It seems like the sandwich generation is in dire need of money strategies to help make themselves financially independent. This generation got the name “sandwich” because they are currently carrying the responsibility of helping the two generations that come before and after them.
The sandwich generation is typically in their 30s or 40s. They have just started their own families and struggling to be good parents and providers for their young children and teenagers. None of their kids are big enough to take care of themselves and have yet to enter into college.
This generation also has parents that are currently retired and in their 70s. This is an age when the elders are already in need of support – most likely physically. During this age, ailments are starting to show and it becomes harder for them to do things on their own. This is why the sandwich generation is expected to care for their parents as well.
While the need to take care of children and parents is a noble responsibility, it is not an easy task. This is why they need money strategies to help them through it. When you are in your 30s or 40s, you have yet to reach your prime. That means you are still trying to prove yourself in your job. You probably have a mortgage or you have yet to buy your own house. There is also a high chance that you have a lot of debts.
Given all of these, you can see just how difficult it is to be a part of the sandwich generation.
What is the financial dilemma of the Sandwich Generation?
What exactly goes on in the financial lives of the Sandwich Generation? According to reports, more than 1 out of 3 parents of children between the ages of 8 to 14 years old are also taking care of an elderly family member. Almost 7 out of 10 of these people have a parent or elderly relative living with them. Being the adult that is in their prime, it is understandable to consider them as the head of the family. That means they are responsible for everyone that lives in the same house.
The thing is, apart from the physical and emotional support that they need to provide their children and parents, this generation also has a lot of financial needs to fulfill. The combination of all the tasks makes it necessary for them to look for money strategies to help them take care of everything.
They have to take care of their elderly parents
Not everyone who is retired has enough money to help them afford a comfortable retirement. If your parents are living with you, that means they cannot afford a lot of things. It may even be possible that they are suffering from physical illness – and we all know how expensive health care can be in this country. If their retirement income is not enough, it is obvious that they would need from help financially.
They have to help their children through school
This is not up for debate. You may be able to turn away the need to help a parent or share the burden with a family member, but when it comes to your children, they are your sole responsibility. Just like health care, child care is also very expensive. While childcare may be expensive, the most damaging to their financial future is their future college expenses. So you need to make sure that you can pay for all their current needs while putting something aside for their college fund.
They have to save up for their own retirement
Finally, the Sandwich Generation also have to deal with their own retirement in the future. Although there are a couple of decades left to save up for it, the amount needed to retire comfortably is high. If you do not want to be a burden to your children and loved ones, you should save enough money for your retirement. While it is a clear necessity, a lot of people in the sandwich generation are failing to save up for it. According to reports, the average retirement fund that these people have is currently at $170,346. And 1 out of 3 of this generation only has less than $25,000 saved up. This is a dilemma that should be dealt with because the repercussions are too great to ignore.
Money strategies to make you feel financially secure
Now that you have a better understanding of the financial dilemma of the Sandwich Generation, it is time to get to know the money strategies that they can use. These will help them take care of all the financial responsibilities.
Secure your own retirement contributions
Let us start with your own retirement. It is important to take care of yourself because that will give you the peace of mind to help other people. It is hard to help others if your own life is distressed. So make sure you are contributing to your own retirement. If you think you cannot afford it, make a way to contribute even a small amount. The compound interest will work in your favor so start saving now.
Help your parents create a retirement income plan
After taking care of your own needs, it is time to look at what you can do for your loved ones – starting with your parents. Helping your parents plan for retirement if not that difficult. However, it can become complicated if they do not cooperate with you. Of course, if they are living with you and know that you are helping them out, they might be more inclined to listen to you. So what can you do? To start with, you should both discuss the source of their retirement income. This will give you a better understanding of what they can afford. Next, you need to look into their expenses. What do they usually spend on? Help them identify areas where they can save so they get to a more secure financial situation without eating up too much of your own finances. Make sure they have money left over to save – especially for health care expenses.
Look for affordable long-term care
Another one of the money strategies that you can look into is getting affordable long-term care. There will come a time when your parents will be too old to take care of themselves. If you are working to support everyone in the house, you might not have the time and energy to physically take care of your parents. If you try to strain yourself, you might end up getting sick yourself. This is why you should consider getting long-term care for your loved one. Admittedly, this can be expensive. This is why it is beneficial for you to invest in insurance that will make long-term care more affordable.
Set up a college savings plan
When it comes to your kids, saving early is always a good thing. The earlier you start the more funds that can be used for college expenses. It is just like your retirement. You can make small savings each month and the compound interest will help make your money grow. If you can save enough, you might not have to choose between paying for your retirement and your kid’s college funds. Worse, you do not have to leave your kids alone to deal with the burden of student loans. If there is a need to borrow, it will be minimal because you already saved for a portion of it.
Teach your children how to handle money
Finally, you should also teach your children how to manage their money. They should be able to come up with their own money strategies. According to reports, the biggest influence in money management is how parents handled their own finances. That means if your parents handled their money well, there is a high chance that you will end up doing the same. Of course, there is still hope if your parents were bad that financial management – you can always teach yourself along the way. But your children do not have to go through that.
You can teach them how to manage their money – just like how you do it. They can also observe how you do it. This will allow them to learn the basics so they know what is the right and wrong way to use their finances. By doing this, you are making it easier for them to set themselves up for financial success.