The sandwich generation, also called the squeezed generation, is a term for a group of people in their middle years who are caring for their parents, their families, and themselves. This generation is usually made up of people aged 30-35 and above.
The sandwich generation has often been the subject of conversation among people and netizens. There are many discussions about this generation, from the efforts needed to survive to ways of overcoming the problems that arise.
One essential thing the sandwich generation must know is how to manage finances. The main problem faced by this squeezed generation is undoubtedly economic or financial. Caring for three generations, namely parents, family, and oneself, certainly requires a large amount of money.
If you are in this phase and part of the squeezed generation, you will feel how hard it is to earn an income. You will understand how difficult it is to wake up early when you are exhausted from work until night, yet waking early is a must. Your mind also needs to be filled with strategies for managing your finances so there is enough for everything. However, this is a natural thing to do for your family.
It may feel heavy, but your mind will become lighter once you know effective strategies for managing finances. Therefore, let's look at these 7 financial preparations that you can apply in your life if you are part of the sandwich generation.
1. Reducing unnecessary spending
The first rule if you want to start managing your finances is to reduce unnecessary spending. You surely understand which needs must be met and which are not. The most important thing is that you have covered food, electricity, water, and communication costs such as data packages.
Non-essential expenses, such as going on a trip out of town every two weeks, are examples of spending you should avoid. In managing finances, you must apply the principle of saving more and spending less.
2. Allocating income for needs
Every time you receive your salary, remember to immediately set aside money for the bills you must pay. For example, if your salary is IDR 3,000,000, set aside IDR 250,000 for rice, IDR 500,000 for daily shopping, IDR 300,000 for your child's school fees, and so on. It is best not to spend your salary right away, but to first allocate it for essential needs, and only if there is something left can you shop or enjoy yourself. It is even better if you save it.
3. Prepare an emergency fund
An emergency fund is money that must always be kept in your wallet or other savings place. It is money that must be prepared, kept, and ideally not used so that it does not decrease. On the contrary, the emergency fund should be topped up whenever you have extra money.
So, once you start collecting and saving an emergency fund, prepare yourself to resist the temptation to touch it. Think further ahead: you may face something in the future that requires money, but you cannot pay for it from your daily income because that money has already been used or set aside for other regular expenses. This is exactly where an emergency fund is useful.
4. Set aside money for retirement
As we know, not every worker receives a pension from their workplace. If you will not receive a pension from your job, you should make an effort to set aside money for retirement. This is not strictly necessary, since by the time you retire you may already have children you can rely on. Still, it is wise to prepare a retirement fund for your own well-being in your later years.
A retirement fund works much like saving for old age, and you can start with small but regular amounts. Whenever you have the chance to add to your retirement fund, do it so that you will not regret it later.
5. Life insurance
Why life insurance? If you are part of the sandwich generation, you are the family's backbone and rely heavily on earning a living. Set aside some of the money you earn to protect yourself with life insurance. If you pass away, life insurance will provide a benefit to those you leave behind in the form of replacement income. At this point, you should recognize that your family depends on you quite a lot. You must do your utmost to be their support.
6. Set your goals
Goals are something you must have as a member of the sandwich generation. Although you handle much of your family's finances, you must still decide what you want to achieve. You may have goals such as owning a home that is not rented, buying a car, paying for your parents' Hajj, reaching financial freedom, and so on. These goals can motivate you to work harder and save diligently to achieve what you have targeted.
7. Investing
You may wonder: if meeting all your needs is already difficult, how can you set aside money for investment? However, this should not be a problem, and you can try it starting now. Today, there are many investment offers, some starting with a very small capital, even as little as IDR 10,000.
Even if you start investing with a small amount and earn small returns, it can grow into something significant over time. It may even become a source of your emergency fund and retirement fund. Through investing, you make your money work for you even with small amounts. Little by little, it adds up over time, does it not?
Those are some preparations and tips you can apply to manage your finances as a member of the sandwich generation. Managing finances is not really difficult once you know the tips, so keep reading and learning about how to manage money, then try to apply what you learn.
If in some cases you find it difficult to apply ways to manage your finances, do not stop trying. Keep at it until you succeed in managing your finances, because financial management is very important and very useful for middle-aged people who already carry responsibility for the lives of their entire families.
By managing your finances, as part of the sandwich generation, you will not have to carry excessive mental strain whenever your income is insufficient or just barely meets your needs. You can also set aside part of your income as savings. The benefits of managing your finances are indeed many, are they not?
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The Kamboja team writes guides on bereavement, funeral arrangements and funeral planning to help families in Indonesia.
