Pattie Lovett-Reid: How the 'sandwich generation' can escape the financial squeeze
Being stuck in the middle between aging parents and young adults can be financially draining as you try to care for both, while trying to focus on meeting your own needs and goals.
Parents want the best for their children and many will help them with expenses such a groceries, food and rent. Ideally, that shouldn't continue forever. The earlier you set boundaries and provide them with the tools they for financial independence, the better off you both will be.
Here are few steps for helping out young adults financially.
- Begin with basic budgeting. This is an essential skill for any young adult. They need to know how much money they have coming and where they are spending it. It doesn't have to be pen to papers; there are so many mobile apps that will do it all for you.
- Understand bank account basics. This includes minimum balances, what happens if you become overdrawn, fees and how to access financial data.
- Appreciate the difference between wants and needs. It is simple but not easy in today's consumption-oriented world. Needs are what’s required to sustain us, everything else is a want. When money is tight, the want has to wait.
The importance of an emergency fund can't be overstated. As a parent, you shouldn't be the emergency fund. Money set aside in the event of job loss, car repair, or illness is all about being responsible for your financial life events.
Developing a positive credit history is critical and reinforces bills have to be paid on time, all the time.
This doesn't mean you need to abandon your children financially. It’s important they understand help is available and you will be there for them when they need you, but that it’s time to pull back on the financial outpatient care.
When it comes to aging parents, it can be very different. It’s all about transparency and knowing the state of their finances. This includes how much money they have saved, how much money is liquid and what sorts of costs are covered off for expenses such as medical, assisted living or a transition into a long-term care facility. It is also imperative Powers of Attorney are put into place, wills are updated, and estate wishes are communicated. Having everyone on the same page creates peace of mind.
It isn't easy caring for children and parents financially, and the burden of it often feels heavy. During this time, it can be so easy to let your own financial goals slide as you help others.
Remember that you are important too, and also need to plan for your financial future.