How to weather the financial challenges of caring for both parents and kids
With today’s economic uncertainties, earning a livable wage is tough. The challenges only grow when that money must stretch to provide for more and more people. According to a recent survey, people in the sandwich generation – those who provide financial support and/or caregiving for both their children and parents – are struggling with a lower quality of life.
“This dual caregiving role creates financial pressure from multiple directions,” says Russell Graves, executive director of the National Foundation for Debt Management, an FCAA member agency.
This pressure can be surprising and overwhelming. Most people don’t expect to be caught caring for both their kids and their parents at the same time.
“There are costs associated with caring for children and parents,” explains Kimberly Cole, community engagement manager for Navicore Solutions, also an FCAA member. “When couples are planning their financial future, many do not anticipate the cost and time commitment of caring for their aging parents.”
Despite the gloomy survey results and rough patches the so-called sandwich generation faces, there is hope. In this article, the FCAA offers useful strategies and actionable tips to help you navigate the challenges.
Challenges facing the sandwich generation
A whopping 66% of Americans report being the primary financial providers for their child(ren) and parents or older relatives, according to an Intuit Credit Karma survey. Half of them say that doing so prevents them from living how they want to live.
The financial hardship can be significant. Nearly a quarter of people spend up to $3,000 a month on their children. Twenty percent spend about the same amount on their parents or aging relatives. Costs add up when there are more mouths to feed, day care to pay and doctor appointments and medications to juggle.
Competing priorities
As a parent, your job is to love and care for your children. As a child, you are to love and respect your parents. When these two roles collide, it can become difficult to set boundaries around what your obligations are and how you can best care for the people you love.
“Both children and parents come with their own individual financial needs,” said Cole. “For instance, you may incur high medical costs for older adults and college tuition for children. This can cause incredibly high debt accumulation as you try to manage both.”
Credit counseling agencies often see people struggling with how to prioritize their finances and ultimately overextending themselves.
“When resources are stretched thin, many rely on credit cards or personal loans to fill the gaps, which can spiral into unmanageable debt,” Graves noted. “One bump in the road will cause their budgets to collapse.”
Depletion of the emergency fund
To cover expenses, those in the sandwich generation may drain their emergency savings to cover unexpected expenses. Unfortunately, when that happens, there is no cushion to fall back on if an appliance breaks, a car needs repair or a medical emergency happens.
“We typically recommend saving three months of salary in an emergency fund,” said Cole. “In most cases, that should reasonably cover emergency expenses. But, when your savings must extend to the care of your parents, you will need significantly more.”
The hidden costs of caregiving
The cost of raising a child from birth to age 18 is estimated between $200,000 to $310,000, depending on where you live and your child’s specific needs and interests.
“We anticipate costs such as daycare for our children, which can be very high depending on where you live,” shared Cole.
Elder care can cost even more. The unexpected additional costs associated with caregiving can easily blow a budget off course.
“If a parent is experiencing a situation in which they require care, the cost can vary greatly depending on the amount of time and the skill level necessary for care,” said Cole. “It may be in the form of a day program for those with dementia or an in-home nurse to provide care and medication for a parent.”
Some people lose wages when they have to take time off work to care for family members themselves. Furthermore, those in the sandwich generation often have to defer retirement savings to meet present expenses.
Weathering the financial challenges of caregiving
Thankfully, there are strategies for navigating the financial challenges that arise from caring for both your children and parents. FCAA member credit counselors help people set financial priorities, build a realistic budget and get out of debt. They offer some valuable advice:
Talk about finances with your family and make a plan
First, identify the financial obligations you see on the horizon (or directly overhead) and make a plan to address them.
“Begin by establishing a budget that reflects both your personal household expenses along with the expenses for your parents. This will give you a good picture of how much money you will need each month,” says Cole. “And, I always advise people to continue making payments into their retirement account, so when the time comes for retirement, they will not have the same issues as their parents.”
Graves advises prioritizing your debt: “Always always prioritize paying for your house before your credit card.” He also recommends giving yourself grace. “Set a realistic budget, but be flexible and forgiving if you exceed it.”
Next, have a family discussion about shared costs. Involve your siblings or other family members to see if they can take on some of the burden. Remember, help does not always need to be in the form of money; it could be time or assistance in other areas.
And finally, Coles recommends creating a separate bank account for the expenses and income of your parents.
Reach out for professional advice and support
Accept the fact that you cannot do it all by yourself. As Graves says, “Don’t be afraid to ask for help.”
- The Financial Counseling Association of America is a valuable resource for individuals who need help with debt. FCAA member agencies have certified credit counselors who can provide a non-judgmental perspective on your situation. These counselors help thousands of people each year and are ready to assist during this challenging time.
- “Seek advice from a professional who focuses on elder law and elder financial issues to determine what your obligation(s) will be,” suggests Cole.
- Find resources for aging parents by contacting a local ombudsman or your state’s Department of Aging to identify programs or funding for which your parent or relative may qualify.
Ask your employer for flexible work arrangements
When managing care for both children and parents, things can become very stressful without family support and flexibility from your employer.
“Speak with your employer about the possibility of working from home or the option for a more flexible schedule,” said Cole.
Just like an employer would accommodate your schedule to pick up a child from daycare, the same should hold true if you’re picking up an older parent from adult care.
Research your state laws on employee rights, and be prepared to have a professional and respectful conversation with your employer to discuss your options.
Take care of yourself
The old adage about putting your oxygen mask on before helping others with theirs holds true in this instance as well. Be sure to prioritize your own physical and emotional well-being during this stressful time.
You can survive the sandwich generation years – and we can help
Remember, caring for children and parents at the same time is exceptionally challenging but important work. When your finances are stretched, don’t hesitate to contact the FCAA and connect with a certified credit counselor for advice.
Beyond assisting you in developing a realistic budget or enrolling you in a debt management plan to pay off your debt, our member agencies have many other tools, resources and contacts that can help.