Stuck in the middle: money management tips for the sandwich generation

If you’re trying to balance more than one generation in your family, you may be struggling financially as well as emotionally. The good news is there are things you can do to help yourself, as well as everyone else.

The feeling that there isn’t enough time in the day – or money in the bank – is one familiar to many people, but perhaps none more so than the sandwich generation.

Coined in the early 1980s, the term ‘sandwich generation’ describes people caring for both ageing parents and children (and, sometimes, grandchildren) while also juggling the demands of work.

More of us have found ourselves in this situation through a combination of many factors, including increased life expectancy, delayed parenthood and adult children living at home for longer.

Being pulled in many directions can be challenging on your mental and physical health. But it’s the financial wellbeing of the sandwich generation that’s most often overlooked. Below, you’ll find some tips to get your money sorted, so you’ll know just how much financial help you can give your loved ones.

Torn between two: meet the sandwich generation

It’s estimated 1.5 million Australians are part of the sandwich generation. The majority are women, who are still the primary caregivers in our society.

Within the sandwich generation, experts have identified two groups:

  • Traditional sandwich: People in their 40s, with younger kids and parents who are beginning to need help.
  • Club sandwich: Older members, sandwiched between elderly parents, older children (who may still be living at home) and grandchildren.

An illustration showing different types of families.

Financial pressures on the sandwich generation

If you’re a member of the sandwich generation, you could be facing several competing money pressures.

Take your traditional sandwiches. They may have substantial debts, given the average Australian mortgage is currently around half a million dollars. Add to that expenses, like childcare or school fees, and money can often be tight – especially if one parent has taken time out of the workforce or is working part-time to care for kids.

Meanwhile, if you’re a club sandwich, you may face different, but no less challenging, financial pressures. Considering 36 per cent of homeowners are still paying off their mortgage when they retire, there’s a fair chance you are too. And then there’s the fact that 43 per cent of 20 to 24-year-olds and 17 per cent of 25 to 29-year-olds continue to live at home. Even if they pay you board, there’s a good chance you’re doing a lot of the heavy financial lifting.

If you’re in either group, helping your parents out financially may mean you’re trying to stretch your money a long way.

Interested in more? Download MLC's free workbook How to plan your finances in a changing world to help you review and reset your goals.

Help yourself first and remember the big picture

Before offering to help family members financially, it’s worth getting your own finances sorted. If you don’t have a clear picture of your incomings and outgoings, put a budget in place. Then think about the future. What are your financial goals? Are you focused on paying off debts or building wealth? What additional expenses are you likely to face over the next 10 years?

If your carer responsibilities feel overwhelming, it could be tempting to consider moving to part-time work. But remember this would have a substantial impact on your day-to-day income and your superannuation. While your retirement may still be some time away, you don’t want to have to keep working longer, in order to help out others.

Money management strategies to take the pressure off

Once you’ve got a handle on your own finances, you can consider the financial needs of your parents and children. Here are some tips that might help reduce some of the financial pressure.

  • Make a plan for yourself. Look at your own finances and think about where you want to them to be. Look into setting up a household budget and savings objectives and investigate whether paying down debt or investing in wealth creation – or a mix of both – can help you achieve your future goals.
  • Prepare your children. If your adult children still live at home, perhaps they can pay rent, or cover some household expenses? It’s a good idea to have a conversation about their plans and whether they’re likely to need financial assistance to one day fly the coop.
  • Familiarise yourself with your parents’ finances. Even if they don’t need your help with funding their care, they may need a hand navigating the aged care system and managing their finances as they age.
  • Include family. If you have siblings, discuss how to divide the costs and responsibilities of caring for your parents. If one sibling contributes more financially, consider whether an agreement to repay this from your parent’s estate is appropriate and ensure their wills are updated to reflect this.
  • Look for government resources. Look into whether you, your parents or your adult children qualify for government subsidies. You can apply for an aged care assessment through the Australian Government’s My Aged Care website, while Centrelink has information about family benefits including carer entitlements, childcare subsidies and rent assistance.
  • Consider seeking professional help from a financial adviser. When it all feels too much, a financial adviser can go a long way in helping you make sense of it all, whether that’s by facilitating a family conversation, checking government entitlements or setting a budget or investment plan that’s aligned to your and your parent’s goals and objectives. Keep in mind that there are advisers who specialise in putting aged care financial strategies in place.
  • Read and research. It’s also a great idea to work your way through MLC’s essential workbook for the ‘sandwich generation’, so you have a better understanding of your finances before you decide to make any changes.

While it has its challenges, caring for others can be very fulfilling. Getting the financial side sorted can help you make the most of your time with loved ones during these sandwich years. It also allows you to build and protect your family’s legacy for future generations.

Start the conversation to see how a financial adviser can help you.

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