By Aussy Aportadera
Whether you’re a nanny, small business owner, or a newborn care specialist, financial planning is a critical skill to have. As you grow older, you get inducted into a group of people that nobody wants to volunteer for. We’re talking about the sandwich generation – and it’s not for everyone.
Being part of the sandwich generation is a unique position that nobody chooses. As someone helping your aging parents and caring for children, you’re stuck in the middle of a massive financial burden. Supporting your loved ones does not mean that you should sacrifice your future.
You’re slowly advancing in age and you need to start asking questions like how much do you need for retirement and how do you save more money. Creating money strategies is not only about meeting day-to-day expenses. You should also save for retirement and prepare for future emergencies.
If you’re feeling some financial squeeze, you’re not alone. Here are some financial planning tips that can help if you are part of the sandwich generation. These can make everything feel a little easier.
Plan, Plan, and Plan Some More
One of the biggest challenges of supporting your loved ones is not knowing which direction to go. If you’re one of the millions around the world experiencing this, the answer is to plan. Plan, plan, and keep on planning until you exhaust every avenue you have. Plan every bit of money that comes your way.
The right money mindset is to start by preparing emergency funds. Build cash reserves enough to sustain you for 6 to 12 months’ worth of your expenses. Avoid any high-interest debt that can cripple your finances and prioritize your retirement money.
Contribute as much as you can towards your workplace retirement plan. The ideal amount is up to how much your company is willing to match so you can maximize what you get. Once you reach the maximum for your workplace savings, consider investing in traditional or Roth IRA funds.
Restructure Your Financial Priorities
Being a new parent can be challenging, especially if you also have elderly parents to care for. As you care for your dependents, it’s vital to account for everyone’s needs so you don’t surprise yourself in the long run.
Money is not everything if you want to make sense of your expenses. Understanding your needs, your parents’ needs, and your children’s needs is as important. Establish crucial non-negotiables for everyone, breaking down the cost for each and determine if you can afford it. At the same time, look at areas that you can exclude from your budget.
Consider cutting down on expenses that you think are less necessary than others. Eating out, daycare, after-school, and more can be reconsidered, especially if you have relatives that you can rely on. Explore additional funding like grants, scholarships, and the like for your kids.
If your children are of working age, discuss with them how you need help and how they can be financially independent. See if they can help with the budget at home.
Many of these adjustments are some of the hardest you might make but learn how to challenge yourself and grow as an individual. Growth means sitting through the hard decisions with the people you love.
Mitigate Risks by Caring For Yourself
If your family needs you, it’s easy to come to their aid quickly – and most of the time, you should. Regardless, make sure that you take care of yourself first and foremost. Don’t put yourself in financial constraint because, if you break down, the entire “house of cards” falls down with you.
Risk mitigation is a matter of protecting your assets now and in the future. Look into long-term disability insurance to protect you from sudden events like accidents. Many employers offer individual plans, so you would want to give them some consideration to protect you from anything sudden.
Make sure you have health insurance and your finances in order. If you can, diversify your income sources apart from your current job. Keep enough money to put towards keeping yourself healthy, allocating for preventive healthcare and checkups. If you have enough, prepare some money for therapy or ways to keep up your mental health.
Setting aside money to keep yourself healthy prevents a potential burnout or physical breakdown. You might be one medical debt away from financial ruin, so taking care of yourself is crucial.
Build Your Financial Safety Nets
Despite all the planning you do, there are instances where you won’t be in control. It’s crucial that you prepare financial safety nets apart from emergency funds. This allows you to keep supporting your parents and children while you ease some of the financial burden on yourself.
Safety Net #1: Long-Term Care Insurance
If your parents are still healthy, encourage them to buy long-term care insurance if you feel the cost of care may build up. Long-term insurance pays can pay for senior care, especially in nursing and retirement homes. Most of these insurance types also pay for things that Medicare doesn’t.
Most long-term care may rack up to a few thousand dollars a month without preparation. Through long-term insurance, these will be paid for by the provider, including the cost of paying for caretakers and living arrangements.
Life insurance is useful for everyone in your family, especially the ones with chronic illness riders on them. Look at your insurance policies and different types of funds that can help for college education or retirement benefits.
Safety Net #2: Estate Planning
Another detail that you can consider is estate planning, which is arranging your parents’ affairs like wills, debt, and other financial matters after their passing. If you’re the one handling their financial matters, discuss with them giving you legal power on different aspects of their properties too.
Discuss downsizing homes with your parents too to help them free up some cash. This allows easier access to much of the home without needing too much effort to move about. It also frees up some extra cash that the family can use for expenses and other retirement planning.
Ask For Help With Family and Relatives
Taking all the burden of care for parents and children can be painful for you as part of the sandwich generation. If you’re alone in the burden, that’s hard enough as it is. Even then, if you can find people who can help you, don’t hesitate to ask for help.
Talk with siblings and family members on how everyone can pitch in and help. How will you divvy up costs for taking care of your parents? If there’s no insurance, how will everyone help with the care responsibilities?
These don’t seem like financial planning tips, but if you can reduce the burden of care yourself and divide them between family and relatives, this opens up more financial channels for you. You can set aside more for your other financial plans, especially those that will go towards your retirement fund.
The Bottom Line
The sandwich generation carries a special burden with them. Taking care of elders and your own children is challenging financially and emotionally as well. If it’s something you need to do, don’t be afraid to plan your finances ahead.
Financial planning is a matter of taking care of yourself so you can take care of others. Don’t be afraid to plan for the future and sit down for the hard conversations. Ask for help where you need to and follow these simple tips to give you the financial flexibility you need.
Aussy Aportadera is pursuing the unhurried life in the beachside town of La Union, Philippines. After a career in communications and publishing for luxury lifestyle, food, and wine, she is now a yoga teacher and co-owner of a ceramics brand.
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