The so-called Sandwich Generation (adults supporting their aging parent(s) and their own children) is growing. In 2018, statistics showed that 12% of adults with a child living at home also provided unpaid care for an adult. And a recent survey showed that the long-term effects of the COVID-19 pandemic are expanding the Sandwich Generation to include more millennials.
Here at Guiding Wealth, we’ve seen an increasing number of clients who come to us because they are the linchpins of their families. They’re financially supporting their own children and their parents, siblings, or other extended family members. They feel immense pressure in this role; if they can’t continue to provide for everyone, the whole family will suffer.
Being in this position is extremely challenging on both a practical and emotional level, not to mention the financial strain. We know that there aren’t a lot of easy answers to these situations; inflation, rising healthcare costs, and a volatile market are making it increasingly difficult for many people to keep up with their own living expenses. Adding other family members’ financial needs to the mix requires careful planning and money management.
Take Care of Yourself First
One of the most common things we see in our Sandwich Generation clients is burnout. If you’re constantly worrying about providing for yourself, your kids, and your extended family, chances are you feel stressed and overwhelmed a lot. Burnout is extremely common in caregivers, and that includes financial caregivers as well.
Perhaps the most important piece of advice we can give is this: take care of yourself. It’s hard to change your perspective and focus on your own needs. You’ve been thinking about others and how you can help them for so long that it may even feel selfish to switch your focus to yourself. But you’re just as deserving of care as your family members are.
Taking care of yourself first is another way to care for others. It’s just like on an airplane when you’re told to put on your own oxygen mask before helping others. Protecting yourself can help ensure you’re able to continue providing for your family.
Make the Tough Choices
At some point, you may have to make some hard choices about how you’re supporting various members of your family. It will be a difficult situation, but you can ease some of the burden by thinking through things ahead of time.
Take the time to decide what you are willing and not willing to do for each member of your family. Think about each person and all the likely scenarios. It’s not a fun mental exercise, but it’s vital.
For example, let’s say you’re supporting your widowed mother and your out-of-work sister. If it gets to the point where you only have the funds to support one of them, which one will you choose? Knowing where you stand ahead of time can reduce some of the stress if you ever have to make that call.
Get the Facts
Before you start providing money to your family members, get all the details you can. Communication is essential; you don’t want to make life-changing financial decisions based on assumptions or partial information.
Talking about money can be awkward, especially with family members. But moving ahead without having those conversations can be disastrous and lead to even more uncomfortable situations down the road. It’s worth the discomfort to have clear, detailed discussions up front.
Create Healthy Boundaries
Once you’ve decided who you’re going to support and how, it’s time to work through the practical elements of the arrangement. How will you provide money? Who will decide how to spend the funds? Will you have veto power on certain expenses?
Even if you’re the sole provider, others may need to have some level of autonomy in their spending. Communicate clearly so that everyone understands how the arrangement will work.
Get the Paperwork in Order
Managing money is complicated, especially when there are multiple people involved. Once you’ve decided how you’re going to support your family members, get all the documentation taken care of as quickly as possible.
Think about all the paperwork you may need now and in the future:
- Power of Attorney forms
- Joint bank accounts
- Authorized-user credit cards
- Wills and trusts
You may also need to add names to real estate deeds, car titles, and other proofs of ownership.
Supporting Your Family Wisely
It’s vital to let your values guide your financial choices, and sometimes that may mean financially supporting various members of your immediate or extended family. The key to maintaining this support without burning out is to care for yourself as well. Don’t be afraid to make tough choices and to communicate your expectations and boundaries clearly.
What if you want to start financially supporting an additional family member but aren’t sure you can afford it? Talking to a financial planner is an excellent first step.
At Guiding Wealth, we have helped many clients organize their finances so they’re able to support their families without endangering their own retirement. To start working with a Certified Financial Planner™, call 214-810-3835 or schedule a consultation online.