4 Tips to Juggling Finances for the Sandwich Generation
Leave it to the media to place a label on everything; those of us who thought we were Millennials or Generation X may actually be part of the Sandwich Generation. The Sandwich Generation are those of us who are “sandwiched” in between two financial stresses: our own family and taking care of aging parents or extended family members. The resulting stress may be one that we’ve invited willingly. However, it’s still a stress that can cloud our judgment when it comes to money. Those of us in the Sandwich Generation may be able to use some advice on how to juggle our finances.
1. Combine Resources
You may be insistent on providing finances for everyone from your parents on down. Your parents have likely offered to help. You should take them up on it. The prior generations are better at saving and are more frugal. They have had jobs that have helped them build a retirement fund, so allow them to use what it’s for; their benefit. While their insurance covers some medical costs, they may have funds to help with expenses for their grandchildren or to apply towards a college education. Some grandparents may believe it’s their right to do so.
The Sandwich Generation isn’t only sandwiched between kids and older adults. Many are living with adult children. If they are able, those adult children living at “home” can contribute to the family finances. You can ask them to pay “rent” or take over 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 elder family members. Use general money saving practices.
- Cut coupons
- Look to make adjustments on 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’s feasible
3. Plan Accordingly
As your family members age, costs will rise. It will become more expensive to raise 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 living with you. Whatever they are paying now, it will be much higher over time. The U.S. Center for Medicaid and Medicare Services is predicting a 5.5 percent annual increase yearly through 2026.1 You need to plan for that eventuality.
You will also need to consider that you, too, will one day be an older adult. You should keep your retirement plan in mind as well. You may have had to do things like reduce your 401(k) contribution or sell a stock or two. Think about these situations as fluid and that you may be able to increase your savings and investments down the line.
4. Emergency Measures
Living with several adults in the home may offer an opportunity for shared finances, but it can create as many difficulties. You may have crammed four adults and three children into your four bedroom home. That will be an untenable situation for everyone. If you need more space, you can look into adding a room or making other home improvements. If your parents don’t move around well, you may have to make your home easier and safer to navigate. You may need a loan or even a second mortgage to accomplish this. You may need to sell your home and find a larger space in a less expensive part of town. Additionally, such moves will 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.
1 https://www.reuters.com/article/us-usa-healthcare-spending/us-healthcare-spending-to-climb-53-percent-in-2018-agency-idUSKCN1FY2ZD
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