Nailing your finances is tough with an increasing cost of living paired with our personal financial responsibilities. The ‘sandwich generation’ is a term used to refer to the specific struggle facing South Africans who are responsible for caring for their parents and children financially. We explore how to alleviate this pressure to avoid feeling like an overstretched ‘sandwicher’.
Are you a ‘sandwicher’?
Since many South Africans are caring for their parents and children, it’s tough to make provision when it comes to saving sufficiently for retirement. When speaking to a financial planner, it’s important that you are transparent about your personal financial demands, i.e. your ‘sandwich position’. This equips your financial planner to give advice that is realistic in making provisions for yourself and your dual-care duties.
Madri Jacobs, a Financial Planner at Sanlam, says: “If you are a family member who provides for your children, parents and/or siblings and the wider family – this could include people in your employment, such as a domestic helper – the question is, ‘How can I make this work?’ It’s vital to plan ahead and to have meaningful conversations upfront.”
Jacobs adds that looking after the financial needs of three generations takes serious planning. And when it comes to having the best chance of meeting financial obligations in the new year, there are multiple considerations to take into account.
Get very practical
Determine the needs of your dependants, then look at how to finance these. Take your own needs into account as well. As an example, a bank could lend you money to pay for educational expenses, but a bank will not lend you money to provide income in your retirement. As advisers, we always caution clients against using their retirement savings to assist parents and children, since it will be almost impossible to make these up, due to the opportunity cost of compound interest and limits to one’s budget for future savings.