Budgeting Tips for the Sandwich Generation: How to Care for Kids and Parents

If you’re part of the sandwich generation, having a money management plan is crucial.

Everyone knows that raising kids can put a serious squeeze on your budget. Beyond covering day-to-day living expenses, there are all of those extras to consider—sports, after-school activities, braces, a first car. Oh, and don’t forget about college.

Add caring for elderly parents to the mix, and balancing your financial and family obligations could become even more difficult.

“It can be an emotional and financial roller coaster, being pushed and pulled in multiple directions at the same time,” says financial life planner and author Michael F. Kay.

The “sandwich generation”—which describes people that are raising children and taking care of aging parents—is growing as Baby Boomers continue to age.

According to the Center for Retirement Research at Boston College, 17 percent of adult children serve as caregivers for their parents at some point in their lives. Aside from a time commitment, you may also be committing part of your budget to caregiving expenses like food, medications and doctor’s appointments.

Budgeting tips for the sandwich generation include communicating with parents.

When you’re caught in the caregiving crunch, you might be wondering: How do I take care of my parents and kids without going broke?

The answer lies in how you approach budgeting and saving. These money strategies for the sandwich generation and budgeting tips for the sandwich generation can help you balance your financial and family priorities:

Communicate with parents

Quentara Costa, a certified financial planner and founder of investment advisory service POWWOW, LLC, served as caregiver for her father, who was diagnosed with Alzheimer’s disease, while also managing a career and starting a family. That experience taught her two very important budgeting tips for the sandwich generation.

First, communication is key, and a money strategy for the sandwich generation is to talk with your parents about what they need in terms of care. “It should all start with a frank discussion and plan, preferably prior to any significant health crisis,” Costa says.

Second, run the numbers so you have a realistic understanding of caregiving costs, including how much parents will cover financially and what you can afford to contribute.

17 percent of adult children serve as caregivers for their parents at some point in their lives.

– The Center for Retirement Research at Boston College

Involve kids in financial discussions

While you’re talking over expectations with your parents, take time to do the same with your kids. Caregiving for your parents may be part of the discussion, but these talks can also be an opportunity for you and your children to talk about your family’s bigger financial picture.

With younger kids, for example, that might involve talking about how an allowance can be earned and used. You could teach kids about money using a savings account and discuss the difference between needs and wants. These lessons can help lay a solid money foundation as they as move into their tween and teen years when discussions might become more complex.

When figuring out how to budget for the sandwich generation, try including your kids in financial decisions.

If your teen is on the verge of getting their driver’s license, for example, their expectation might be that you’ll help them buy a car or help with insurance and registration costs. Communicating about who will be contributing to these types of large expenses is a good money strategy for the sandwich generation.

The same goes for college, which can easily be one of the biggest expenses for parents and important when learning how to budget for the sandwich generation. If your budget as a caregiver can’t also accommodate full college tuition, your kids need to know that early on to help with their educational choices.

Talking over expectations—yours and theirs—can help you determine which schools are within reach financially, what scholarship or grant options may be available and whether your student is able to contribute to their education costs through work-study or a part-time job.

Consider the impact of caregiving on your income

When thinking about how to budget for the sandwich generation, consider that caring for aging parents can directly affect your earning potential if you have to cut back on the number of hours you work. The impact to your income will be more significant if you are the primary caregiver and not leveraging other care options, such as an in-home nurse, senior care facility or help from another adult child.

Costa says taking time away from work can be difficult if you’re the primary breadwinner or if your family is dual-income dependent. Losing some or all of your income, even temporarily, could make it challenging to meet your everyday expenses.

“Very rarely do I recommend putting caregiving ahead of the client’s own cash reserve and retirement.”

– Quentara Costa, certified financial planner

When you’re facing a reduced income, how to budget for the sandwich generation is really about getting clear on needs versus wants. Start with a thorough spending review.

Are there expenses you might be able to reduce or eliminate while you’re providing care? How much do you need to earn each month to maintain your family’s standard of living? Keeping your family’s needs in focus and shaping your budget around them is a money strategy for the sandwich generation that can keep you from overextending yourself financially.

“Protect your capital from poor decisions made from emotions,” financial life planner Kay says. “It’s too easy when you’re stretched beyond reason to make in-the-heat-of-the-moment decisions that ultimately are not in anyone’s best interest.”

Keep saving in sight

One of the most important money strategies for the sandwich generation is continuing to save for short- and long-term financial goals.

“Very rarely do I recommend putting caregiving ahead of the client’s own cash reserve and retirement,” financial planner Costa says. “While the intention to put others before ourselves is noble, you may actually be pulling the next generation backwards due to your lack of self-planning.”

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Making regular contributions to your 401(k), an individual retirement account or an IRA CD should still be a priority. Adding to your emergency savings each month—even if you have to reduce the amount you normally save to fit new caregiving expenses into your budget—can help prepare you for unexpected expenses or the occasional cash flow shortfall. Contributing to a 529 college savings plan or a Coverdell ESA is a budgeting tip for the sandwich generation that can help you build a cushion for your children once they’re ready for college life.

When you are learning how to budget for the sandwich generation, don’t forget about your children’s savings goals. If there’s something specific they want to save for, help them figure out how much they need to save and a timeline for reaching their goal.

Ask for help if you need it

A big part of learning how to budget for the sandwich generation is finding resources you can leverage to help balance your family commitments. In the case of aging parents, there may be state or federal programs that can help with the cost of care.

Remember to also loop in your siblings or other family members when researching budgeting tips for the sandwich generation. If you have siblings or relatives, engage them in an open discussion about what they can contribute, financially or in terms of caregiving assistance, to your parents. Getting them involved and asking them to share some of the load can help you balance caregiving for parents while still making sure that you and your family’s financial outlook remains bright.

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Gratitude in a Difficult Year

This year took so many twists and turns we haven’t been able to keep count– often leaving us in complete overwhelm with a whirlwind of thoughts and emotions. Grief, anxiety, and sheer disappointment are just a handful that comes to mind when we reflect on the endless amount of curveballs life has thrown over the past year. Tragedy and loss plagued the entire world, leaving us speechless day after day. Despite the darkness that loomed for what seems like an eternity there has been an outpour of positives that we can’t forget to remember. As 2020 quickly comes to a close, let’s take the time to decompress and reflect on the happier moments we were lucky enough to live through and witness. Even though Thanksgiving may look less traditional than previous years, we still can readily name some things that shift our hearts to a place of gratitude.

Family first

Let’s face it – the hustle and bustle of life impact our family and friends more than we’d like to admit. Competing schedules, conflicts, and not making enough time for those that matter are often reasons why we are unable to nurture the people we hold near and dear. Because of restrictions on travel and other entertainment, we were forced to become more creative with our time indoors; in turn, helping us to restore the meaning of family and work-life balance. Quite frankly, it allowed us to hit the pause button on everything that probably was unintentionally too high on the priority list in the past. Our families served as the safety net it’s supposed to be when the weight of the world (and social media) became overbearing with less than desirable news. We utilized technology to a new degree when scheduling virtual happy hours, catch up sessions with our loved ones, and birthday celebrations in other geographic areas. It made us truly appreciate the very thing we took for granted; all the people that make up our family tribe.  

Curating and developing passions

2020 generated a newfound level of introspection, leaving our minds to really consider what it is that we really cherish the most. Whether it be career-related or new passion projects, this year made room for some much-needed self-reflection, making us reassess where our fulfillment really comes from. Leveraging books, social media outlets, and various streams of consuming knowledge-based information sent us on a path of rediscovery. Remember that ‘other’ to-do list that’s filled with the things you really don’t want to do around the house? It even made that list appear fun-filled! Home improvement projects and DIY tasks were done with enjoyment while being budget-friendly. Adulthood can be full of things that aren’t as exciting, but mustering up the courage to take ideas from ideation to execution served as a second wind. New business ventures and side hustles were birthed with unmatched creativity, a place many of us haven’t been in quite some time. Existing businesses were able to thrive despite the unprecedented events occurring nationally. Funding was also provided to various business owners which granted many small businesses to increase their visibility while positively generating profit. 

The importance of sustainment

There are a countless number of families that were impacted by job loss and/or unexpected expenses. It doesn’t matter if things started off rocky financially – what matters most is you’re still standing. Getting caught up on bills, eliminating some debt and saving are all things to be very proud of. Temporary hardships don’t have to turn into permanent problems. Creating a plan of action and sticking to it no matter what arises will always be rewarding. Celebrating the small wins should never be overlooked. We’ve all handled this year in different ways – but what’s most important is discovering what works for you. Rule of thumb for those that are battling with the ‘not enough’ emotions: don’t believe the hype. While there is a multitude of people accomplishing great things, there are also many imposters. Social media is a highlight reel, a virtual platform where people can share whatever information they choose, at their discretion. People are more likely to share their highs versus their lows, so be sure to keep in mind you may only be getting a small piece of the overall story. Don’t look at someone else’s life and fail to recognize what you’ve done on your own. Financial progress, no matter how insignificant you may think it is – is still progress. We all make financial missteps and life has a way of making things very difficult that hit us where it really hurts. Keeping your head above water, remaining afloat, maintaining your health, and providing for your family should never be considered a small feat. Grant yourself some grace and reflect on the dedication it took for you to get (and stay) where you currently are.

Back to the basics

This year forced us to really hone in on what matters and prioritize accordingly. This applies to our lives, but most importantly our finances. Pulling back the curtain to really take a look and evaluate where money was going served as a constant reminder that we should be doing this more than the occasional once or twice a year. It’s never too late (or too early) to create new money habits! Financial stability is essential – and maybe the cushion we imagined should be enough proved itself to be untrue. Our willingness to make changes at a faster rate to ensure the financial security of our families felt less painful and so much more intentional. The uncertainty of everything occurring allowed us to complain less while redefining comfort levels with our contingency plans.

No matter what has transpired this year, what are you most thankful for? As things come to mind be sure to jot them down. Reference them when your days seem laborious or when your feelings try to force you to reflect on things that aren’t as positive. It’s clear we don’t know what the future holds, but we do know (and have been reintroduced) to the moments, things, and people that continually keep us hopeful and thankful – no matter what lies ahead.

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