“Individuals who find themselves having to support both their parents and children are so financially squeezed that they often don’t save enough for their own retirement. The irony is that a lack of retirement savings on their parents’ part is usually the reason why they find themselves in this situation in the first place. So unless they save enough, they risk being in their parents’ position when they retire.”
Stanleur says breaking the dependency cycle and achieving financial freedom is possible if you follow the right steps. Here are a few steps to start your journey to financial freedom:
Step 1: Get other family members to help
You may be avoiding frank financial conversations with your dependants for the sake of peace. However, this may soon cause more financial problems and resentment. Open conversations may help you adapt the family’s lifestyle in line with your financial constraints. You may also identify means to earn additional income or find ways in which dependent members of the family can also contribute to the household finances.
Step 2: Get a grip on your debts
Indebtedness often goes hand in hand with supporting dependants for extended periods of time. Servicing debt may thus consume a large chunk of your disposable income. Pay off debt with the higher interest rate first and try to stay away from bad debt. But while paying off debt is more pressing, try to strike a balance between this immediate expense and saving for retirement. Playing catch-up on retirement savings can be very costly since the later in life you start saving, the less you benefit from the power of compound interest.
Step 3: Talk to a financial planner
A qualified financial planner will consider the entire family situation when assessing your needs. He or she can help to clarify financial constraints and imperatives as part of a holistic picture, while also identifying areas where extra savings can be unlocked by utilising tax incentives on products like retirement annuities or tax-free savings accounts.
Stanleur – Caring for your financial future. Call 012 942 1401 or email firstname.lastname@example.org.