Photo courtesy Cottonbro studio on Pexels.
The sandwich generation consists of people who are involved in taking care of their children as well as their parents. This is a difficult job as after all you are a single person and have to manage everything, many times resulting in stress. You are in your 30s or 40s and have the parents as well as the children dependent on you. The parents would have retired by this time and the children would be in high school or college.
Caring for your loved ones from two different generations comes with an emotional as well as physical toll. Other than taking care of your loved ones you would have your own office stress if you are in a job, or the stress resulting from your business. Many times there may be feelings of guilt about whether to give priority to the parents’ problems or the children’s needs.
There is no harm in asking for help from other senior family members or older children. Help is available but you have to reach out. The best way is to open an honest line of communication between all the family members. Discuss with your parents the time you will have to devote to the children and in the same way inform the children on how your and their lives will be affected by the growing needs of taking care of your parents. A family that can accommodate the needs of all the members is the happiest.
Financial planning is one of the most important challenges faced by the sandwich generation. There may be many members in a family dependent on the earnings of a single person. There is debt to be paid, saving to be made, tackling emergency situations, and planning for retirement. If the finances are handled well many of the problems will take care of themselves as after all the world runs around money.
Taking care of Parents-
Talk to your parents and have an open conversation about the state of their finances. This is a preventive step before it is too late to take any remedial action. If they are not financially prepared the burden would fall on you. Find out how long they are in a position to support themselves. Learn of their investments and the debt that they carry.
The major effort is to see that they have a regular source of income and manage their medical expenses. There are a number of government schemes like the senior citizen savings scheme and the Pradhan Mantri Vaya Vandana Yojana where they can invest. If they have a lump sum amount it can be invested in the systematic withdrawal plan of the mutual fund scheme where they will get a certain amount every month. It gives better returns than debt instruments.
The other major area of concern for retired parents is the medical and healthcare expenses which tend to increase with age. If there is a critical illness and they don’t have money it can burn a hole in the pocket and also affect the care that you could take of your children with the same money. Ensure that they have substantial health insurance to take care of medical emergencies. This will remove some of the stress of knowing that they would be provided financial support in case of medical emergencies.
Taking care of children-
It is wise to start planning for the education of the children from an early stage. Start saving and investing early as the cost of higher education is always rising. You have to allocate finances taking into account the inflation in education expenses. Besides this, you have to take care of their marriage too. For the girl child, you can invest in the Sukanya Samriddhi Yojana (SSY) where the rate of interest is 7.6% which is higher than the fixed deposits. Weddings cost a lot and you may have to finance the wedding also.
Be transparent with your children about the finances. Talk to them about the education expenses and how much you need to save for their higher education. This will make them aware of the financial condition of the family and they will have healthy spending habits. In case you are finding it difficult to manage both the finances of your parents as well as planning for your children you can take the help of a financial advisor.
Make a budget and save money-
In order to talk to your parents and children about the finances you should be aware of your monthly expenses and should have a budget plan. Review your budget and make the necessary changes to keep up with your life goals. Try to eat out less frequently and cut on other discretionary expenses which will help you to save more money.
Plan for the long term-
You have to take care of your near and dear ones and have a long life ahead. You have to save and invest for the long term so that you don’t fall short of money in your old age and become too much dependent on your children. Invest in equities or equity mutual funds so that you can compound your wealth. Start saving early and put money in employees’ provident fund where your employer makes an equal matching contribution.
Once you have taken care of the long-term finances, ensure that you have proper real estate planning so that the assets of your family are passed to the next generation without any problem.
No doubt the job of the sandwich generation is enormous, to take care of children and parents where emotions are involved, but proper financial planning can ensure that you carry out your duties more responsibly. Being disciplined in personal finances will go a long way in achieving the family goals.