Should you support adult family members financially?

South Africans are feeling the pinch, and every month-end puts more pressure on our pay cheques.

As your family grows, it’s reasonable to expect an increase in expenses. However, few people are prepared for added obligations towards their elderly parents, or their adult children.

We consider the growing responsibilities of the “sandwich generation”, and how they can be addressed.

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Put on your own oxygen mask first

There is great risk in looking out for others, and in so doing, sacrificing your own financial stability.

Francois O’Kennedy, director of finance at Finovate Group Limited, notes that the current economic conditions require caution, and frugality. 

“This starts with a strict budget, and strict adherence to it,” he says. “Within this budget, I recommend a monthly investment proportion of 10% to 15%, as well as an additional emergency fund, which can be used to assist close family members.”

Each family must be realistic about what they can afford, notes Grant van Zyl, a certified financial planner and owner of The Wealth Room.

“There is no hard-and-fast rule for how much you should spend on helping your family; and we see the need for support rising. Average life expectancy has drastically increased, and many people haven’t planned adequately.”

“The sooner you start saving, the better,” Van Zyl adds. “You’ll get accustomed to not using the funds, and you’ll create a buffer for unexpected costs.”

By prioritising your financial health in this way, you’ll avoid becoming a burden yourself when you reach retirement age.

Communicate openly

Journalist and writer Denise Mhlanga says, “Talking about money is never easy in families. Communication is crucial, however. If discussions are had from the onset and everyone understands the financial situation, it makes life simpler.”

O’Kennedy agrees. “Manage expectations by having the difficult conversations as early on as possible.  All family members should have a budget, which follows similar guidelines and considers their earning potential.”

Find practical solutions

It may seem counterintuitive, but you can help to educate your parents financially.

“The key is understanding their finances, and separating their needs from their wants. This might be difficult, especially for parents who have been earning little or no income,” Mhlanga says.

The 2021 General Household Survey published by StatsSA reports that 22.7% (more than a fifth) of households include at least one elderly person.

“Living with your parents may not seem ideal, but having one household to support instead of two is one way of cutting costs,” Mhlanga adds.

If your parents are capable and in good health, encourage them to find a side hustle. Babysitting, starting a lift service for school children, or even baking could help earn an extra income, while giving them a sense of purpose.

If you have siblings, discuss the obligations, and decide how responsibilities can be shared.

Similar principles apply when accommodating adult children in your budget. Some practical suggestions include:

• Teaching them how to budget
• Helping them to define their career goals
• Helping them to find ways to supplement their income
• Offering them the option of moving back home, if it’s feasible

Van Zyl concludes, “Your unique family situation will determine whether there is an ethical obligation to support family members. If this is the case, you can start planning and setting up a realistic investment goal.” This may necessitate seeking financial advice, he notes.

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