The Financial Struggles of the Sandwich Generation

So, you started a family. And in the blink of an eye, your teenagers are heading to college right around the same time your aging parents need more attention. If this sounds familiar, congratulations—you’re part of the sandwich generation!

Trying to take care of multiple family members can be tough on your emotions and your money. We’ll walk you through the best ways to support your loved ones while also making sure you’re setting yourself up for the future you want.

What Is the Sandwich Generation?

No, it has nothing to do with your lunch preferences. The sandwich generation is the group of middle-aged adults trying to take care of both their parents and their children . . . at the same time.

Maybe you fall into this category. If so, you’re not alone. Around 11 million Americans provide care to an adult while also caring for children living in their home.¹ Some members of the sandwich generation are even trying to balance the cost of nursing homes and college tuition in the same year. Yikes!

While it’s not easy to take care of your children, your parents and yourself, there are ways to keep your finances from being spread too thin. So, take a deep breath. You got this!

Financial Tips for the Sandwich Generation

1. Get your own finances on track.

If you’re part of the sandwich generation, you may already know what it feels like to have several hands dipping into the cookie jar each month. You care about your parents and children—no doubt—but you need to make sure you’re taking care of your own money situation first.

It’s kind of like what they tell you on airplanes—you have to put on your own oxygen mask before assisting others. If you’re in debt or are struggling to make ends meet, you’re not ready to financially support someone else.

So if you’ve got debt, you need to get rid of it—fast. And here’s how: the 7 Baby Steps. They’re Dave Ramsey’s proven plan for getting out of debt and saving for the future. In fact, one of the goals for working the Baby Steps is to be able to give generously. (Hey, that’s what you want to do!) Here’s what those steps look like:

Baby Step 1: Save $1,000 for your starter emergency fund.

Baby Step 2: Pay off all debt (except the house) using the debt snowball.

Baby Step 3: Save 3–6 months of expenses in a fully funded emergency fund.

Baby Step 4: Invest 15% of your household income in retirement.

Baby Step 5: Save for your children’s college fund.

Baby Step 6: Pay off your home early.

Baby Step 7: Build wealth and give!

It may be tempting to rearrange these steps because of family members that need help, but the fastest way to win with money is to do these steps in order. Once you’re debt-free, you’ll be able to do so much more for your loved ones.

So, here’s the bottom line: If you’re in debt and your parents don’t have the money to keep living how they’re living, you’ll have to be honest and let them know you’re not able to help them financially right now. That might mean your parents will need to downsize their home, get on a tighter budget, or dramatically change their lifestyle.

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Same goes for your adult children. If you’re struggling to pay the bills, it doesn’t make sense to fully support a 26-year-old. So, it might be time for Junior to find a better job or move out. We know that might sound harsh, but you’ve got to get your own finances in order before you can help your family. Then, you’ll be able to give to them generously—and with less stress.

2. Talk about finances early and often.

Look, we know talking about money with family is straight-up awkward. And when it comes to talking with your parents about finances, there’s something called the powdered butt syndrome—since they’ve powdered your butt, they don’t want your advice about money.

But it’s important to make sure you get everyone’s money situation out in the open. Your family members’ financial decisions might impact you one way or another, especially if you’re the one supporting them.

So, don’t be afraid to ask the tough questions. Are your parents in debt? Do they have life insurance or long-term care insurance? What about investments? And of course, you’ll also need to discuss wills and inheritance. Yes, it can get a little morbid, but having these conversations sooner rather than later will save the entire family a lot of pain and stress in the long run.

Be sure to approach each conversation with honesty and love. Let your parents know you appreciate them and are grateful for what they’ve done for you, and now it’s your turn to take care of them.

As for your grown children, tell them you care enough to show them some tough love (which is really just love). Ask them about their goals. Talk to them about the lifestyle changes they need to make so they can get where they want to be. By encouraging your children to dream about their future, you can help get them out from under your roof and on the right track. You don’t want to harm your kids by holding them back and keeping them from being successful, independent adults.

These money talks aren’t easy. But you’ve got to have them if you want everyone to win in the end.

3. Decide on the right kind of elderly care.

Every situation is different, and there’s no one-size-fits-all approach to caring for aging parents. The most important thing is to make sure your loved ones are safe and well cared for.

Before rushing mom or dad to a senior living facility, make sure round-the-clock care is the right choice for them. Your parent may still be able to live on their own and just need help cutting the grass or going to the doctor. If that’s the case, think about making a schedule and asking family members or people from your parents’ community or church to help a little each month.

If your parents do need in-home care, an assisted living facility, or a nursing home, look at their money situation with them and decide what fits their budget (or yours, if you’re the one supporting them). 

Also, check your HR benefits at work. Many companies want to take some of the stress off their employees who are caring for elderly parents, so they give reimbursements or discounts for senior care. Maybe they’ll let you have more flexible hours so you can check in on your parents. Or they might be able to connect you with a good resource for planning care. Either way—it doesn’t hurt to ask how your workplace can help.

Deciding on long-term care also requires emotional strength. Talk through the situation with your parents using facts. It may take a while for them to warm up to the idea of getting help, so be patient. Your parents may not want to move or prefer a place that’s too expensive. They might even direct anger at you. Don’t let that bring you down. You’re not being mean by putting your foot down here—you’re trying to find an affordable way to get your parents the care they need.

4. Save and invest for your own retirement.

Even if your parents weren’t ready for retirement, it’s important that you save for your golden years. Don’t put this on the back burner! You may be tempted to take care of your child’s college fund first, but don’t. Your kid may or may not go to college, but you will need to retire one day.

Get this: According to our own Ramsey Solutions research, nearly half of baby boomers are facing retirement with less than $10,000 saved. This is not a spot you want to be in! Start investing now so you’ll be ready later.

Once you’re out of debt and have an emergency fund of three to six months of expenses, you’re ready to invest. You should invest 15% of your pretax income. Here’s how: If your company has a 401(k) plan and matches your contribution, invest up to the match there. Then start investing in a Roth IRA. If you max out the Roth IRA and still haven’t reached your 15%, go back to your 401(k) and invest the rest there. You can also put your entire 15% in a Roth 401(k) if your employer offers one. Follow this plan even if you’re approaching retirement age and need to work a little longer.

By making your retirement savings a priority, you’ll save your kids from the same stress you might be going through now with your own parents.

5. Save for your children’s college.

Once you start funding your retirement, it’s time to turn your attention to paying for your children’s college. We know a lot of parents worry about how they’re going to pay for their kids’ college tuition. But the good news is, there’s a lot your kid can do to help on this one. Here are some tips for your current or soon-to-be college student:

Tips for Kids in College

The best thing a college student can do is get a j-o-b. Cash flowing a degree is totally possible if students are willing to put in the time and effort. They can work around their class schedule and pick up a ton of hours during the summer. Looking for scholarships or grants is another great way to pay for college. It takes time, but it also means free money to help with the cost of tuition.

Make sure they pick a major they love and that will allow them to make a decent income (so no degrees in underwater basket weaving). And encourage them to buckle down and work hard so they don’t spend more time (or tuition) in school than they need to.

And your child should be living on a college student budget. That means staying in the dorm (or at home, if it’s close enough) and not going out to restaurants all the time. Living on a budget also helps students get ready for a realistic lifestyle once they turn the tassel and move out on their own—which means they’ll need less help from you.

Tips for Kids in High School

Listen, your kid’s dream school is the one they can afford. That could be a public, four-year, in-state university. Or they could get a degree from a community college at a much lower cost and then transfer their credits to a public university.

Remember to be honest with your child about what you can afford. You’re not a bad parent if you can’t pay for your son or daughter’s tuition. But there are other ways you can help! Encourage them to get a job while they’re in high school to start saving up—and help them apply for as many scholarships as possible.

If you want to know more about sending your kid to college without taking out loans, check out Anthony ONeal’s book Debt-Free Degree. It gives parents a step-by-step guide to help their children go to college debt-free!

6. Set clear boundaries.

Balancing money and relationships can be complicated. The best thing to do is set healthy boundaries and talk about expectations. We know it’s hard to say no to parents or children when you’re trying to work on your finances. But don’t let anyone make you feel guilty for trying to take care of your own household first.

And remember, just because you can’t help financially right now, that doesn’t mean you can’t give in other ways. You could visit your elderly parents several days a week and help them with chores. Or support your grown children by offering advice and a listening ear. Just being there often means more to people than any amount of money you can shell out.

If you’re ready to start learning how to pay off debt and save for the future, start Financial Peace University! It's is the best way to begin. Dave and his expert teaching team will walk with you step by step on how to get your finances in order so you’ll be free to be outrageously generous.