How to protect your money when you have to take care of everybody else.
Family ties are increasingly putting financial pressure on South African parents.
A recent survey showed that more than a fifth of South Africans now have to support both their children and parents.
This so-called sandwich generation is squeezed between the needs of both children and parents, while trying to hold down a job themselves.
Many people are having children later in life
, and then find themselves with dependent offspring at a time when their own parents need more care.
Life expectancy has also increased dramatically, leaving them to look after their parents for many more years – while children at the same time tend to stay at home for longer.
In 1990, less than a third of South Africans between 18 to 24 years lived with their parents. Today almost 70% of them are still at home, and almost half of those between the ages of 25 and 34 stay with their parents, a recent Old Mutual study found.
The toll this can take on a household's finances, coupled with supporting elderly parents, is enormous.Put your retirement first
Finding money for your own retirement, while having to care for the rest of the extended family, is one of the biggest problems.
And where parents traditionally had some years' grace after their children left home to recover financially and pay off their bond, many people will now have to retire while still having to support children.
Also, with only a fraction of South Africans having enough retirement savings, chances are that you will have to support your parents
If you are responsible for your children as well as your parents, it is often difficult to think about long-term priorities. But the last thing you want is to end up in the same position as your parents, so make sure that you have retirement savings, says Karin Muller of Sanlam Personal Finance.
Get an expert view from a professional financial planner to make sure you are putting enough away.
And avoid dipping into retirement savings, no matter how tempting this may be, says Lynette Nicholson, head of research at Old Mutual.
Dealing with parents
- Don't wait until a crisis like a sudden illness, death or financial catastrophe hits your parents.
Talk to your parents regularly about their financial situation, to know what will be expected of you and your siblings.
Find a financial adviser to help them choose vehicles which will ensure them the best possible retirement cash flow.
- Make sure they have wills in place and ensure you have power of attorney, which will allow you to handle their financial, legal or healthcare matters if they are suddenly left incapacitated.
- If they do not have medical aid, you could add them as beneficiaries to yours once they have retired, says Muller.
Dealing with children
- Make sure all your siblings are updated regularly about your parents' situation, and call family meetings (long-distance teleconferences if need be) to make sure everyone is contributing equally.
- Many employed adult children are staying at home because they can't afford to buy or rent on their salaries.
The reality is that very few of these children contribute to household expenses, says Suzette van Niekerk of Exceed. When children are unemployed, it can add even greater strain to household expenses and family relationships.
She recommends that families draw up a household budget together. If they cannot pay their way, ask them to contribute by doing housework.
- Also, be realistic about how much support you can give, says Gregg Sneddon, a certified financial planner with thefinancialcoach.co.za.
There is, for example, nothing wrong with a student loan – it's the way most people can afford to study.
Also encourage older kids to look for ways to get additional income, like baby-sitting and odd jobs.
Read more on Fin24