FAMILY ties are increasingly choking many South Africans, ruining their finances for life.
A recent survey showed that more than a fifth of South Africans now have to support both their children and parents.
This so-called sandwich generation is squeezed between the needs of both children and parents, while trying to hold down a job themselves. (Make that a club sandwich, if grandparents and grandchildren are thrown into the mix.)
Many people are having children later in life, and then find themselves with dependent offspring at a time when their own parents need more care.
Life expectancy has also increased dramatically, leaving them to look after their parents for many more years – while children at the same time tend to stay at home for longer.
In 1990, less than a third of South Africans between 18 to 24 years lived with their parents. Today almost 70% of them are still at home, and almost half of those between the ages of 25 and 34 stay with their parents, a recent Old Mutual study found.
The toll this can take on a household's finances, coupled with supporting elderly parents, is enormous.
Part of the sandwich generation? Then keep this in mind:
Put your retirement first Finding money for your own retirement, while having to care for the rest of the extended family, is one of the biggest problems.
And where parents traditionally had some years' grace after their children left home to recover financially and pay off their bond, many people will now have to retire while still having to support children.
Also, with only a fraction of South Africans having enough retirement savings, chances are that you will have to support your parents as well.
If you are responsible for your children as well as your parents, it is often difficult to think about long-term priorities. But the last thing you want is to end up in the same position as your parents, so make sure that you have retirement savings, says Karin Muller of Sanlam Personal Finance.
Get an expert view from a professional financial planner to make sure you are putting enough away.
And avoid dipping into retirement savings, no matter how tempting this may be, says Lynette Nicholson, head of research at Old Mutual.
Dealing with parents• Don't wait until a crisis like a sudden illness, death or financial catastrophe hits your parents.
Talk to your parents regularly about their financial situation, to know what will be expected of you and your siblings.
Find a financial adviser to help them choose vehicles which will ensure them the best possible retirement cash flow.
• Make sure they have wills in place and make sure you have power of attorney, which will allow you to handle their financial, legal or healthcare matters if they are suddenly left incapacitated.
• If they do not have medical aid, you could add them as beneficiaries to yours once they have retired, says Muller.
"Taking away this expense means that they can use their income for other living expenses. Their medical expenses will increase as they get older and provision needs to be made for additional costs that will not be covered by a medical aid."
• Make sure all your siblings are updated regularly about your parents' situation, and call family meetings (long-distance teleconferences if need be) to make sure everyone is contributing equally.
Dealing with children:• Many employed adult children are staying at home because they can't afford to buy or rent on their salaries.
The reality is that very few of these children contribute to household expenses, says Suzette van Niekerk of Exceed. When children are unemployed, it can add even greater strain to household expenses and family relationships.
She recommends that families draw up a household budget together.
"The main benefit is that children will see how important it is to plan and how important it is to save."
If they cannot pay their way, ask them to contribute by doing housework.
• Also, be realistic about how much support you can give, says Gregg Sneddon, a certified financial planner with thefinancialcoach.co.za.
There is, for example, nothing wrong with a student loan – it's the way most people can afford to study.
Also encourage the kids to look for ways to get additional income, like baby-sitting and odd jobs.
Be cold-blooded about spendingIn these desperate times you should be ruthless about curbing your spending, says Sneddon. "Look after all the little amounts - R50 here, R100 there and the next thing you know you have saved a couple of hundred rands per month."
Make sure you have spent time going through the budget and that you know where every rand is going, and make sure you have no unnecessary insurance or debit orders.
Also try to stay away from credit, he advises.
"Research shows that we spend significantly more when we use a credit card than when we pay cash. There is no emotional attachment to a credit card purchase.
"Think about the last time you swiped – what was the amount?"
Lastly, make sure you are not confusing your needs with wants.
"You might need to replace a car, but it does not have to be an expensive one – you could do with a second-hand Hyundai," says Sneddon.
- Fin24