Parents financially supporting adult children are common in Malaysia. There are statistics showing that 57% of parents in the country spend one-third of disposable income to support grown-up children. But what happens when there is a reversal of the situation?
While Malaysia ranks fourth in the world for supporting their children into adulthood, it is also the second-fastest aging country in the world. In about 25 years, it would be an aged nation. Based on forecasts, the elderly population, 65 years old and above, would grow to six million by 2040.
Before extending help, children would have to think about their money situation so as not to their finances. If you are in the same dilemma, you can still step up and provide the much-needed help to your parents.
Here are 5 ways to start helping your parents financially.
1. Know the Financial Difficulty
Knowing the real financial need is the most critical step. It would be good if your parents reach out to you for financial help. Otherwise, you need to spot the signs of money strain.
When you know exactly where the financial difficulty is, it would be easier to deal with the situation and come up with a solution.
2. Work Together to Create a Budget
After the first step, assess and list down your parents’ monthly expenses to find out whether their pension or retirement income is sufficient for them. Your parents might only be overspending or living beyond their means. If money is tight, work together with your parents to create a monthly budget.
If you have siblings that can help, take on specific bills like utilities or share other expenses like groceries to lessen the financial burden. Once duties are clear and you reach an agreement, your parents would not ask for money anymore to fill the regular needs.
3. Take Financial Responsibility
Now that you see the actual financial situation and know which expense to shoulder, take responsibility. Instead of handing out cash to your parents, pay the bills or do the grocery shopping yourself. You want to make sure the money goes where it should go, according to the budget plan.
4. Set Up an Emergency Fund
Expect other expenses to arise outside of the day-to-day living expenses. Thus, you can set up a parents’ emergency fund for unbudgeted expenditures like medical bills and other emergencies.
Saving money, even little amount regularly, or whenever possible, can serve as your back-up. You can use the savings to cover some of the urgent costs that would come from time to time.
5. Discourage Borrowing
Obtaining a high interest rate debt like credit card to fund retirement spending is not advisable. You protect both your parents and your personal finances if you can avoid adding a debt burden when it is not necessary.
Also, if you sign as a co-maker or co-guarantor, you have to accept the responsibility of the loan repayments in case your parents die. Read our article on what happens to an individual’s loan if they die.
Honour Your Commitment
Helping parents who are struggling with their finances can be emotionally and financially draining. When you agree to help your parents financially, it means you are prepared to honour your commitment. Accept too that it could be for the long term.
However, if you are married, your spouse should be made aware of the plan. Please do not keep it a secret from your partner. Make sure that your partner consents to give money to your parents. A couple can set aside money for this specific purpose.
The practice of filial piety or the respect and care to one’s parents remain strong in the Asian culture. When the situation calls for it, adult children will come to the aid of parents to provide at least a minimum standard of living. Sometimes, what matters to parents is not the amount but the sincere gesture of the children to extend help.
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