caring for kids and parents

The Sandwich Generation Survival Guide to Finances

For many US adults, as you enter your 30’s, 40’s, and 50’s, a new financial puzzle pops up: caring for kids and parents at the same time. (And often on the same income you supported just yourself on.)

My partner and I are beginning to plan for this ourselves (though as a childfree couple, our financial puzzle is more caring for siblings and parents than kids and parents.)

This phenomenon is not new. It’s been around for decades and even has a name: the Sandwich Generation.

What is the Sandwich Generation?

This is a nickname given to whichever generation suddenly finds themselves sandwiched between paying for their younger children and their aging parents. It means that you are someone who has a least one financially dependent child and one financially dependent (to some degree) parent.

Gen X has largely gone through this already, and Millennials are beginning to. And from the looks of things, Gen Z should plan for this in the next 15-20 years.

This financial pressure can come in many forms. Your three-year-old and five-year-old are in expensive daycare at the same time that you find out Mom and Dad haven’t saved enough for retirement.

Or maybe you have to send a certain amount of money back to “the old country” while also paying for your child’s private high school education in the US.

Balancing these responsibilities AND preparing for your own financial future can be stressful and challenging. It requires strategic financial planning, budgeting, and legal protections to secure your income and investments.

10 Step Survival Guide for the Sandwich Generation

Let’s explore practical steps for working adults aged 25-45 to successfully navigate the complex terrain of financially caring for kids and parents.

Step 1: Do a Financial Audit of Everyone’s Finances

We don’t know what we’re working with until we do a financial audit and get everything out into the light.

Establish a Comprehensive Budget:

Start by creating a detailed budget that outlines your monthly income and expenses. Include fixed costs like rent or mortgage, utilities, and insurance, as well as variable expenses such as groceries, entertainment, and childcare. Make sure to ALSO include the amount you currently have IN investments and savings accounts and the monthly amount you are putting towards these accounts. This saving and investing rate is important to gauge your own financial future.

You can use an online budget tool like Empower or YNAB to do this. I like using Empower in addition to my personal budget spreadsheets because Empower lets me see ALL my finances in one place. I log in and see my credit card, my bank account, and my investments. It even tracks your net worth and is free to use!

I also suggest tracking your spending for 30 days. Do this without judgment! We don’t want to start changing anything yet, we’re just on a fact-finding mission. Tracking your spending will show you where your money goes and how often you spend it. In our values-based budget workbook, we have a spreadsheet for a 30-day spending tracker, as well as a budget spreadsheet to get you started!

Prioritize Essential Expenses:

Identify essential expenses and prioritize them in your budget. Ensure that necessities like childcare, healthcare, and basic living costs are covered before allocating funds to discretionary spending. This is where you need to have the most clarity: be ruthless when it comes to determining what is “essential” vs “nice to have”.

Once you have clarity on your expenses and spending, it’s time to have the money conversation with your parents.

Step 2: Talking to Parents About Their Money

What are their financial needs? What are their financial expectations for you and how you’ll contribute to their life?

Having this conversation is crucial but that doesn’t make it easy. Parents can often be resentful or hostile when having this conversation. They might be embarrassed to have to ask their child for help, or they may simply think that you owe them.

Here are a few questions to open the conversation respectfully:

-How do you envision your retirement?

-Do you understand all your work benefits?

-Did you hear about {insert family/friend’s financial story here} What did you think about that?

-Can we review your financial plans together?

These questions should get the conversation started. The information you’re looking for from your parents is WHAT and HOW MUCH they expect you to contribute to their lives. Do they want you to provide a small check each month? Do they need you to provide housing? The more you know about their needs the better plan you can make with their assets and for your own budget.

Step 3- Check Your Parents Benefits

Now, the default mindset many people go to when faced with caring for kids and parents is “How will I and I alone afford all this?”

But the great news is that you may not have to do all this from your own bank account! For example, if your parents worked for decades in the US, they likely paid into social security and now will get some sort of monthly payment.

You can create an account using your social security number at and check on your benefits. Have your parents each do this! Social security can go a long way to helping them pay their bills in retirement.

Step 4: Save For Your Own Retirement

This might be step four but it’s honestly the most important step. If you don’t save for your own retirement, you’ll repeat this whole situation in 20 or 30 years when your kids are adults.

In your budget, you should include some money for investing, even if it’s just $15 a month to start. I promise that $15 is better than nothing!!

Here are a few blog posts about starting to invest:

Starting to Invest at 40

How Much Money Do You Need to Start Investing?

Your goal should be to save 20% of your gross income for retirement. If you can’t start there, no problem. The very cool thing about investing is that small amounts really DO add up over time. So if you need to spend two years doing the bare minimum and can then increase, those two years will still contribute to your future self’s lifestyle.

-Take advantage of a workplace retirement plan, like a 403b or 401k, especially if they offer a match! That’s money that corporate America is going to invest for you, so take advantage of it.

-Open a Roth IRA if you have no workplace retirement plan or work part-time, and make less than $130,000 a year. Roth IRAs are powerful retirement accounts and we have a guide on how to open one in our investing course.

-Pick a low-cost index fund. Generally, I don’t like to tell people to invest in individual companies anyway, but when you’re dealing with financially caring for kids and parents you definitely need the best deal in the stock market, and index funds are it. Here is a list of more ethical index funds you can start investing with!

Rollover any old 401ks you left at old jobs. Any money you invested into a workplace 401k or 403b is YOUR MONEY! But many of us leave behind old jobs and old investment accounts. Please go snag that money and roll it over into an IRA! IRAs have lower fees and you’ll be able to contribute to the account again. Capitalize will do a rollover from an old 401k to an IRA for you for free.

Step 5: Build and Maintain an Emergency Fund

Emergency funds are a basic step for anyone’s financial plan, but for adults caring for both parents and kids, it’s essential.

An emergency fund is an amount of money you keep in a high-yield savings account for when an emergency hits. Pretty straightforward! An emergency is not Taylor Swift going back on tour. An emergency is a broken car, a broken bone, or a housing crisis.

Start with four months of your bare minimum living expenses in a high-yield savings account. Refer back to your budget to find out your bare minimum expenses. Add up all your essential expenses and multiply by four: that’s how much you should have in your emergency fund.

You can use a high-yield savings account like Atmos to earn money on that cash. This is truly passive income! The money earned will simply be added to your account each month and help build your wealth.

Step 6: Get Your Parents Legal Protections in Place

Coming back to your parents, and getting their legal documents in order will be very helpful for you in the future.

Firstly, check if they have a will. If they don’t, they can create one online. Wills are legal documents that dictate who gets what when it comes to physical items and money in savings or checking accounts. If your parents already have a will, make sure it’s been updated in the last five years. Often we create a will and then never update it, even though our lives and money change.

Secondly, check any life insurance policies your parents have and make sure everyone understands them. What are the benefits? What is the current cost? Is there a cash sum available?

Life insurance can be hugely helpful but only if you understand it.

Step 7: Get Your Own Legal Protections in Place

While we’re at it, get yourself a will and estate plan as well! Everyone needs a will, but parents and married folks ESPECIALLY need a will. The last thing you want is to leave your partner in the lurch with your child and aging parents to care for.

You should also appoint a next of kin for your child. This information can go in your will and you should state clearly who you want as custodian of your child in the event that you pass away before they are a legal adult.

If you and your partner are not married but plan to in the future, you should also consider a prenup. Every married couple actually has a prenup; it’s called the divorce laws of your state. Getting a personal prenup allows you to decide as a couple what you want to happen to joint assets and personal assets in the event of a future divorce. If you don’t want to be subjected to the default laws of your state, get a personal prenup before getting married.

Finally, get yourself life insurance. Life insurance does mean another monthly bill in your budget, but it’s essential for parents and guardians to have. If you pass away with life insurance (depending on the plan) that is money your child could inherit, that could be used to pay for the funeral or could be used to cover living costs.

The most important thing to know about life insurance is to AVOID WHOLE LIFE INSURANCE. This is the kind of policy that gives the industry a bad name. Whole life insurance policies are expensive, have a lot of fees, and are inflexible.

Instead, look for something called TERM life insurance and look for a 25-year term policy. Term life insurance is cheaper and more flexible.

Step 8: Create a Household Emergency Plan

Now that we’ve got our budget, emergency fund, and investments squared away, we need a plan for when an act of God happens. Like…your house catches on fire, or your brother and your kid both end up in the hospital at the same time and you can’t be home to feed the dog.

Put together a home emergency binder, which is a beautifully organized file drive that has all your household, financial, personal, marital, and medical information in it.

Why do you need this information in one place? Well, let me ask you this: can you get into your partner’s phone without them? Do you know where they keep their medicine, and how much they take daily? Does your partner know where the dog food is, and where you keep your insurance paperwork?

While we may live with someone and love them deeply, when an emergency happens it can quickly show us that we don’t know the important details of their lives. A family emergency binder has all that information in an easily accessible place. Each of you in the partnership can access it and find out exactly where the dog’s food is and what amount of Wellbutrin you take daily.

Step 9: Review Your Work Leave Policy

If you need to take time off work because caring for kids and parents is becoming your new full-time job, you’d want to know your work leave policy.

Some workplaces offer paid time off, some offer unpaid time off. Check your policy and set up a meeting with HR to go through the details and make sure you understand them. I recommend doing this well in advance of needing to take time off so you can make planning easier.

On the federal level, there are also FMLA (Family and Medical Leave Act) benefits, which provide certain employees with up to 12 weeks of unpaid, job-protected leave per year. Sadly, the US does not have a one-size-fits-all federal leave policy for all types of workers. A waitress will qualify for a different level of FMLA than a corporate accountant.

Your eligibility for FMLA will depend on your health insurance status, the size of your company, as well as the length of time you have worked there, and the hours worked per week.

You Can Manage This

I know this article makes caring for kids and parents seem overwhelming. There’s a lot in this post! But remember: you should do most of these things anyway, and you don’t have to do them all at once.

I like to assign one big financial task to one month per year. So in January- set up your budget and review spending. In February, create a will. In March, get life insurance. (Obviously, you don’t have to wait until the beginning of the year to do these things; your “year” can start in June!)

Balancing the financial demands of childcare and supporting aging parents can be challenging, but with strategic planning and proactive measures, working adults aged 25-45 can navigate these responsibilities successfully. By taking these steps, you’ll be better equipped to meet the diverse financial needs of your growing family and aging parents while securing a stable and prosperous future.

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