A pandemic financial plan for all the family
- Credit: Archant
Members of the sandwich generation, (those in their 40s, 50s and 60s) who are bringing up children while also providing care for their parents, face increased financial strain in the best of times, says expert James Cridland, director of North Somerset company Coleridge Wealth Management.
In the current crisis, the pandemic is impacting jobs, businesses, schools and home life.
It’s the perfect storm of financial, emotional and time pressure. You might be having to juggle parenting responsibilities with the challenge of working from home. Or you might have been furloughed and face the prospect of a cut in income. Added to this, there are concerns about the performance of your pension and other investments given recent stock market falls.
So, amid this perfect storm, what can you do? Here are some tips on how to support your parents and your children – while also taking care of yourself.
How to help your parents
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Whether your parents live with you, by themselves or in a care home, this is an anxious time. And while money is never an easy topic to talk about, having a conversation will allow you to plan for this period of uncertainty more effectively.
Do you have a clear understanding of your parents’ assets, income sources, living expenses and debts? Do they have life insurance or long-term care insurance? Are they claiming all the benefits they are entitled to?
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Talk to your parents about financial scams in order to help prevent them from falling victim to online or telephone fraud.
And though it is a difficult subject, it’s important to check that your parents’ affairs are in order. Will writing and legacy planning will be front of mind for many people during this time of uncertainty, and it’s worth taking a look to make sure everything is up to date. Also note whether they’ve specified who can legally take control of their finances should they become unable to make decisions on their own.
How to help your children
Whether your children are home from school, back from university, or they have been laid off from their job, they may need increased emotional – and possibly financial – support.
Thinking about money as a family, rather than each generation trying to manage alone, is a great place to start, and has the added benefit of introducing younger generations to financial planning.
Ask yourself: what are you currently paying for childcare or schooling? Are you saving for a child’s education, or to help with a first-home purchase? Are loans and gifts to your children being structured in the most flexible or tax-efficient way?
Pensions and Junior ISAs are great opportunities to give children a financial head start, and it’s worth contributing even in times of volatility. The annual allowance for a Junior ISA has now more than doubled to £9,000. A parent or guardian must set up the Junior ISA, but anyone can pay into it, and there is no tax to pay on any income or gains. And even small contributions into a child or young person’s pension can make a big difference over the long term.
How to help yourself
Remember, to continue caring for your children and your parents, you need to take care of yourself.
If you can, continue contributing to your own pension and savings. Sacrificing saving today could result in financial strain tomorrow. In addition, life insurance and financial protection are relevant now more than ever – we may not like to think about death, serious illness and long-term sickness, but they’re especially important if others rely on you financially.
Use your time in lockdown to give your budget a spring clean. Are there monthly costs that you could eliminate or reduce? Are you using available tax breaks? You may even find there is an opportunity to make the most of a fall in share prices and invest for the future.
When markets have dropped, it can be a good time to save and invest. It may seem counterintuitive, but you are buying cheap stocks.
Look after you and yours. If you have any questions or concerns about intergenerational financial planning, just ask a financial adviser. They’re there to help.
To receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Coleridge Wealth Management on 01275 430024 or email firstname.lastname@example.org