Leave it to the media to place a label on everything; those of us who think of ourselves as millennials or Gen Xers might be part of the sandwich generation. The sandwich generation includes those of us who are “sandwiched” between two financial stresses: caring for our own families and caring for our aging parents or extended family members. The resulting stress may be one that we have willingly invited. Nevertheless, it can cloud our judgment when it comes to money. If you are a member of the sandwich generation, here is some advice on how to juggle your finances.
1. Combine Resources
You might be insisting on providing financial support for everyone from your parents down. Your parents have likely offered to help. Well, you should take up their offer. Their generation is generally better at saving and more frugal. They have typically built a retirement fund for their old-age care, so you should allow them to use it for that purpose. While their insurance most likely covers some medical costs, they may have funds available to help with their grandchildren’s expenses or to put toward a college education. Some grandparents may believe it is their right to do so.
The sandwich generation isn’t only sandwiched between children and older relatives. Many are living with adult children. If they are able, those adult children living at home could contribute to the family finances. You can ask them to pay rent or a monthly expense.
2. Make a Lean Budget
Saving money is never a bad idea; however, it may be a necessity for those caring for elderly family members. Use general money-saving practices, such as the following:
- Cut coupons.
- Review and adjust cell phone, Internet, and cable TV packages.
- Institute strict policies for the use of utilities (keeping in mind the needs of older adults).
- Use public transportation if it is a feasible option.
3. Plan Accordingly
As your family members age, costs will rise. It will become more expensive to provide for your children as they eat more, have more extracurricular activities, and desire more expensive items. It could also become more expensive to take care of your parents.
Get a firm grasp of your parents’ medical expenses. Medical costs may well have been the thing that drove them to live with you. Whatever their costs are now, they will increase over time. The US Center for Medicaid and Medicare Services is predicting a 5.4% annual increase through 2028.1 You need to plan for that eventuality.
You also need to consider that you will one day be an older adult; therefore, you should keep your retirement plan in mind, too. In the short term, you may need to convert some of your assets into cash (e.g., reduce your 401(k) contribution or sell a stock or two) to cover caring expenses. Think about these situations as fluid and how you may be able to increase your savings and investments in the future.
4. Emergency Measures
Living with several adults in the home may offer an opportunity to share finances, but it can lead to a number of difficulties, especially in terms of physical space. For example, if there are four adults and three children crammed into a four-bedroom home, then it will quickly become clear that the situation is untenable for everyone. If you need more space, you can look into adding a room or making other home improvements. Or you may need to make your home easier and safer to navigate for your elderly parents. Renovations are not cheap, and you may need to take out a loan or even a second mortgage to fund home improvements. Alternatively, you may need to sell your home and move to a larger house in a less expensive part of town. Such moves have tax implications as well.
Big changes can bring big problems. However, you may sleep better at night knowing that if one of your parents falls ill, they are in good hands. You can further improve your sleep patterns by asking a financial advisor for more ideas on how to navigate being a member of the sandwich generation.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.