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Credit Coach: What are the budget implications for the sandwich generation?

I recently had the role of the middle man in heated financial discussions between a grandmother, a daughter, a niece and a nephew.

I recently had the role of the middle man in heated financial discussions between a grandmother, a daughter, a niece and a nephew. They were discussing finances, minimum wage, university costs, housing prices and comparative effort levels in the work force. As an observer to the conversation without a point to prove, I was able to take in some valid points from each individual. Each made winnable arguments as to which generation had the rougher go.

As a practicing Licensed insolvency Trustee with BDO Debt Solutions, I have worked with all age groups. This three-part blog series will talk about some of the current challenges facing three generations: millennials, the sandwich generation and seniors. I’ll provide you with some tips and tricks and identify some pitfalls to help you avoid falling into debt.

The sandwich generation is a term used to define the financial and debt implications for folks in their 40s and 50s, and even 60s. People in this age group can be raising a family or supporting adult children (millennials) while also financially helping out their aging parents (seniors) — they are therefore “sandwiched” in between the two generations.

Canadians in the sandwich generation are pulling their hair out financially. Think of the challenges they’re facing:

  • Higher housing prices
  • Heavy student debt loads — an issue for millennial children, but also for 40-something parents
  • Lower paying part-time jobs for their growing children
  • Aging parents who still want to keep their independence, even though pensions are largely fixed and retirement savings may be inadequate

So what can Canadians do who are facing this crunch?

  1. Research the topic. Information is plentiful these days. Search out blogs and articles on the topic of the sandwich generation. Do your research into elder care and the costs associated with taking care of mom and dad when they reach 70 or 80 or 90. If your house is paid off and you’ve been out of the market for a while, take the time to research today’s housing market. Keeping tabs on housing prices and keeping in touch with mortgage rates will help you prepare your children for their first home purchase.
  2. Have a financial heart to heart with all those you are watching over. It can be a very difficult conversation with kids that are 21 and have their own opinions, and/or an independent mom or dad that can’t bear to burden you with the hidden credit card bills or the fact that they been scammed by some slick telemarketer. However, if you are sandwiched in the middle and your finances are going to be called upon as the cornerstone, you need to know where everyone else is sitting with their debt.
  3. Make it a priority to create a budget for all involved — this is critical. You will want to ensure that either family member (your senior parents or your child) is keeping track of spending and expenses, keeping up with debt payments and not slipping towards personal bankruptcy. Don’t forget to mind your own finances. During this stage it is often wise to stress test your financial health, so you and those you are supporting will know how much financial support you can truly give.
  4. If you sense a financial problem seek help. If mom or dad or one of the kids in your charge were ill you would immediately reach out for the best care possible. I have often found it funny that we seem to have no problem being poked and prodded in the most private of spots by a doctor that is sometimes a complete stranger, however when it comes to debt problems, many find it far too embarrassing to go and sit with a debt help professional and get the information they need.

Communication in all areas of one’s life is critical for success. If you’re faced with the task of caring for two generations — an adult son or daughter attempting to spread their wings and aging parents not yet willing to give up the family home — make sure that everyone is on the same page financially and knows the expectations. The tips above will go a long way towards helping you avoid being sandwiched in.

Share your sandwich story and how you survived @JSCreditcoach or tell us about it in the comment section below.

Jayson Stoppel is a Licensed Insolvency Trustee and Chartered Accountant with BDO First Call Debt Solutions. With over 15 years in practice, Jayson assists individuals, families and companies with financial difficulties in Thunder Bay and throughout Northwest Ontario. To reach Jayson by email: