Article provided by Sharon Bonfield, St James’s Place
How to ensure a safe financial future for yourself, your parents and your children during the current crisis.
Members of the sandwich generation are women (and men) in their 40s, 50s and 60s who are bringing up their own children while also providing care for their parents. Faced with increased financial strain at the best of times, they are pulled in many different directions, often trying to save for their own future during a critical period in their working life.
In the current climate, the sandwich generation is facing additional challenges, with the pandemic impacting jobs, businesses, schools and home life. What’s more, recent research by The Institute for Fiscal Studies (IFS) and University College London (UCL) revealed that the burden is falling disproportionately on women, with mothers doing, on average, more childcare and housework than fathers who have the same work arrangements.
It’s the perfect storm of financial, emotional and time pressure. You might be in a senior role at work and have to juggle management responsibilities with the challenge of working from home. Or you might have been furloughed from your current role and face the prospect of a cut in income.
So, amid this ‘perfect storm’, what can women of the sandwich generation do? Many of us would invest in a personal trainer to help with fitness goals, so why not consider the same approach with financial goals? It pays to get support from a financial advisor, but in the meantime, here are some tips on how to support your parents and your children – while also taking care of yourself.
How to help your parents
- Talk to your parents about the dangers of financial scams to help prevent them from falling victim to online or telephone fraud. Keep in regular contact (via phone or digitally) and make sure they’re aware that you’re happy to discuss any money concerns that they may have.
- Whether your ageing parents live with you, by themselves or in a care home, this is an anxious time. And while money is never an easy topic to talk about, having a conversation will allow you to plan for the future more effectively.
- Do you have a clear understanding of your parents’ assets, income sources, living expenses and debts? Do they have life insurance or long-term care insurance? Are they claiming all the benefits they are entitled to? These are some of the facts to establish.
- Consider involving a financial adviser at this point . It can help with what can end up being an emotional conversation and will therefore help to restrict the discussion to the facts and figures.
- And though it is a difficult subject, it’s important to check that your parents’ affairs are in order. Will creation and legacy planning will be front of mind for many people during this time of uncertainty, and it’s worth taking a look to make sure everything is up to date. Also note whether they’ve specified who can legally take control of their finances should they become unable to make decisions on their own.
How to help your children
Whether your children are younger and home from school, or older and back living at home they will likely need increased emotional – and possibly financial – support.
- Thinking about money as a family, rather than each generation trying to manage alone, is a great place to start, and has the added benefit of introducing younger generations to financial planning.
- Ask yourself: What are you currently paying for child-care or schooling? Are you saving for a child’s education, or to help with a first-home purchase? Are loans and gifts to your children being structured in the most flexible or tax-efficient way?
- Pensions and Junior ISAs are great opportunities to give children a financial head start, and it’s worth contributing even in times of volatility. In the March Budget, the annual allowance for a Junior ISA was more than doubled to £9,000. A parent or guardian must set up the Junior ISA, but anyone can pay into it, and there is no tax to pay on any income or gains. And even small contributions into a child or young person’s pension can make a big difference over the long term.
How to help yourself
Remember, to continue caring for your children and your parents, you need to take care of yourself.
- Use your time in lockdown to give your budget a spring clean. Are there monthly costs that you could eliminate or reduce? Are you using available tax breaks? You may even find there is an opportunity to make the most of a fall in share prices and invest for the future.
- It can be tempting to try to predict the future, or react to events as they happen. Talking to a financial adviser can help you make a financial plan in a calm, rational way, rather than reacting to news stories or your own emotions.
- If you can, continue contributing to your own pension and savings. Sacrificing saving today could result in financial strain tomorrow. In addition, life insurance and financial protection are relevant now more than ever – we may not like to think about death, serious illness and long-term sickness, but they’re especially important if others rely on you financially.
Look after you and yours.
Sharon Bonfield works at St James’s Place.
Sharon works in Marketing and specialises in women and money.
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