One in four employed South Africans belong to what is known as the sandwich generation – they are supporting their children and their parents, according to the latest Old Mutual Savings & Investment Monitor.
According to Old Mutual, the monitor reveals the financial consequences of supporting two generations of dependants: this year, 28 percent of people in the sandwich generation were overdue with their debt repayments, compared with 15 percent of people who were supporting only one generation of dependants, or none.
Although children who spend years in tertiary education or who who can’t find a job may be contributing to the problem of the sandwich generation, the root of the problem is a lack of savings. It is the main reason the older generation is dependent on their children, and it should motivate you to save for your retirement.
The Old Mutual survey reveals that many people have no financial buffer or emergency fund. As many as 52 percent of those surveyed say they would have to take out a personal loan, rely on credit facilities or borrow from family and friends to be able to manage an unexpected expense of R10 000. Another 28 percent say they would not be able to handle a bill like that at all.
Failure to set aside savings for financial emergencies that result in you having to take on expensive debt will only further hamper your ability to save.
There is only one way to get out of the cycle and start saving: spend less.