Financial Planning

Despite our enormous diversity, there are some commonalities found in families across Canada, including ups and downs, petty squabbles and unconditional love.

For Canadians in the sandwich generation – those with both children and living parents – there’s an added aspect of family life to add to the list: financial stress.

According to a recent poll by market research firm Leger, 30% of sandwich generation Canadians anticipate the need to financially support both their child(ren) and parent(s). A quarter (25%) expect this responsibility to strain their finances, and 27% foresee the need to put their personal financial goals on hold as they support their family members.

As with so many things in life, this financial stress is driven in part by uncertainty. If you are part of the sandwich generation, here are 3 keys things you can do to tackle this uncertainty while still supporting the financial well-being of your children and parents.

  1. Plan, monitor and adapt

In an ideal world, everyone should have a financial plan, but having one is even more important if your financial responsibilities extend to other family members. If you don’t already have a financial plan, creating one will help you gain a clear picture of where you’re at now, where you want to go and how you’ll get there.

Do you plan to help an adult child with money for a down payment on their first home? Do you expect additional annual expenses to pay for your parent’s care in a nursing home? These are just two examples of the many costs that Canadians in the sandwich generation may face as they support their loved ones.

With a financial plan, you can make informed decisions based on clear projections about how much money you’ll have and how much you’ll need. This will enable you to allocate your funds in the best way possible.

However, creating the plan is only the first step. To make the most of it, it is critical to revisit your plan at least once a year to monitor its performance and adjust for changes in your cash flow, family circumstances or other key factors.

  1. Communicate openly

Miscommunication is a frequent source of tension within families, and this is certainly the case when it comes to finances. If you’re in the sandwich generation, one of the keys to successfully navigating your responsibilities is ensuring open and clear communication with your children and parents.

What is the state of your child’s personal finances? How much can they contribute to their education, new home or other large expenses? How are your parents managing financially? What are their needs and plans regarding living situation, medical support, etc.?

Money can be an uncomfortable topic within families, but having these conversations is essential to coming up with a plan that works for everyone. This communication is crucial to set realistic expectations about how you can help, what your limits are, and how your children and parents should be contributing.

  1. Protect your income

You may currently have the financial capacity to support your children and parents, but what happens if your situation changes? If you were to become disabled due to an injury or illness and unable to work, would you be able to pay for your own living expenses, let alone those of your loved ones?

For sandwich generation Canadians, having good disability insurance coverage is essential. While the specifics vary from one policy to the next, disability insurance generally provides monthly payments to replace your lost income if you are unable to work. These payments can be lifesavers, especially if you suffer from a long-term disability.

Although many Canadians have disability insurance through their employer, it often provides only partial income replacement – in some cases 50% or even less. Purchasing your own disability insurance top-up can be a cost-effective strategy to ensure you’ll have enough money coming in to meet your own needs and those of your family.

Reducing uncertainty for the sandwich generation

For Canadians in the sandwich generation, financial planning can mitigate some of the uncertainty that stems from financially supporting both children and parents. If you would like help gaining clarity on your financial situation, contact Rubach Wealth at (647) 349-7070.


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