When we are growing up, we are financially taken care of by our parents or guardians. Then before we know it, we have to start adulting and many of us take care of our own expenses. If you choose to have children and support your parents financially, you end up taking care of the generation before you, and the one after you. And that is why people with children and ageing parents are said to be in the sandwich generation or the gen S.
Being in the sandwich generation means you have the need to establish financial and health security for both your parents and your children. This means, that your cash outflow is high, and you feel like a candle being burnt at both ends.
If you are a gen S mom, here’s how you can plan and manage your finances.
Insurance Coverage
While many people underestimate the need for an insurance plan for their children, it is absolutely necessary to make them more financially secure. This means that you should budget for a plan for both your parents and your children, to ensure there is no last-minute emergency that drains your bank and puts you in debt. “Buy a Mediclaim/Health Insurance policy and life insurance policy for your parents, children, and yourself, and ensure that each one is adequately covered,” Sai Bhosale, a chartered accountant and financial advisor suggests.
You can add an accident disability cover for your parents and ensure your health is covered as well.
Investment of Funds
When you have so many financial responsibilities, simply saving up will not give you the desired results. Bhosale advises investing wisely, both on behalf of your parents and for your children. “Invest a substantial portion of post-retirement funds of your parents in schemes that are specially designed for Senior citizens like the Senior Citizen Savings Scheme and Pradhan Mantri Vaya Vandana Yojana, Senior Citizen Fixed Deposits. The balance funds can be invested in other investments like Mutual Funds, Bonds, etc,” Bhosale explains.
“Similarly, invest funds to plan your child’s education and your retirement. For Children, go for investments like PPF, Sukanya Samriddhi Yojana or LIC’s New Children's Money Back Plan or LIC’s Jeevan Tarun,” Bhosale adds. It’s important to start equity investments for your children early on. The longer the duration of your investment, the more it will get compounded.
Estate Planning and creation of Will
“No matter how uncomfortable the subject may be, it is important to get clarity from parents on asset distribution to their legal heirs after their demise. It is advisable to register the will to prove its authenticity,” Bhosale advises.
Set up an emergency corpus
It’s important that in case of emergencies or certain situations such as loss of income, you have enough liquid funds to help you remain financially secure. If you have medical insurance, your emergency corpus need not be that big, but if you don’t you will have to ensure you have a substantial amount.
Setting up of Funds
“Set up different funds for different needs and requirements. For Example, set up a fund for parents that provides for their vacations and gifts or other recreational activities. You may set up a fund for children’s extracurricular activities like art or hobby classes,” Bhosale advises.
Also Read: How To Equip Your Child With Financial Literacy