Financial Planning When You Are In The Sandwich Generation

The Sandwich Generation, so named because working adults are literally ‘sandwiched’ between caring for dependent children as well as dependent parents or other family members, may have many financial burdens that require a strategy to manage. It may sound like an insurmountable task to support all generations of a family but committing to financial planning and employing some tips and tricks can help ease the financial burden going forward for years to come. Indeed, caring for a multi-generational family while planning for your own retirement could require a multi-pronged approach.

Manage Sources of Financial Stress

Some causes of financial stress for the Sandwich Generation can be unexpected healthcare costs from injury, illness, or accidents, as well as other unforeseeable costs. Supporting a multi-generational family and paying for everyone’s healthcare, schooling, elderly daycare, and recreation can put a damper on savings plans. Nannies, helpers, home health aides or therapists are all health-related expenses that occur. Other types of typical expenditure include grocery bills, transportation, entertainment, school fees and tuition.

Creating an ongoing savings plan as a safety net can be a good way to prepare for any of these unseen challenges. One way to do this is to have a savings plan set up with your bank, for example, a standing instruction which regularly deposits a set amount from your salary into your savings account – this way, your money grows consistently.

Work in a Family-friendly Environment

In order to enjoy both the young and old family members in your life, make efforts to strike a healthy work-life balance with your employer. Major organizations are creating supportive structures for the personal commitments of their employees while smaller companies may be able to provide more flexible options.

Working long hours with little downtime is a serious problem for many. However, for the Sandwich Generation, being unhappy in your work life can lead to expensive habits that may hurt your family’s finances, such as over-spending to compensate for a lack of relaxation time. This is particularly counterproductive when your likely goal is to make changes that will break the cycle of being financially dependent on your children in your own retirement years.

Make Smart Spending Choices

All financial planning requires a cap on spending, whether it’s a budget or an allowance for family members. It’s important to set a monthly or weekly spending target to stay within your means, so you don’t overextend your income and savings. Living within your means is the key to keeping your finances in order. Avoid using credit to keep everybody in the family happy with expensive gifts, meals or vacations. Managing expectations within the family on these items can help develop a sense of commitment to a healthy financial life. If everyone contributes, you may generate more harmony in the family, as well as good values about money.

How Should the Sandwich Generation Plan for Retirement?

It’s imperative that you plan for your own retirement to break the cycle of the Sandwich Generation. While it’s a difficult situation to have the combined expenses of three generations in your household, making sure you save and invest money for your own coverage can help you and your future generations be on better financial footing. Take advantage of any government or work-offered retirement plans and be active in your financial choices for these products and services. Keep up your financial literacy so you understand where your money is going and how it is building up your savings.

Educate Family Members on Retirement Scams

Grandparents are often the target of retirement or other scams that offer huge returns on cash investments. Make sure they know not to give away their own money for deals that sound too good to be true. It’s also possible for younger family members and even those in the Sandwich Generation to be lured into scams. Overall, remember that if the deal sounds too good to be true, then it probably is. Keep an eye out for news, social media posts or government reports on any ongoing scams as most are reported.

Empowering the Next Generation: Financial Literacy for Kids

Teaching financial literacy – and the value of money – is a key effort to work on throughout children’s lives. While this is also important for grandparents to know, making sure the younger generation is educated about finances, the costs of living and how to manage them, can help reinforce good spending and saving practices in your household.