How to Manage Multigenerational Finances

2 - How to Manage Multi-gen Finances {Header Image}A grown child’s emergency car repair? An elderly parent’s new glasses? Meal-planning for a full house?

It’s all in a day’s work for the Sandwich Generation.

Whether you have everyone under one roof or consistent financial contact with family members around the world, you may have struggled with some of the unique planning challenges that Sandwich Generation members face.

Budgeting and managing the emotional aspects of integrated finances are often at the top of the list.

How can you make sustainable plans – and make sure that everyone is happy? Read on for some of the tips and tricks that we recommend to our Sandwich Generation clients.

Build your own budget first

It is so easy to put yourself last – after all, who wants to tell their parents that those new reading glasses will have to wait? But prioritizing family requests for help over your own financial needs could, at some point, become seriously unsustainable.

So instead of reacting to them, anticipate requests for help by budgeting for them. You know that you want to help and that your family might need it, so start by building a budget that accounts for that help.

Make sure to prioritize the following:

  • Your own recurring and necessary expenses (like housing, groceries, health insurance)
  • Your financial goals (like retirement, paying off credit card debt, or building a savings account)
  • Your own emergency fund

From there, you can assess what’s left, and how much you can reasonably afford to spend helping out your other family members.

Put this money aside right away. Depending on your family’s needs, you can use these funds to build a “savings account” for family assistance, or you can proactively contribute to family members’ needs with a monthly check.

Either way, your contribution is established and limited to what you can actually afford.

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Encourage independence by other family members

By setting an example of sustainable spending, you’re already taking an important step in helping other family members develop their own sustainable spending plans.

You could also:

  • Offer a clear amount of financial help, as noted above. This can make it easier for your family members to plan their budgets.
  • Make yourself available to help create a budget or spending plan.
  • Offer your services in helping an elderly family member reduce their costs on common expenses like insurance or cable TV.

Of course, it has to be said that in many cases total independence might not be in the cards – your elderly family member may have a limited income or illness, or your young adult child might be making their way in a difficult job market.

In these cases, do your best to foster a sense of self-sufficiency to the extent that you can, and recognize that sometimes inter-dependence is just as important in family life.

Talk through the difficult questions

Taking a clear view could help limit some of the difficult conversations that can arise around money. Because we’ve all been there: you need to say “no” to something, but you don’t want to hurt the other person’s feelings.

With your own insights into your financial picture, you could find that it’s easier to talk through those “no” decisions.

If the situation warrants it, you can share information about:

  • Your budgeting process and long-term financial priorities
  • The importance of sustainability in your own budget and life
  • Your need to build a solid financial foundation so that you can continue to help support your family members

Obviously, these conversations are highly dependent on the individual family in question (and, often, individual family members!). But know that with a plan of your own you can address what you can do to help and why.

Get creative

Sometimes, money issues can be addressed with something other than financial support.

To take one common issue: if your adult child is struggling to make rent, maybe it’s time to talk about what’s happening and whether there are alternatives to subsidizing your child’s cost of living.

For example:

  • If your child is working in a low-wage or entry-level job, maybe it’s time to consider a career change – or a lower-cost living situation.
  • If there’s a major cost-center eating up your child’s budget (commonly childcare or big-city rent), investigate a cheaper alternative. Could a family member or friend help babysit? Is a move to a cheaper area possible?
  • Find out if your child struggling with student or other forms of debt. Maybe it’s time to consider refinancing or renegotiating the payment plan.

Talking through some of these structural issues can be more beneficial in the long-term because it gets to the heart of the problem.

Of course, that’s not to say that any of these issues are necessarily simple to resolve. Sometimes, financial planning and re-imagining takes far more than a single conversation. But only by opening the lines of communication can you get on the path to resolving them.

Looking for more?

Our free eBook series on Sandwich Generation finances offers help with planning, guidance, and support for members of the Sandwich Generation. Covering everything from tax tips to lifestyle advice, you’ll get access to a lot of information in an easy-to-read downloadable format. Click here to download your copy today!

Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

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mportant disclosures

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.