Caring for both children and aging parents can lead to increased financial demands, especially post-pandemic. Here are strategies to maintain financial equilibrium.
The pandemic has significantly altered our lives, reshaping our emotions, jobs, families, and finances. While some managed to reduce expenses and eliminate debts, many faced increased financial pressure.
A recent study highlighted the struggles of the sandwich generation—those juggling children and elderly parents—showing that spending has surged since early pandemic days.
On average, caring for an elderly relative costs about $1,000 monthly in normal times, but over half of those surveyed reported spending significantly more since the pandemic began. Notably, 23% spent at least $200 extra monthly. Jeff Beligotti, a vice president at a major financial firm, noted that many caregivers are dipping into savings, delaying bill payments, and cutting back on debt reduction.
This rise in expenses poses a major challenge, often hindering other life goals as caregivers prioritize others' needs. Shelly-Ann Eweka, a financial planning expert, points out that long-term care costs have been increasing faster than inflation, with in-home care costs rising at an annual rate of approximately 4% over the last five years.
These rising expenses can greatly affect your budget and long-term financial health. However, you can support your loved ones while managing your financial situation. Here’s how to achieve a healthier balance.
Reach Out to Family for Support
If you're fortunate enough to have a support system, now's the time to connect. Even a few hours of help per week can ease your financial burden more than you might expect. People who care for you will often want to assist, so don’t hesitate to ask for the help you need.
Avoid Tapping Into Savings
“If you sacrifice your retirement, you’ll only put your children in a similar position,” warns Eweka. While it’s natural to feel the pressure to support aging parents, consider how your financial decisions will affect both your future and your children’s.
Everyone wants their children to thrive. Focus on how you can assist both your parents and your kids while ensuring your own financial independence. That’s a true gift.
Assess Your Financial Situation
Take a close look at your budget. Analyze where your spending has changed. Are there areas where you can cut back or redirect funds towards caregiving? This is also a good time to explore local programs that might become available due to recent changes in your income or your parent’s income. Consult friends, family, community resources, and financial advisors.
Collaborate with a Financial Advisor
Research indicates that partnering with a financial advisor can significantly alleviate the financial strain of caregiving.
43% of those prepared to care for a loved one reported collaborating with a financial professional to facilitate their responsibilities. Those who engaged with an advisor were much less likely to resort to emergency savings, personal loans, or extra jobs to fund future care.
Your financial advisor can also inform you of possible benefits you may qualify for due to changing circumstances. For instance, your family member might now qualify as a dependent.
Don’t hesitate to seek assistance during this challenging time. You’re managing a lot, and it’s crucial not to jeopardize your financial future. Your family may rely on you now, but remember that “future you” also deserves a secure and stable life.
