Childcare is the biggest expense that parents bear every month. According to an estimate, parents spend around $8,355/per child every year. It’s almost impossible to bear this cost with the rising inflation and taking care of a dependent parent.
As per a report, about 23% of US adults fall under the sandwich generation. It means that they are about 40-59 years of age and are looking after an old parent and supporting a child. If you also fall under the sandwich generation, here are some tips to help you plan for dependent and child care with the rising inflation.
1. Automate Your Savings to Save Yourself from Struggle
Now is the best time to start saving for your future. If you have not started saving already, you’re making a mistake that you will regret when your child’s tuition is pending or when your aging parent meets an unfortunate event. Automating your savings will save you from doing extra work, so start investing the already saved income in getting good returns.
2. Buy Life Insurance to Leave Something Behind
According to a 2020 estimate, about 54% of US consumers opted for at least one type of life insurance.
Do you fall on the list of those consumers? If not, then it’s time to buy life insurance!
If your family is dependent on your income, then life insurance will save them from a financial burden after you pass away. You will have to fit the monthly premiums into your expense, but it will give greater benefits to you in the future.
3. Don’t Forget to Create an Emergency Fund Other Than Health Insurance
Looking after an aged parent and a child means anything can happen at any time. Emergencies become pretty common during this time; therefore, you must invest in an emergency fund. There will be a lot of medical expenses that won’t be covered in your health insurance, so an emergency fund will save you from all the struggles when faced with an unfortunate event.
4. Get a Disability Insurance for Your Aging Parents
Disability insurance is a must for your parents. It will protect you from bearing a financial burden if your parent suffers from an injury or illness.
Francisco Faraco is a CFA charterholder with years of experience in the field. Francisco Jose Faraco lives in New York with his family. He’s working as a Teaching Assistant in the Financial Mathematics program at the University of Chicago.
