How to manage your money when you have family to support
More and more South Africans find themselves financially responsible not only for their children and ageing parents, but for other adult family members too. Financial coach Agnes Chikukwa Hove gives expert advice on meeting family obligations – without going into bad debt.
So much for New Year hopes of #20plenty – lockdown has hit our finances hard. Over three million South Africans lost their jobs as a result of the Covid-19 pandemic, many of whom are now relying on their family to get by.
In fact, more than half (52%) of employees in metro areas are currently giving financial support to adult family members (other than their spouse or partner), according to 2020 Old Mutual Savings and Investment Monitor. Because they’re sandwiched between their children as dependents on one hand, and parents and extended family members on the other, this group has been dubbed the ‘sandwich generation’.
Being a member of the sandwich generation has never been easy, but when your income has to stretch further to support more of your family – as is the case for many earners this year – the stress can become overwhelming. Research shows this stress can even lead to depression, divorce and domestic abuse, as well as putting you at risk for alcoholism and other forms of addiction.
So if you find yourself in this position, what can you do to cope – both emotionally and financially? What is the best way to deal with family members who need financial support without straining relationships or putting yourself at risk?
HOW TO GO ABOUT GIVING WELLDecide how much you can afford to loan or give, without putting yourself at risk, and then either give the maximum amount you can afford all at once (and let your loved one know that’s the case) or perhaps give smaller amounts until the situation is resolved.
Make sure it’s clearly understood whether the money is a gift or a loan to be repaid, so you don’t create an awkward situation for the family member. As with most financial situations, there is no one-size-fits-all model. However, there are a few tips to navigate the situation.
- Giving to your parents
- Giving to your adult children
- Giving to extended family members
- Give skills and tools, not just money
- Manage your spending more carefully than ever
Set boundaries on how much money you can loan or give to family members, and how much you’re willing to let it affect your life. Ask yourself these five financial boundary questions:
- Do you loan money to friends and family out of your overdraft, credit card, revolving credit facility or bank loans?
- Do you loan money to friends or family but they never pay you back?
- Do you agree to give someone money before you have had a chance to think about whether you can afford it, or to discuss it with your partner or spouse?
- Do you give or loan money and find that you do not have enough to cover all your expenses?
- Do you give or loan money, even if you do not yet have an emergency fund built up?
If you answered yes to any of the above questions, you may have a boundary issue that needs examining and changing. Remember that ‘No’ is a full sentence! You do not even have to explain why you cannot help. A simple, “No, I am not able to help out right now,” is enough.
DON’T LOSE SIGHT OF YOUR OWN PRE-LOCKDOWN FINANCIAL GOALS
You may be under pressure from family needing financial support. Companies, too, have been inundated with requests for salary advances, and personal loan applications have shot up. We don’t know economy will be vibrant again, so it’s easy to lose track of our money goals. But, while it’s undeniably tough, it’s now more important than ever to practise good financial planning and strive for financial freedom, one small step at a time. These steps include:
- Get out of debt – or aim to cut your debt in half.
- Draw up a formal written budget.
- Build an emergency fund (aim for about three months of your salary).
- When your debt is paid and your emergency fund is in place, start to build your wealth in the form of interest-bearing savings accounts or investments.
- Start a ‘side hustle’ – bringing in a little extra can go a long way to paying off debt or putting a little away.
- Keep learning about how to manage your money – it’s a life-long process.
REMEMBER, MONEY IS NOT THE ONLY WAY TO HELP THOSE YOU LOVE
What’s unique about this financial crisis is its cause — a virus beyond anyone’s control. We are all struggling with uncertainty and it’s clear that the only way out is together. Pooling community resources can be a great source of help. Simple words of encouragement and checking in with family members means a lot to those feeling stressed or unsure.
About the authorAgnes Chikukwa Hove is a seasoned strategist who is currently the Chief Executive Officer of Sequor Consulting a Pan-African SME Development, Consulting and Advisory organisation. She is also the Treasurer at African Women in Agriculture (AWiA) a women’s empowerment organisation. She possesses a Master of Science (MSc) Degree in Strategic Management, a Business Management (BBA) Degree and a Diploma in Nursing. Agnes finds fulfilment in being a Financial Wellness Coach. She coaches individuals, couples and organisations on effective personal financial management, and has done so for the past eight years
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