Are you raising your kids and taking care of your parents? You’re not alone. Known as the sandwich generation, people aged 45 to 64 are having more challenges than ever before. This kind of life can bring emotional and financial pressure as you’re pulled by several dependents at the same time.
Caught in the care crunch? It can be challenging to take care of people and shoulder responsibility for everyone, but there are ways to keep your finances secure. Here are 5 proven money saving strategies that everyone caught in the middle can use.
Also Read: 7 Tools to Help Older Adults Manage Finances
#1. Put Yourself First
In a world where you care for two separate generations, the best move you can do to manage finances is to put yourself first. As more people depend on you, you teach people how to treat you. People who don’t care for themselves first are bound to experience a slippery slope of care towards others.
Your physical and mental health depends on your ability to keep yourself above water. There are people who find themselves burnt out not because they can’t handle caring for others, but rather they do so to their detriment. If you don’t put yourself first, everything else will force you to do so.
Continue saving for your eventual retirement. Never withdraw money from your retirement plan for the expenses of your dependents like education or nursing homes. This can help you stay confident about your potential retirement, knowing that you have enough money later on.
You can also grow that money tax-free with a Roth or deferred with a traditional IRA.
#2. Do Some Estate Planning
Estate planning is a vital money strategy for anyone within the sandwich generation. Estate planning refers to arrangements done so that everything that you own can go to the right people when you die. This type of money mindset not only helps you, but also the people around you like your senior parents.
If you have sizable assets, as well as liabilities, detail everything in a will or trust. Make sure that you bequeath everything as you intend them. By planning your estate, you make sure that your loved ones don’t have to pass through expensive and time-consuming probate.
Have a talk with your parents, especially if they are aging. Sit down with your parents and siblings and encourage them to plan their estate. While nobody wants to talk about assets once they’re dead, you can remind everyone that this is to make everything easier. It also helps assign executors and conservators, especially for a living will.
#3. Don’t Forget To Ask For Help
Taking care of parents and children at the same time can be an exhausting experience. Doing it alone can take everything that you have; you don’t have to do it. Ask for help where you can and don’t forget you have several options to lighten the load for you.
If you have siblings and close relatives, ask for help. Have a serious talk with them about what they can do to contribute, even if it’s not anything financial. Even taking care of a kid or parent on a weekend for a few hours a day adds up to something you can use for self-care. If you have close friends willing to do the same, it will be much better.
For those who have nobody to turn to but have a little extra financial leeway, hiring a personal concierge for aging parents is useful too. A Personal concierge is not household help, but rather trained caregivers who can do different kinds of tasks. These can be anything from errands to adhering to the medication schedule.
If you’re having trouble managing your finances, ask a financial advisor for help. Financial advisors can navigate through the existing financial position of your family and create a plan that works for you. This can help keep your income streams moving, as well as find investments that work for your needs.
#4. Learn Your Senior Parents’ Financial Situation
To prepare yourself for supporting your parents’ finances, it’s best to know their current financial situation. While they’re healthy, do a family inventory. Build a comprehensive list of financial details with them, including but not limited to:
- Financial records and their location
- Legal documents and their location
- Bank accounts available
- Types of insurance
- Debts and liabilities
Knowing their financial situation can help give you a baseline on where you can start helping. It also underscores the responsibility that you have to each other, as well as learning the right investment strategy you can use. If you have time, you can even be with your parents as they discuss their financial strategy with their advisors.
Try to understand your parents’ financial goals, what you can do for them, and vice-versa. Inform them what kind of investments are they looking at, as well as what amount you’re willing to use to support them.
#5. Discuss Finances With Your Children
Hard financial decisions should not only happen with your parents but with your children too. No matter their age, your kids should be a part of financial planning for their future. Discuss the household budget with them, as well as how much you’re willing to pay for their personal needs like cellphone bills.
If they’re adolescents, discuss with them their plans for higher education, as well as how they think they can pitch in. For families where going to university is an option, save as early as possible. Encourage your children to find ways to minimize their cost of education, from community college, grants, to scholarships.
For adult children post-graduation, discuss how they plan on paying for their loans. Encourage them to find a job, pay off their student loans and even match the value of whatever they pay above the minimum. If you can, encourage them to go back home for a while, live rent-free, and have them put supposed “rent money” towards savings.
The Bottom Line
Being part of the sandwich generation is hard but it doesn’t mean you have to suffer for it. While it has its own challenges, it can be a fulfilling and enjoyable time to take care of your family. This means nobody gets left behind or gets forgotten. Then again, you need to prepare for your own future.
That’s simply the reason you need to develop appropriate money saving strategies. The strategies I highlight in this post has been proven to be effective for the sandwich generation.
Don’t forget to care for yourself.
Set aside money and be intelligent about spending. Know the investment options available for you, as well as the roles and responsibilities you can expect. This knowledge can help keep your family tight-knit for generations to come.