It 'Keeps Us Up At Night:' The Surprising Money Concern That Younger People Now Face
Yikes, 1 in 4 young people say this is a top money concern, according to a new survey.
Brittany Kline, a 30-year-old Rochester native, says she’s been worried about her single mother’s finances for a long time, and COVID-19 hasn’t helped at all. “She is on the verge of becoming furloughed and her company is trying to stay afloat in the aftermath of the pandemic,” says Kline, one of the founders of money blog The Savvy Couple. Now, Kline is worried that her mom won’t be able to dig out of debt or retire well.
And for 25-year-old NYC-based Connor Brown, the impact of COVID-19 on his parents’ finances is also one of his top concerns. “Both of my parents are nearing retirement age and a large portion of their portfolio is tied up in dividend-producing stocks. I’m afraid that the dividends they intended to use as retirement income may be cut substantially,” says Brown, who is the founder of After School Finance. If that happens, Brown’s parents’ ability to retire could be delayed. “What keeps us up at night is the sense of responsibility we feel to support our parents if there’s a shortfall in their finances,” says Brown.
Millions of Americans lost their jobs this year and began looking for help managing their money. Many of them found that cookie-cutter solutions weren’t enough—but that hiring a financial planner can cost thousands.
Kline and Brown aren’t the only young people sharing this sentiment. One in four millennials and Gen Zers say one of their top three financial concerns right now is the impact of COVID-19 on their parents’ financial situation, according to a new survey of more than 1,500 people by Vanguard. That makes it a greater concern than things like having to tap into their own savings, their ability pay off their debt, having to take on more debt to get by, and more.
A parents’ financial woes may be particularly stressful because young people often want to help a struggling parent—even though they’re likely not in a good financial position to do so. (Indeed, two-thirds of working millennials have nothing saved for retirement, according to a report by the National Institute on Retirement Security.) But Arielle Bittoni, chief wealth strategist at Refresh Investments, says young people should first take care of themselves. “They need to be in a stable position to help their parents without hurting themselves,” says Bittoni. Here’s how to help your parents who are struggling financially even if you don’t have money to give them.
Open the Lines of Communication About Your Parents Finances
“It can be a tough subject to discuss with parents, but it’s worth having,” says Bittoni. To start that conversation, financial coach Emma Geiser suggests “saying something like, 'Mom and dad, with everything going on with coronavirus, I want to make sure you’re both doing okay financially. I realize I know little about your finances and if anything were to happen, I want to have the knowledge I need to be able to step in and help. Would you be open to sharing this information with me.'”
Try to get a clear picture of your parents’ entire financial situation “especially areas that have been impacted by the pandemic,” says Anderson Lafontant, a millennial and senior advisor of advanced planning at Miracle Mile Advisors. “Once you understand your parents’ needs, then you can assess how much you can reasonably help them out,” says Bittoni.
Record Their Financial Details
Lafontant urges young people to go through their parents’ personal finances with them and create a master record of their bank accounts, retirement accounts and other related financial accounts. “If they’re relying on you for support and expect you to manage their financial situation, it’s important to have a clear understanding of their assets,” says Lafontant.
For those with bad spending habits, certified financial advisor and money blogger Sophie Trautschold suggests children offer to review their parent’s credit card spending habits from the previous year and to create an easy to understand chart. “Use a Google spreadsheet to show just how much they spend on clothes, food, etc. This might make it easier for their parents to understand where they should begin cutting back,” says Trautschold. You can also use an app like Mint or You Need a Budget to help them create a useful budget.
Assist in Cutting Expenses
Explore ways to help your parents cut back on eating out, shopping and paying for things like unused landlines. “Seeking payment relief from creditors and reducing household expenses wherever possible are steps households can take to weather a period of income reduction,” says Greg McBride, chief financial analyst for Bankrate. Adds Bittoni: “Another place to save can be reviewing the deductible on insurance policies to lower premiums.”
Step in Physically
“If you’re handy, assist with any home repairs and maintenance,” says Bittoni. She also suggests buying grocery items in bulk to share with one’s parents. “That way, you can split the costs,” she says. “
Help Them Downsize
If there are no kids left in the house, Trautschold says downsizing makes a lot of sense. “Speaking from experience, as my parents were empty-nesters as of last year with my youngest sister leaving home, my parents downsized from a 4-bedroom home to a 1,200 square-foot cottage,” she says. With a smaller yard to care for, fewer utilities to pay and a more manageable space to clean, a smaller property can mean larger savings.