms. They can be secular or religious. The true extent of this type of activity is generally unknown.

Lower income families often engage in frequent, smaller shifts. They could split food costsfor example, or relatives can help each other pay large, unexpected bills.

Wealthier Americans tend to give larger amounts of money to extended family members, but less often. These could include a parent’s help with an advance on a young adult’s first home or paying part of the cost of a the grandson’s university studies.

Some families establish formal structures such as financial trusts or 529 Education Savings Accounts to make these transfers easier to complete and track. Number of people using 529 accounts has grown steadilyas provided by states matching funds and tax incentives.

The nature of this financial support often reflects economic needs and cultural values. In many East Asian American communities, for example, adult children routinely provide financial support to their parents— as a cultural expectation.

Regardless of the community involved, technology has transformed the way people share money with friends and family.

Mobile payment platforms make it easy to share costs and send quick support. Money Transfer Apps they normalized small-scale financial sharing between friends and family.

Online platforms and social media they are used to gather resources for medical expenses, funerals or emergency needs. These tools extend traditional support networks beyond geographic boundaries.

Other types of support

Financial assistance can extend far beyond direct monetary aid.

Families and communities could buy groceries in bulk together to save money, or they live together to manage rising housing costs. Some parents create informal childcare cooperativeswhile others coordinate caregiving responsibilities for elderly relatives with their extended families.

Financial education often emphasizes personal savings and budgeting. However, many Americans practice financial interdependence managing their finances and making decisions in collaboration with others.

Addressing the challenges

To meet today’s economic challengesAmericans find creative solutions through shared resources.

Young adults more and more they need more help to become owners than what I can get from a bank. Median home prices have far outpaced wage growth, making essential family assistance for many first-time buyers.

College costs have stabilized, albeit at high levelswhich causes more families to pool resources for educational support. This often creates long-term financial obligations across generations.

Medical expenses remain a leading cause of financial strain, pushing families to rely on each other to pay for health-related costs.

These support systems operate at many levels, including family, community, workplace, and government.

Some employers now offer emergency loan programs and matching funds for the difficulty of the employee. Some companies create formal peer support systems for employees facing financial challenges.

Several states also supports family caregivers by providing tax credits to reimburse their out-of-pocket expenses.

Recognizing the financial burden of caregiving, Michigan Governor Gretchen Whitmer has proposed a tax credit to support dependent respite services, healthcare and transport.

Some complications

While financial interdependence provides crucial assistance, it can also create challenges.

Financial responsibilities can strain family and friendship bonds. Giving too much financial aid can create or reinforce power imbalances in relationships. Some communities may not have enough money to be able to equally and effectively help all members.

Clear communication and healthy boundaries can help manage these tensions.

As economic pressures mount for many American families, these informal financial support networks are becoming increasingly vital. Studies show rising costs makes financial stability increasingly difficult to achieve on your own.

This article is republished from The Conversation under a Creative Commons license. Read the original article here: https://theconversation.com/informal-safety-nets-help-many-americans-with-expenses-people-at-all-income-levels-benefit-from-this-financial-interdependence-242178.

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