According to a recent AARP‡ study, 32% of midlife adults ages 40–64 provided regular financial support to their parents during the past year, and 42% expect to do so in the future. In addition, 51% of midlife adults are providing funds to their adult children for basic expenses. With this additional financial strain, it can be challenging to understand how to manage your finances. Here are a few tips to help.
The first step in understanding where your money is going and if you have enough funds to help support other members of your family is to understand your financial plan. This includes a budget and a view of all your investments and other accounts like retirement and savings. As you review this plan, consider and rank what is most important to you—including financial support to family members—so you can prioritize your money allocations to match your values.
While your kids are at home and financially dependent on you, take time to teach them about the importance of budgeting and saving. You can start by giving your kids an allowance and taking them through the exercise of saving some, giving some and spending the rest. This is also a great time to discuss needs versus wants so your kids can begin understanding how to prioritize the way to spend money.
Whether you are supporting your parents or other older relatives, it is important to help protect them from online scams. Be sure you talk about changing passwords regularly and being skeptical if an email or someone on the phone asks for financial information. Set up alerts on their accounts so they can be notified quickly if unusual activity takes place and be sure to remind them to monitor credit scores regularly.
Financially supporting other members of your family is no small feat. It can be both mentally and fiscally taxing. Keep the lines of communication open as you provide money advice and funds to your family. If you are unsure of how to maneuver these areas or have questions, UMB bankers are available to discuss tactics to make your financial picture easier to manage.
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