Many of us are in or will be in a situation where we are responsible for not only bringing up your own kids, but caring (financially, physically, and/or emotionally) for an aging parent(s). This is known as the sandwich generation. This situation can put a lot of pressure on not only you but your family dynamic as well.
As I’ve talked about many times before, all of us have finite resources. These resources include energy, money, time, attention, etc. Each of these resources must be balanced and renewed often in order to keep operating. Obviously, self-care and good family and partner communication are vital when balancing both sides of this coin. While I am no self-care expert (in fact, I could use a little more myself), I can add value to the financial demands this situation can create. Here’s the crux of the question:
How do you help financially support your loved one(s) while also supporting your own current family and needs?
This post is written specifically to help an aging parent, but I think it also very much applies to siblings, cousins, or other family members or friends, that need, use, and sometimes drain our financial resources. Before I dive in though, let me also caveat that each situation and person is different. In this post, I’ll do my best to share resources, ideas, and principles, but please know that you must apply and adjust these to meet your specific needs for your specific situation.
Recently, I was asked about helping in a family situation where the son was helping his mother out financially. She had hit a rough patch while trying to financially make it by living on social security alone with no other financial resources or job income. In short, this kind son had invited his mom to move in with him and his family. In return, the son asked if the mother could help with a relatively small contribution in proportion to her income to the household budget (i.e., rent, food, etc.). By the time he came to me, there was already starting to be friction in this situation given that the mother felt that she still didn’t have enough to live on and spend how she would like. He was at a crossroads and trying to decide whether to ask her to leave or if he would just supplement her living expenses entirely.
My short answer is neither. I know there is a way to create a win-win solution for all parties involved where each can feel a constructive part of the house while the other is not feeling robbed.
On a personal note, my husband and I have a similar situation with my father-in-law. He has been living on a very limited social security disability check for several years since he became disabled and unable to work. Physically, he is still able to live on his own, but financially we needed to help him out in order for him to survive.
Last summer, we felt that we needed to do something more to help him manage his health, financial situation, and other needs. We were fortunate to find a solution that worked for us in terms of living arrangements, and we were able to move him from AZ to VA. This allowed us to be an hour and a half apart instead of halfway across the country. Since moving him out here, I have also been able to help him get his finances in order, which allows him to live on his own, take care of his own needs, and keep his personal dignity.
This is our version of making the finances work in our win-win solution:
1. Open Two Separate Bank Accounts
Starting off, we opened two separate bank accounts. One account was where his SSDI check is deposited. It serves as the main bill-paying account. This is where he pays us a portion of his income for rent, and then he covers water and electricity and any other utilities that are required to keep his house operating. He also pays his own cell phone bills (on our family plan), vehicle insurance, taxes, registrations, etc., from this account. Other than that, he doesn’t touch the account. He writes two checks a month usually for water and electric bills plus the automatic bill pays, but nothing variable (i.e., gas, food, clothing, etc.) comes from this account.
The second bank account allows for a small weekly living allotment for him to use for any needs that arise…food, clothing, gas, etc. In his case, the best option was to open a separate checking account at a different bank that is convenient for him in the small town he lives in. This allows him free ATM access, no-cost bank access, and other free amenities in his community.
2. Allow for Some “Freedom Spending”
The second account is key to this concept of “freedom spending”. This small weekly amount is put into the ATM account, and he can use it however he sees fit. It’s only a very limited amount and there is no need to discuss it with us since this is his freedom money that he can spend how he chooses.
In his case, this is a very limited amount so the decision often becomes whether to buy food or gas, but honestly, he can spend it however he wants without messing up the bill pay budget. Note this amount is divided up to a weekly amount since this is how he is used to being paid; he likes the peace of mind knowing that each Monday he will have this set amount in his spending bank account for him to use how he sees fit. There is also no stress for me or my husband since this is a set amount that we have worked into his budget. It’s a win for us because the bills get paid and a win for him so that he feels he has a little bit of “freedom” money that he can spend on what he wants or needs.
3. Getting Buy-in from all Parties
I must say that my father-in-law has been a champ in allowing me to actively help him set up this budget and this plan. He actively participated in this process, so I didn’t make the decision in a vacuum. Instead, it was a conversation with some ideas that let all of us feel a bit freer and offered him dignity. (Side note: I am not a signer on any of his accounts. My husband (his son) is a signer on his main expense account, but my father-in-law is the only signer on his small weekly allotment account).
4. Paying off Debt with Limited Income
So you might be saying that is great Mary but what about those who still have debt. Well, we’ve passed that hurdle too. The first thing, especially with a credit card or any revolving debt, is to stop using them. After a good discussion, he agreed that he didn’t need the credit cards and closed them out even though he still had balances to pay. He allowed me to help him set up a debt payoff plan (I’m a big fan of PowerPay which is free and super helpful in creating a plan). Since then, he has paid off 3 credit cards with a significant balance relative to his income in less than a year. After paying off these 3 cards in small monthly allotments, he can finally live debt-free on his very limited income.
By working together to set up these parameters for a spending plan, debt payoff plan, and bill payment plan to make sure all needs are being met, we’ve created a bit of “free” money that allows my father-in-law to still make decisions for himself. This helps all of us breathe easier knowing that the bills/needs are being met, but also allowing freedom to our father and grandfather to our daughters. It’s left us all happier in the long run.
Best of luck as you work on a win-win plan for your specific situation. You might start the conversation with what is working well and what could be improved with input from all parties. Then have a brainstorming session that allows everyone the opportunity to add their input for solutions (for a refresher on how to have hard conversations about money, go to my earlier blog post here). See what everyone is comfortable with and then talk through a solution that works for all involved parties. Hopefully, through a positive conversation (or a few), you can all work out a win-win solution for your unique situation.