Per our friends at Wikipedia, “The Sandwich Generation” is a generation of people who care for their aging parents while supporting their own children.
A growing number of individuals and families worry not only about their own financial security, but they are also supporting adult children and caring for their parents at the same time. They are “sandwiched” between financially dependent children and parents.
By providing for others first and taking care of yourself last, you may jeopardize your family’s overall financial health and continue this “Sandwich Generation” cycle. However, by planning ahead, you can secure your family’s financial well-being and give yourself peace of mind.
Budgeting helps you set and achieve goals while tracking expenditures. By following a budget, you will better understand your spending habits to ensure you are allocating your money carefully.
You may be tempted to cut back on your retirement savings to save for your children’s college education. However, it may be wise to explore other options first. Financial aid and scholarships may be available for college, but not for retirement.
If your parents need assistance, you may want to have a frank discussion with them about their finances. Discuss all available sources of income and expenses, as well as assets and liabilities. Once you have an idea of their cash flow, budget and net-worth, you can help them with their options. Many state and local governments have programs available to help seniors, so be sure to check with the Wisconsin Department of Health and Human Services for more information.
Determine Financial Obligations
As a family, discuss how much each member can expect to receive from you and budget accordingly. Children need to know up-front how much help they may receive. The same holds true for aging parents. The following list may help you get started: household expenses, debt, retirement, health and insurance expenses, college, weddings, car, first home, health care concerns, and living arrangements.
Most importantly, realize your financial decisions are interrelated—each piece is part of a larger puzzle. However, it’s easier planning for your dependents’ future needs now rather than later.
Jason S. Lacey is a certified financial planner professional at Lewis Lacey Capital Management LLC in Milwaukee.