The Sandwich Generation, Part II: Protecting Your Children’s Financial Future

By J. Bryan Allee – Executive Vice President & Chief Fiduciary Officer

In my last article, I wrote about the challenges of adults in the “sandwich generation” dealing with the financial affairs of their aging, increasingly dependent parents. In this article, we focus on the “flip side” of that coin – the ongoing challenges parents often face with the financial health of their children as young adults.

There are a number of challenges that parents in the sandwich generation face when helping with the financial decisions of their adult children.

Financial strain.

Even for those who appear financially affluent, parents in the sandwich generation may be struggling financially themselves, making it difficult to help their adult children financially. They may feel guilty about not being able to do more to help, or they may worry about their adult children making poor financial decisions. This guilt often leads to transfers of savings that parents really need to children and can form a cycle of dependence that neither can escape.

Time constraints.

Often, parents may be juggling work, family, and caregiving responsibilities for their parents – just as their adult children may be. This leaves “sandwich-ers” with little time to help their adult children with their finances. As a result, parents may feel overwhelmed by the number of financial decisions that need to be made and the amount of time and energy it takes to help their kids.

Differing financial goals.

Parents in the sandwich generation may have radically different financial goals than their adult children. Moreover, their perspectives on budgeting, investment risk, and the need to consider short-term and long-term goals, can make it difficult to agree on how to manage money. “Sandwich-ers” need to balance sensitivity to their differences in these goals but stand firm in their adherence to core principles that make for better decisions.

Emotional challenges.

Helping adult children with their finances can be emotionally challenging for parents in the sandwich generation. What is worse, this may cause parents to feel resentful that they are being taken advantage of by their adult children.

Despite the challenges, there are several things parents can do to help their adult children with financial decisions.

Set clear expectations.

It is important for parents to set clear expectations with their kids about how much financial help they are able to provide reasonably. This will help to avoid misunderstandings and resentment down the road.

Provide guidance and support.

“Sandwich-ers” can provide guidance and support to adult children without making all of their financial decisions for them. This is a critical understanding. Parents help their children the most when they are proactively engaged and mentoring their kids to complete the same tasks they themselves are (or should be) doing for their own finances; developing budgets, creating savings plans for short- and long-term goals, and planning for anticipated (and unanticipated) life events – from car repairs to hospitalization to even death itself.

Encourage independence.

It is important for “sandwich-ers” to encourage their kids to be financially independent. It’s not always a simple process. Today’s global and local economies have created challenges for the younger generation that parents may not have faced. Nevertheless, in the end, insisting on financial independence will help children develop good financial habits and take responsibility for their own financial futures.

Helping the younger generation with financial decisions can be a challenging but rewarding experience. By setting clear expectations, providing guidance and support, and encouraging independence, parents in the sandwich generation can help their adult children to make sound choices.

If you are a “sandwich-er”, it is important to remember that you are not alone. There are many others who are facing the same challenges. There are also resources available to help you. Always feel free to consult with your financial planning professionals at Central Trust Company for help in this difficult but vital part of caring for your children and their families to secure their financial futures.