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Make a difference: helping your parents financially, amidst tough times

by Staff writer
24 Nov 2020 at 12:46hrs | Views
The older you become, the more roles you need to take on. For many South Africans, this includes financially taking care of your elderly parents. While every child wishes to help their parents during financial difficulties, it becomes harder when you, yourself, are facing financial difficulty too.

This can be a scary prospect, and without a constructive plan, it can leave you in a much worse financial situation than before. That's why planning is a must when you're in a position of providing financial support for your elderly parents. To see how you can budget effectively to support your family and yourself, continue reading this detailed article. 

Evaluate your finances first 

When you have financially dependent parents, your first instinct would be to take care of their needs and look into their finances. But that isn't an effective strategy. You need to sit down with yourself, or your partner, and discuss your finances. See how much money goes towards your fixed and variable expenses, and see where you can cut back on spending. For instance, this might mean reducing your clothing, entertainment and dining budget. But, tracking your budget will give you an idea of where you can cut back so that you have more leeway to help your parents during a tough time. Once you have looked at your finances, create a budget that includes their needs. For example, if you have to pay for their groceries or medical bills, ensure that you factor these in when creating your monthly budget. Have a section for them and the estimated expense so that you can plan more realistically. 

Talk to your siblings 

If you are fortunate enough to have siblings who are working, you need to initiate the conversation with them. It cannot be your burden to carry, even if you are the eldest. Discuss with your siblings what each of you can do. For instance, one can help with groceries, utilities or with their insurance policies. By dividing everything up, you get to help your parents in a more manageable way rather than taking everything alone.

Take a look at your parents' finances

Once you have taken a look at your finances after cutting down on expenses, then you can examine your parents' finances and see how you can help. Also, make sure you discuss the sacrifice you are willing to make in helping them and how they can meet you halfway.  That way, when you support your parents financially, it makes a difference in their financial situation because you're meeting each other halfway. Make sure that you also discuss your parents' financial needs at this moment. Do they need help paying off debt, vehicle finance or money for food and day to day expenses? This will help give you an idea before investing in your parents' financial struggles. 

Help them downsize to free up money

Assisting your parents doesn't only mean giving them money; it also means helping them make better financial decisions. This can be moving into a smaller house or having them sell their two cars and opt to get a smaller vehicle with an impressive fuel economy. Showing them how to budget for a car that fits into their new lifestyle can be a great way to free up money. They can trade in their two vehicles and use that money to pay a deposit for a smaller car. That way, they are still able to move around freely, but they have smaller and much more affordable monthly instalments to pay. You can also offer them the option to sell their house and move in with you. That way, they won't have to cover the electricity or water bill. Moving out of their home and opting for one vehicle can help limit their expenses to a workable amount for them, or for you to help with. 

Review their budget

People manage finances differently, and sometimes advice or guidance can go a long way. Ask to be a second pair of eyes for their budget so you can get an idea of what they spend their money on. Maybe you can be objective and see where they can cut back. Many online budget tools in South Africa can assist you in creating a budget that is realistic to your parents' situation. 

Help them pay off their debt 

Debt can be very stressful to manage, especially at an old age. To help alleviate your parents' financial struggles, you may need to help them pay off their debt. To do this, you will have to sit down and calculate the overall cost of their debts. This includes credit cards and store accounts that require payment every month. Once you have an amount, you can apply for a personal loan in South Africa that will help you consolidate their debts. Taking out a personal loan is a better financial decision than using all your savings to pay off their debt. Using your savings will leave you at a disadvantage should you need those savings at a later stage. Many lenders have a personal loan settlement calculator that will give you an idea of how much the monthly repayments will be for the loan amount. Once you have the numbers, you and your parents can discuss how it will work. Either you will take care of the loan repayments, and they will take care of their living expenses, or they can move in with you and help you pay off the loan. Either way, there needs to be a mutual agreement on how this will work. Taking out a personal loan is a huge step, and you need to ensure that you are certain and have a plan of action that will ensure you are not left in a sticky financial situation. 

Final thoughts 

Taking on your parents' financial situation is overwhelming. And, when done incorrectly, it can lead to family disputes and miscommunication. To ensure that this doesn't happen always initiate open communication between you and your parents. Discuss your financial limits and remind them that you also have your financial responsibilities. Remind them that you can only afford to spend a certain amount of money and don't overexert yourself. Even if you do decide to take out a personal loan after all the other efforts have been made, make sure that it is an amount you are comfortable to pay back. Lastly, remember that tough times don't last and with thorough planning, you can help your family and still live comfortably.

Source - Byo24News