Forecasting your family’s future.

If you’re trying to balance more than one generation in your family, you may be struggling financially as well as emotionally. The good news is there are things you can do to help yourself, as well as everyone else.

The feeling that there isn’t enough time in the day – or money in the bank – is one familiar to many people. More of us have found ourselves in this situation through a combination of many factors, including increased life expectancy, delayed parenthood and adult children living at home for longer. 

Being pulled in many directions can be challenging on your mental and physical health. Below, you’ll find some tips to get your money sorted, so you’ll know just how much financial help you can give your loved ones.

Financial pressures on the middle generation

If you’re in the middle generation, you are classified as a middle-aged adult who cares both elderly parents and your own children who at times face several competing money pressures.

Those in their 40s may have substantial debts, given the average Australian mortgage is currently around half a million dollars. Add to that expenses, like childcare or school fees, and money can often be tight – especially if one parent has taken time out of the workforce or is working part-time to care for kids.

If you’re in your 50s, you may face different, but no less challenging, financial pressures. Considering 36 per cent of homeowners are still paying off their mortgage when they retire, there’s a fair chance you are too. And then there’s the fact that 43 per cent of 20 to 24-year-olds and 17 per cent of 25 to 29-year-olds continue to live at home. Even if they pay you board, there’s a good chance you’re doing a lot of the heavy financial lifting.

Pressure to help adult children financially, especially with buying a property, is a big challenge for older Australians, many of whom “just can’t afford to give away large sums of money”, says Laura Menschik, a director at WLM Financial Services. The risk is that they leave themselves with little for their own retirement.

Retirement planning and intergenerational wealth transfer are emotive and complex issues for all families. However, whatever your family situation, there is no room for complacency, says Menschik, who argues retirement planning should start as early as possible.

Help yourself first and remember the big picture

Before offering to help family members financially, it’s worth getting your own finances sorted. If you don’t have a clear picture of your incomings and outgoings, put a budget in place. Then think about the future. What are your financial goals? Are you focused on paying off debts or building wealth? What additional expenses are you likely to face over the next 10 years?

If your carer responsibilities feel overwhelming, it could be tempting to consider moving to part-time work. But remember this would have a substantial impact on your day-to-day income and your superannuation. While your retirement may still be some time away, you don’t want to have to keep working longer, in order to help out others.

Contact the team at LA Wealth today so we can discuss money management strategies to take the pressure off your family’s future.

Disclaimer: Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.

Source: Godfrey Pembroke Group