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Financial planning for the 'sandwich generation'

Farmers and their families are increasingly seeking a safe financial future for themselves, their parents and children in these uncertain times. Farmers Guardian speaks to Sean Aldom, regional manager and head of business at wealth management expert St James’s Place, for his advice.

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To continue caring for your children and your parents, you need to take care of yourself.
To continue caring for your children and your parents, you need to take care of yourself.
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Financial planning for the 'sandwich generation'

Members of the sandwich generation are men and women in their 40s, 50s and 60s who are bringing up their own children while also providing care for their parents.

 

In farming families, it Is not unusual for the three generations to share a property, to work together and have plans for their working future already mapped out.

 

Faced with increased pressures of Covid-19 on their income, their employees and the local economy, the rural sandwich generation is pulled in many different directions.

 

Balance

 

With the challenges of running the farm day to day, they need to balance parenthood, with the prospect of caring for their own parents.

 

All this against a backdrop of succession, as one generation passes the tenancy or ownership baton to the next.

 

Amid this perfect storm of financial, emotional and time pressure, what can those in the sandwich generation do to support their parents and children, while also taking care of themselves?

 

Sean Aldom, regional manager and head of business at wealth management experts St James’s Place, gives his top tips.


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How to help your parents

 

Whether your ageing parents live with you, by themselves or in a care home, this is an anxious time. And while money is never an easy topic to talk about, having a conversation will allow you to plan for the future more effectively.

 

  • If you are due to take over the tenancy do you have a clear overview and understanding of your parents’ assets, all income sources, expenses and any debts they may have accrued overtime? Once you take on the full running of the farm, will they be claiming all the benefits they are entitled to? Do they have life insurance or long-term care insurance? These are some of the facts to establish.
  • Consider involving a financial adviser at this point. It can help with what can end up being an emotional conversation and will therefore help to focus the discussion on the facts and figures.
  • And though it is a difficult subject, it is important to check that your parents’ affairs are in order. Will creation and legacy planning is part and parcel of financial planning for farming families, but it’s worth taking a look to check everything is up to date. Depending on your circumstances and the ownership of the business, also note whether your parents have specified if you can legally take control of their finances should they become unable to make decisions on their own.

How to help your children

Whether your children are younger and home from school, or working on the farm they will likely need more support during this time.

  • Thinking about money as a family, rather than each generation trying to manage alone, is a great place to start, and has the added benefit of introducing younger generations to financial planning.
  • Ask yourself: What are you currently paying for child-care or schooling? Are you saving for a child’s education, for property on their behalf or future investment in the business? Are loans and gifts to your children being structured in the most flexible or tax-efficient way?
  • Pensions and Junior ISAs are great opportunities to give children a financial head start and it is worth contributing even in times of volatility. In the March Budget, the annual allowance for a Junior ISA was more than doubled to £9,000. A parent or guardian must set up the Junior ISA, but anyone can pay into it and there is no tax to pay on any income or gains. And even small contributions into a young person’s pension can make a big difference over the long-term.

How to help yourself

 

Remember, to continue caring for your children and your parents, you need to take care of yourself.

 

  • Are there monthly costs that you could eliminate or reduce? Are you using available tax breaks? You may even find there is an opportunity to make the most of a fall in share prices and invest for the future.
  • It can be tempting to try to predict the future, or react to events as they happen. Talking to a financial adviser can help you make a financial plan in a calm, rational way, rather than reacting to news stories or your own emotions.
  • If you can, continue contributing to your own pension and savings. Sacrificing saving today could result in financial strain tomorrow. In addition, life insurance and financial protection are relevant now more than ever – we may not like to think about death, serious illness and long-term sickness, but they are especially important if others rely on you financially.
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