QUESTION: Hi Sir Randell! I’ve been reading a lot of personal finance articles about millennials. I read one that definitely hit home. It was one about the “sandwich generation” wherein Filipino adults feel sandwiched between their responsibilities to their parents and their responsibilities to their families (or the family they will have in the future). I don’t have any children yet, and I’m still single, but I’m scared and I already feel the pressure being sandwiched. My parents are the best, but unfortunately, not when it comes to money. I already give part of my income to them, and there are times I feel like they see me as their retirement plan. How can I talk to them and express my feelings that we need to do our own parts in setting ourselves up financially on our own? That I cannot fully depend on them and they cannot do the same to me? —Angel via Facebook Messenger

Hi Angel! This is definitely an interesting situation you are in, but a common one nonetheless. Compared to questions on investing and saving, I don’t get this type of question a lot. I’m sure, we see it happening around us always, and the phenomenon tends to be more obvious here in the Philippines where parents have the mind-set their children will take care of them come retirement.

This is a tricky topic to confront your parents with, but here are some steps you can use when the time finally comes that you need to approach them and talk to them:

Let them know their numbers.

If you’re contributing to household expenses, you know how much your parents spend on basic necessities monthly. You may have an idea how much their monthly expenses are.

With this, you can compute your parents’ retirement numbers. This is the amount they need to be able to retire comfortably. Crunching the numbers and showing the amount to your parents will make them realize you won’t be able to handle it on your own, not even when you and your siblings work together, because you have your own futures to prepare for.

Be transparent.

It may be that your parents also have no idea of the financial stress you’re going through contributing to their monthly budget, so it pays to be transparent. Let them know you’re having a difficult time covering even your needs.

If they’re aware of how you feel, they may ease the pressure on you and find ways to sustain themselves.

Do the saving for them.

However, if your parents are stubborn, and no amount of talking to them will make them understand, you can instead reduce your contributions and open an investment account for them. This may be especially effective if your parents do not know how to handle money properly.

When they reach retirement, they already have a retirement fund that you started years prior.

Be fully independent.

Last but not least, the only way for your parents to become truly independent from you is if you are not dependent on them. If you still live with them, then it’s just fair that you contribute to their monthly expenses, especially if your parents are still paying for the utilities.

If you don’t want to be treated as a retirement fund in the future, start by becoming fully independent from them. This could mean renting your own place and avoid asking for financial assistance unless it’s an emergency and is absolutely necessary. This way, your parents will understand they cannot depend on you (financially) because you’ve already stopped depending on them.

Money talk is always difficult, especially since this kind of talk is still taboo in Filipino culture. However, if you never initiate this type of conversation, you stand to risk your future.

When it comes to personal finance, it pays to start early. How will you start your own life if you have people who are still fully dependent on you?

By having the talk, you can make each other aware of your plans and align your next steps for the future.

Just a brotherly reminder: When discussing difficult issues with your parents, always do so with utmost love and respect. Remember, we are blessed when we honor our parents.

“Honor your father and your mother, that your days may be long in the land that the LORD your God is giving you.” Exodus 20:12, ESV

“…For children are not obligated to save up for their parents, but parents for their children.” 2 Corinthian 12:14, ESV

“A good man leaves an inheritance to his children’s children…” Proverbs 13:22, ESV

Here is a nice blog written by my good friend Edmund Lao. Edmund is a Registered Financial Planner and and advocate of financial literacy for Pinoys. Excellent piece, a must read. — Randell

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GUEST BLOG

The Tired,  the Retired, and the Re-Tired

By Edmund Lao

Have you ever heard employees say that they feel sick and tired of being sick and tired?  The reason they feel this way is because they have been doing the same thing over and over for years and they are still the in the same situation the day they entered the corporate world. This situation is analogous to a person running on a treadmill. No matter how long the distance shown in the odometer, he is still on the same spot. Such is the predicament of the present day employees. Sadly but with truth, Robert Kiyosaki said    that all employees are in a rat race. In a rat race, employees never get rich no matter how much they tire themselves. It is because all they know is to earn income that is directly proportional to the effort they exert. They did not learn and put into practice the methodology to increase their income passively after earning it actively. If they were able to build their wealth during their productive years, they would be able to enjoy the fruit of their labor during their golden years. In any thing that we do, we always feel relieved and indefatigable after we had achieved our target. With building our finances, for sure we would have felt the same. The only time we feel tired and frustrated is when we realize that all our effort were all spent in vain. That is how employees feel today, No matter how hard they strive, they could not make both ends meet and are always deep in debt. They always look for loan and then they work hard to be able to pay their balance due, then get a new loan again, and the cycle repeats. That is the life of the tired employees.

The Retired

For majority, retirement means the end of their corporate life. There are some who felt a sense of insecurity. On the other hand, there are some who felt they are finally granted independence from their voluntary prison cell of twenty to thirty years.  They also see this as opportunity to build their own business.

A lot of people mistakenly correlate retirement with age when in fact, retirement has something to do with personal net worth and cash flow. The sooner a person reaches his financial goals, the sooner he can retire and enjoy life. Normally, employees are retired by age 55 or 60, and assuming they have served quite a number of years, say 25 years, some enjoy the benefit of a big amount of retirement pay.

I have heard of a company that paid almost five million pesos retirement benefit to an employee after 30 years of qualified service. So to those people who regularly transfer from one company to another, it is advisable for them to do the math first before making a decision. The problem that is often encountered come retirement day is that the retiree was not qualified to the retirement pay due to limited tenure of service. Then the only source of retirement income he will receive is from SSS. Jokingly, it can be termed as Living On SSS or LOSSS (rhymes with loss).

On the other hand, the retiree who received a huge amount may want to reward himself after working hard for so long that he carelessly spent or invested all his retirement funds. His has the risk of outliving his fund and when that happens, he will be in the same shoe with that of the one who retired broke. It is not a bad idea to reward one’s self, but he has to be very careful in controlling his emotion specially the excitement of a spending spree.

The Re-tired

What if the retiree became broke after retirement? The usual thing to do is to go to his favorite orphanage institution, his children. He will now experience reality. The time he has abundance, he was the asset and favorite “visitor” of his loved ones. With his present situation, he is now an overstaying liability especially to his sons/daughters-in law. If he has wealthy children, then luck is on his side. Otherwise, he can be compared to a basketball since he will be passed on from one son to another. The former good provider to his children is now a burden to them. The children become “sandwiched” since they have to support their own children and now, their aged parents.

With this kind of scenario, the once happily retired person, out of shame, has no other option but to return to the corporate world to get rehired again (if ever he succeeds considering the competition in job hunting nowadays) and do the things a tired employee does. He is what we can call the re-tired employee because he will just duplicate what he has done as a tired employee.
Solution

From being tired to being re-tired, we can see there is a common denominator, money. Out of desperation, some opt to doing part time work other than the regular job. There are those who voluntarily work overtime as needed. Worse, there are some who resort to theft of time and money from their company. This is a common problem in the workplace.
Employees complain of inadequate pay but they do not realize that it is their lifestyle that has a bearing on their personal finance. Their lifestyle reflects a “living beyond their means” and “keeping up with the Joneses” principle.
The key is to be frugal, budget by reducing unwanted expenses, and most importantly, pay forward so that later, the retired no longer needs to be re-tired.

In order to achieve that, a correct money attitude is a must. Money is just a tool and we are the ones who should manipulate it. Early on, acquire a good habit of disciplined savings regardless of the amount.
That way, there will be a possibility that your accumulated fund may outlive you. In that case, you have the opportunity to leave a legacy to your family.

Allow me to end this article by quoting the Proverbs:

Proverbs 13:11 “Dishonest money will dwindle, but money gathered little by little will surely grow.”
Proverbs 13:22.  “A good man leaves an inheritance to his children’s children”
Special thanks to my very good friend, Engr Rudy Calingo of Metrobank Head Office, General Service Groups, for coming up with the title of this article.