The “sandwich generation” is a phrase used to describe people who are caught between caring for two generations of family members including minor children and elderly parents. This frequently happens to Australians who have children later in life. The high cost of housing is also an influencing factor; with housing being so expensive, it is now commonplace for multiple generations of Australians to live together in the same house. Another influencing factor is that Australians’ lifespans are growing increasingly longer.
As of 2013, experts had estimated that as many as 1.5 million Australians were “sandwich generation” caregivers. Perhaps you’re amongst those who are experiencing this trying situation. If so, consider the following 5 tips intended to help you juggle multiple financial responsibilities:
1. Consciously Prioritise Your Family’s Spending
Many Australians run out of money well before they’re due to get their next pay cheque. It’s especially easy for this to happen when you’re trying to take care of both kids and elderly parents. The most practical way to avoid this situation is to pass on impulse buys and instead, to be highly conscious of how you spend your money.
To accomplish this, simply implement a budget and do everything you possibly can to stick to it.
2. Harness Technology to Automate Your Finances
Making a workable budget isn’t easy, and sticking to one is even more challenging. However, you can harness the power of technology to make this part much easier than it would be otherwise.
To maximise your chances of success, you’ll ideally want to have one checking account and multiple savings accounts. Each savings account will represent one of your major savings goals. For example, you may wish to consider setting up a university savings account for each of your children. You can set up your pay cheque to be direct-deposited into your checking account and then set up automatic transfers to each of your savings accounts that will happen after your pay cheque hits your main checking account. You’ll also want to set up automatic payments for bills such as utilities and rent.
If you can make these things happen automatically, they will happen. If you fail to do this, they are far less likely to happen; you’ll have to be disciplined enough to ensure that the funds all get where you want them to go. Why take chances with this? Automating it will ensure that you are systematic about saving for the things that are truly most important to your family.
3. Figure Out Who’s Paying for Aged Care and How Much It Will Cost
Ideally, elders would all pay for their own aged care – but in reality, it doesn’t always work out that way. Hopefully your parents were proactive about saving money and contributing to their super funds. If they weren’t, you can’t exactly leave mum and dad out in the cold, can you? So their problems become your problems.
You may wish to evaluate the inclusion of aged care savings as an item on your monthly budget. If your parents will need your help, hopefully you’ll still have time to do this. Everyone is different, but many senior citizens cease being able to fully care for themselves at some point after they celebrate their eightieth birthday.
4. Consider Seniors’ Health Insurance
No matter what else happens, you can count on public Medicare to ensure that both your children and your parents are cared for in the event of most medical emergencies. However, Medicare doesn’t always offer the absolute best value on healthcare. There are instances where private health insurance can actually offer a more substantial value – particularly in cases where your elders would frequently need to take medications that are not covered by Medicare or would need elective surgeries that have horribly long wait times through the public system. It is beneficial to research senior citizens’ health insurance to ensure you will actually get the best value for the money your family will spend on healthcare.
5. Implement a Retirement Savings Plan for the Future
Everybody needs to have a savings plan, but savings are particularly critical for single mums who are also caring for elderly parents. It would be all too easy to spend all your money helping your children and your parents at the expense of your own retirement funds. You don’t want to find yourself destitute when you reach retirement age, and this is an all too real possibility if you aren’t proactive about contributing to your own superannuation fund. Ideally, you’ll also want to have an emergency savings fund available to cover life’s unexpected problems as they arise.
Nobody can be assured of accurately predicting what financial markets will do in the future, but many finance experts believe that inflationary times lie ahead of us. If you agree that this is a situation to be concerned about, you will want to ensure that your savings plan includes some hedges against inflation.
There are many ways to do this. One possibility is to consider implementing a self-managed superannuation fund that could include hard assets such as property, precious metals or artwork. It is not guaranteed that these assets will maintain their value through inflationary periods; however, historically, such assets have had a strong track record of doing so. AJ Agrawal at Inc.com points out that real estate, precious metals and artwork have typically been the assets that the ultra-rich use to preserve their wealth through economic downturns.
There are many potential pitfalls to be aware of, such as high taxation rates on precious metals; for this reason, we recommend that you consult a financial advisor for well-considered advice that is tailored to your family’s unique situation before you make any substantial investments.
If you’re feeling a financial burden as you try to care for your children, yourself and your parents, these 5 tips could potentially help you to ease the strain. If you find that, despite taking these measures, there still isn’t enough money to go around, don’t hesitate to ask for help from siblings or other family members who may be able to provide it. There are also public resources for carers that you may be able to take advantage of. Lastly, a financial advisor’s help will be invaluable for identifying other ways you may be able to better your family’s financial position.