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Here's what millennials belonging to the sandwich generation can do to keep finances in order

While an emergency corpus warrants attention even in normal circumstances, its importance is much more for those in the sandwich generation.

Aug 08, 2019, 12.47 PM IST
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Liquid funds are an ideal bet to set up this corpus as they offer higher returns than a bank savings account.
By Rahul Jain

Sandwich generation refers to the section of the population who has to take care of their ageing parents and plan for their children's future in addition to funding their expenses. Juggling between the roles, when it comes to keeping finances in order, many of this generation face challenges of a different kind, leading to stress as evident from findings of the 2019 Cigna Well-Being Survey.

The survey found that 89 percent of India's sandwich generation (aged between 35 years and 49 years) to be suffering from some level of stress with less than half of them feeling that they are doing well financially. While it's true that shouldering major responsibilities, without faltering, often becomes a tough balancing act to pull off for this section of the population, the same can be done in the following ways:

1. Keep expenses under control through proper budgeting

A meticulous budget to keep expenses under control is an effective way through which millennials of this generation can have control over their finances. Distinguishing between needs and wants goes a long way in prudent money management.

Take for example, the case of Karan. The 35-year-old IT professional, working in Bengaluru, has his task cut out with a range of demands. He needs to take care of his parents living in Mumbai, fund costs of his son's education along with meeting his own household expenses. To do this effectively, Karan has chalked out a monthly budget, which he follows to the T.

He and his wife do everything to keep a tight lid on discretionary expenses and avoid unnecessary borrowings. The couple is also inculcating the habit of savings into their son, which they feel will help him in the future.

2. Maintain two different accounts
Having separate accounts can help individuals of this generation juggle between various responsibilities with ease. It's prudent to have at least two accounts - one for yourself and the other for your parents.

Having different accounts give a holistic picture of cash flow management. For instance, Karan has helped his parents open a special senior citizen account where a certain amount of money is deposited each month. He has given a standing instruction to his bank, whereby a certain amount is deducted from his account and transferred into his parents' account. Thus, he knows how much he and his parents have each month at their disposal to spend.

3. Opt for health insurance
A medical emergency has the potential to derail even the soundest of financial plans and wipe out all savings at one go. Medical inflation is rising at an alarming rate and hence, health insurance is an absolute must. It must also be noted that healthcare expenses are high, particularly for senior citizens.

To keep one's finances in proper shape, it's essential to avail health insurance. One can opt for a family floater plan which offers coverage to all the family members, including aged parents. Along with a family floater plan, it's essential to avail a critical illness insurance plan.

Critical illness plans are fixed-benefit policies that offer a lump sum upon diagnosis of a critical ailment such as cancer, stroke, etc., as mentioned in the policy as against family floater plans which reimburse only hospitalisation expenses.

4. Set up an emergency corpus
While an emergency corpus warrants attention even in normal circumstances, its importance is much more for those in the sandwich generation. A sudden job loss or a temporary break from work due to an accident is not uncommon and it's during these times that an emergency corpus comes handy. This corpus takes care of all the essential needs.

While generally, it's advisable to build an emergency corpus taking care of expenses for six months, for the sandwich generation, it's ideal to build a corpus close to a year. This is because they have the additional responsibility of supporting their parents. Liquid funds are an ideal bet to set up this corpus as they offer higher returns than a bank savings account.

These funds invest in instruments with a maturity period of 91 days. A systematic investment plan (SIP) in these funds can help one build a buffer for emergencies.

5. Have the right mix of investment
Investments are necessary to make money work and address essential life goals. Though investments don't follow a one size fits all approach, the mix of equities and debt helps to get the right portfolio balance. While juggling between multiple roles, millennials of the sandwich generation shouldn't lose focus on several critical life goals including higher education of children, their marriage and most importantly one's own retirement.

Prudent investment in equities and fixed-income products can help achieve all of these. While SIPs in equity mutual funds help build a corpus for retirement, aggressive hybrid funds and fixed deposits can aid in realising goals such as children's education and marriage.

The task for millennials of the sandwich generation is by no means easy. That being said, skilful planning coupled with strict adherence to a financial plan can make the tightrope walk a lot easier.

(The author is Head, Personal Wealth Advisory, Edelweiss)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of

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