If you’re a parent in your 40s and 50s who also needs to care for your own aging parent, you’re a member of the sandwich generation. This means you’re the source of financial support for two generations of family, which could add stress on your finances. Here are some strategies to help ease some of your money worries.
Take care of your financial needs first
It’s important to maintain your own financial obligations. First, make sure you’re saving money from every paycheck to build an emergency fund of at least three to six months of living expenses. It’s also important to make automatic contributions to fund your retirement. If your employer matches contributions to your 401(k) plan, take advantage and contribute what you can to get the full match. It’s free money for your future!
And it’s just as important to make a budget and stick to it. Try a budgeting app that can help you see what you’re spending and where. You may find areas where you can cut back, thus freeing up funds for other financial needs. Remember, if you’re not using Wi-Fi, data charges could apply. Contact your provider for details.
Rethink how to pay for college
College is a major expense for your family. That’s on top of existing financial commitments. So, when it comes to paying for college, be open and honest with your teen about what you can afford. Then work out a savings plan for covering tuition. Include other related costs like buying a used car. Your child can help contribute to the cost of school by working part time and saving, in addition to applying for loans, financial aid and grants. In addition, each year LGFCU awards scholarships to eligible members to help pay for college, university and trade school expenses.
Ask for a financial contribution from your parent
To find more financial balance in the home, talk with your older parent about contributing from retirement savings and income. Keep in mind your parent may have personal expenses like health care bills that will only increase with age. If your loved one doesn’t have retiree health insurance from a former employer, a Medicare Supplement Plan (Medigap) can help pay for services not fully covered by Medicare. For prescription drug coverage, encourage your older parent to sign up for Medicare Part D. These coverages may mean more money spent each month, but there may be greater protection against larger out-of-pocket costs later. The savings from low-cost Medicare coverage may also be a way to add more money to the household.
Next, discuss a long-term care plan and your loved one’s ability to pay for it through Medicare or long-term care insurance. You also want to encourage your parent to create or update an estate plan now. This way your loved one’s final wishes are clear.
Being a member of the sandwich generation doesn’t mean you either choose to care for your immediate family or your aging parent. A proactive approach to good money management and early communication can help you do both.
The advice provided is for informational purposes only. Contact a financial advisor for additional guidance.