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The Best Budgeting Tips for the Sandwich Generation

Family eating dinner

Taking on the financial burden for three generations at one time can feel overwhelming. Yet 23% of American adults are supporting multiple generations of their family. They are part of what some call the “sandwich generation”.

If you’re a member of the sandwich generation, then you’re likely familiar with some of the common stressors these caretakers face, such as anxiety, depression, burnout, and general fatigue. Fifty-two percent of Americans in the sandwich generation have experienced “serious suicidal thoughts,” according to a 2021 report.

Although budgeting can’t fix everything, eliminating some of the financial burden caretakers face can help ease some of the stressors that can so commonly snowball into bigger problems.

Below is a list of helpful budgeting tips for the sandwich generation to help free you from falling into financial catastrophe.

What Is the Sandwich Generation?

Anyone who has at least one financially dependent child and at least one aging parent to care for is considered part of the “sandwich generation”. They are squished between two financially dependent groups who need physical care and emotional and financial support.

Those in the sandwich generation are often between the ages of 35 and 50. But while terms like “millennial” or “Baby Boomer” refer to a specific age group, the term “sandwich generation” doesn’t refer to a group of people born in a particular period. You can be a member of the sandwich generation as a 20-year-old just as easily as you can at 65—the only criterion is that you’re simultaneously caring for the needs of your parents and your offspring.

Budgeting Tips for the Sandwich Generation

Budgeting doesn’t have to be complicated or difficult. The key is to take it one step at a time and only focus on the next step in the process. That way, you can avoid overwhelm and ensure you remain on track to achieve your financial goals.

You can get started by following the steps below.

Start by Understanding Everyone’s Financial Situation

The first thing to do is thoroughly review all financial assets or income.

Start with your household. Are you a single-income household, or do you have a partner that contributes financially? Don’t forget to consider any investments and side hustles.

Once you have added up all your income, factor out any money spent on housing costs, utilities, food, insurance, and transportation: anything you need to live comfortably.

If you plan on spending your personal time providing for your parents (cooking, cleaning, etc.), then make sure you recognize that helping them could decrease the number of hours you spend at a job. This will affect your income significantly.

It’s essential to examine your aging loved one’s financial situation as well. As awkward as it can be, it’s essential to talk with your parents as early as possible. Decide how much financial help you think they need.

Have a completely transparent discussion with your parents about their finances. Determine how much they receive through income, including Social Security benefits or pension payments. Request copies of their bank statements, bank history, investments, debts, and insurance policies.

Learn About Budgeting

If you aren’t familiar with budgeting, don’t be afraid to look for help. See if there’s an in-person class in your city. Ask friends and relatives who are more experienced to help you, or search for online videos, articles, and classes that can give you simple budgeting techniques.

Try a Percentage Budget

An easy way to get started budgeting is to break up your income into percentages. For example, a 50:30:20 budget means you use 50% of your income to pay for basic living expenses, 30% for unnecessary purchases, and 20% goes into savings.

However, not everyone can afford to only spend 50% on living expenses. If this is your situation, adjust the percentages until they fit your situation. Try a 70:20:10 budget or an 80:15:5.

Find Where You Can Cut Back

Once you understand the needs and financial requirements of daily living, you can separate needs from wants. Determine which expenses are unnecessary and make a clear list to show your parents and children where you might decrease your spending.

If you find your household needs to cut back on spending, talk openly with your children if they’re old enough, and let them contribute ideas for how you all can save money together. Speak openly with your parents and find parts of their lifestyle they can go without.

Some simple money-saving ideas:

  • Eat out less.
  • Cut down on back-to-school costs.
  • Attend fewer entertainment events, such as movies, sports games, or concerts.
  • Only buy what you need. Leave the unnecessary snacks or new clothes on the store shelf.
  • Do not waste water, electricity, or heat in your home. Turn off lights when you don’t need them, take shorter showers, and turn the thermostat down a few degrees.

Put Your Financial Needs First

On an airplane, they always tell passengers to secure their own oxygen masks before helping others around them. With finances, we recommend the same strategy.

Try to set aside a small amount of money for unexpected emergencies, such as medical issues or damages to your home or car. Then when an expense pops up, you already have an emergency fund.

Your financial safety, savings, and retirement funds should remain the priority. Without those, you may inadvertently put your children in the same situation you’re now in providing for three generations at the same time.

Consider ways you can plan for the future and upcoming financial needs.

Look into:

  • A 401k retirement plan: Many employers offer a 401k. Make sure you regularly contribute to your plan.
  • A Roth IRA: An Individual Retirement Account (IRA) will put money away so you can withdraw it tax-free when you eventually retire.
  • A 529 College Savings Plan: If your children plan on attending college, a 529 plan will set aside tax-exempt money for their future expenses.
  • Life insurance: If you died prematurely, your dependents would receive money to cover their needs, even if you were no longer there to provide for them.
  • Long-term care insurance: If your parents needed to enter a long-term care facility or program, you would have the means to provide for them.

Plan for Upcoming Expenses

The needs of every aging parent may vary depending on the situation. Some parents may only require help with groceries or cleaning, while others may need help to pay their fees for retirement homes or care facilities. With age, almost all will require increased levels of care. Consider when you may need to pay for in-home care, medical procedures, or retirement facilities.

When you have an idea of what to expect, make plans and budget accordingly.

Don’t forget about planning for your child’s future as well. Map out the upcoming financial needs of your children: What will their education payments be next year and the year after? Do you need to help them pay for college or trade schools?

Work with Your Other Family Members

couple working on their financesDon’t take the entire burden upon yourself alone. Work with the other parent of your children (if not in your household) to split the financial requirements of the children.

In regard to your parents, contact siblings, family friends, or community members and ask for help to plan for their future. Come up with ideas together to provide for them as their needs increase.

As your parents age, their cognitive ability may decline. The earlier you have financial conversations with your parents, the more likely they are to give correct information and thoughtfully help you set up plans for their future. If you can, try teaching your parents how to budget and set financial goals for the next few years. Impress on them the importance of considering long-term care homes or medical expenses that could come up unexpectedly. Teaching them to budget on their own will ultimately eliminate their need for your help.

If your children are adults but still dependent upon you for financial support, consider having an honest conversation with them about becoming more financially independent.

Contact a Financial Advisor and Make Plans for the Future

While many believe they should handle the financial strain of multiple households on their own, we recommend getting professional help.

Financial advisors are trained and have experience guiding families through situations such as these. An advisor will help you become aware of programs and resources in your area which could help your parents or children with basic costs.

An advisor will focus on long-term solutions and strategies that can ease financial burdens and give you a clear picture of your future and your options.

Power Texas Finance Can Help

While you may feel overwhelmed by financial burdens, there are ways to alleviate your stress by following our budgeting tips for the sandwich generation and planning for a more stable financial future.

If you need even more help, contact Power Finance Texas. We have solutions to help you get started when you need cash fast to pay for unexpected expenses and provide for your family.

Those with a valid Texas driver’s license can receive a loan in just minutes, eliminating the need for panic or lengthy meetings at a bank. We’ll help you get on your feet so you can move forward and provide for those who need you.

See how Power Finance Texas can help you today.