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The sandwich generation and their financial planning

Last update: 3 min read

Sandwich generation is the term given to the caregivers of the family. They are generally young to middle aged adults who take care of the basic needs, and are responsible for their families. As the term suggests, this generation is sandwiched between their aging parents and growing children. From a monetary perspective, a sandwich generation is the provider of the house and the financial decision-maker.

Indonesia’s National Socio-Economic Survey (SUSENAS) conducted a study and found out that 6.42% of members in a household falls under the sandwich generation category. Indonesia has a very family-oriented culture and staying with family is common, almost 77.8% of the household expenses are managed by the Sandwich generation.

Caring for the household and managing work is challenging, and the sandwich generation often faces a lot of challenges. Let us see what they generally are:

  • No proper work-life balance due to a busy lifestyle
  • Spending most of their income on family, leaving little finances for themselves
  • Lack of financial knowledge that leads to an uncertain future
  • No stable job security and earning guarantee
  • Difficulty managing relationships and taking out personal time
  • Worrying about future financial planning, present economic balance, and managing finances
  • Struggling to take care of healthcare, maintain good health, and save for health emergencies

But fortunately, to every problem exists a solution and that is why there are certain steps that the sandwich generation can adapt to make life easy:

–      Develop a financial plan: It is always healthy to gauge and keep records of one’s earnings and expenditure. It is important to understand what needs to be met immediately and what needs to be planned. School fees, monthly EMI’s, monthly medicines are immediate needs whereas spending on a holiday is a need that should be planned and saved for.

–      Alternate forms of income: If your expenses leave no place saving, it is always advisable to look for an alternate or additional source of income. One can always use the additional funds to plan for the future and meet other needs.

–      Choose your insurances: It is crucial to be prepared for emergencies and understand self-protection. To save oneself from life-oriented disasters it is important to have health and life insurances. The normal pension schemes given by employers in Indonesia are generally not enough and hence investing in a pension fund also assures a secure retirement.

–      Take a loan when necessary: In times of urgencies, it is always helpful to look for suitable debt options instead of burning one’s cash reserve. Always choose a debt according to the need, interest rate, and one’s capability to pay it back. For example, taking a home loan is advisable when buying a property since this helps in tax saving and keeps one’s fund intact for any other need. The expense towards debt should not be more than 30% of one’s income.

–      Stay together, preferably under one roof: Staying under one roof with dependants also saves a lot of money when one is planning something and needs to save. Not paying extra house rent, electricity bill, maintenance costs also adds to the saving. If one owns more than one property, the other can be rented out for additional funds.

–       Reap benefits from financial aids: An ideal financial planning should always include a retirement plan, children’s education, and medical emergencies. There are multiple financial aids that are customized for such needs, one should be aware of these instruments.

This whole generation of people is so busy caring for others that sometimes they forget to care for themselves, and hence to ease their burden, they should seek help when needed, be it in terms of financial assistance, aid or just knowhow.

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