Let’s talk about money, money, money! As you know, I am all about helping you save your coin and teaching you how to use your money smarter. One big part of this is managing our expenses and reviewing our financial obligations.
A huge obligation that many Canadians have is taking care of their family members and loved ones. I recently saw a stat that said that 1 in 5 Canadians ages 18 to 34 are expecting to postpone their retirement as a result of financially supporting their parents. The number gets even higher when it comes to newcomers to Canada who are supporting family back home. Young people are delaying buying a home, delaying marriage, delaying, having children and more in order to provide for their loved ones. As much as we love our family members, I don’t want this to be us! I want us to be able to support our parents while still supporting ourselves and planning for our own futures.
Here are four tips that can help you manage your money while taking care of family.
- Find the most efficient method to send money
If you are currently paying to send money to people, stop it! There are free options that you need to look into. If your parents are within Canada, great – use e-transfer and find a bank that has free e-transfers (such as EQ bank) or create a joint account with them so that you can easily send money at any time. While paying $1 to $2 for each e-transfer may not seem like much, over time it can really add up.
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- Have a serious conversation with your family member(s)
Find out what exactly they need the money for so that you can ensure you are sending a reasonable amount. This conversation can be hard and they may feel like you are intruding, but remember, this is your hard-earned money. If they tell you that they need $2000 a month and you ask what they need it for and they say rent…but you know their rent is only $1000 monthly, this may be a sign that they are asking for more than they need, and an opportunity to revisit the amount you send them monthly.
- Recruit other family members to contribute
Another tip that I have is to consult other family members such as your siblings to see if they can pitch in. The burden does not have to be all on you. Say you have 3 siblings and you are sending money to your parents but you are the only one out of your siblings who is actually sending money. Speak to your siblings and see if you can split the expenses. So if it is $1000 monthly that you are sending, split it into 4. Each person sends $250 which lowers your expenses significantly.
- Make a detailed financial plan for both you and your family member
For you, create a budget each month and plan out your expenses. Have you ever reached the end of the month and wondered where all the money you made this month has gone? Most of us are guilty of this, but planning can help. A budget is important as it ensures that instead of wondering where your money went, you are directing each dollar where you want it to go. Add your family obligations as a line item on your budget so that you have incorporated into your monthly financial plan and aren’t dipping into your savings or investing money in order to help family.
When it comes to planning for your family members, sit down with them to understand their finances. How much is coming into their account each month? What is coming out each month? You might even want to consider pulling in a financial planner who can look holistically at your parents’ investments, retirement accounts, and other assets. This can help you get a more objective view of the best way to allocate resources.
Remember, your finances come first and you can only pour into others if your cup is full.
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