The other day, I asked some questions on Twitter and it elicited an interesting conversation on the timeline but also in my DMs
In Kenya, it is common for parents to expect parental support from their children. The logic as aptly expressed by a leading economist David Ndii is that a child is the best pension plan – it visits, brings grandchildren etc, unlike just getting money from an ordinary pension scheme.
@rookieke yes, your education is their pension! better than money, money can’t visit you and bring grandchildren
— David Ndii (@DavidNdii) January 24, 2017
From the parental perspective, this view is fair. Parents invest a lot, sometimes everything they have in their children’s education, it is only fair to expect that this investment will pay back. The model also worked for the last few generations because getting an education guaranteed you a good job, stable income and credit worthiness. Our parents could even take loans to build homes for their parents, because ta stable job came with good credit from the SACCO.
Today, job security is a myth, credit is scarce and our living expenses are higher than ever. Our favorite thing to reminisce about as parents is how kindergarten education now costs more than our parents paid for our entire schooling. This is because we are also trying to prepare the next generation for a world that is rapidly changing.
The expectation that we will support our parents economically however is still there, and the case for it still stands – their own retirement is in jeopardy because of the deteriorating economy and sometimes they are saddled by education obligations towards our siblings.
So how do we balance this expectation and still take care of our own financial present and future?
I am no expert at this, and would love to hear how you manage it. I however have a few tips I would like to share regarding educating our parents about money.
1. Your financial security should be your priority. When we spoke about this on Twitter, some people confessed that they are not able to save money or make investments because of family obligations. While sometimes the need is so acute that saving is a luxury, in most cases it was not – some parents have a comfortable income and ask for help either for projects or to subsidise their expenses, but because of guilt, we find it hard to say no.
My advice is that you must be wise on this. If you jeopardize your financial future because you were supporting your parents, you are perpetrating a cycle of dependence, because it will then compromise how much you can do for your children and eventually you will need your children to support you financially.
Be prepared to have some uncomfortable (but mature) conversations with your parents about money. I feel there should be a balance and an appreciation of relativity or earnings and expenses when talking about money with our parents, especially if they live upcountry and we live in the city. Their perception of certain expenses may not be matched to your reality – do not show them your payslip, because they may not understand for example, why you spend so much on rent, yet upcountry houses are a fraction of the cost. I remember once being asked if I understood how much the 30,000 bob I paid in rent could accomplish upcountry. But alas, if I worked upcountry, I would not have the 30,000 bob! They may wonder where you take all your earnings, not realising that the things they get for free from the farm, you have to buy at a premium. Talk about all this.
2. Never conceal your struggles. I have made an observation that many people who can barely afford to scrape by, save for investments and retirement are also funding luxuries for their parents. By luxuries I mean helping them buy that pick-up they “need” but can live without, or helping them upgrade their home to “a stone house with a chimney”, because they are the only ones without one in the village 😀
Parents are not immune to peer pressure. They are prone to comparing what their friends’ children are doing for their parents with what you are doing for them. From a parental perspective, all the kids are in the city / have jobs, so they may put undue pressure on your to help them measure up, if they are not aware of your struggles.
Again, this conversation calls for a level head and maturity on your part. You are not asking them for help, but are letting them know that you are struggling so they can ease up on the demands. Do not rant, do not make it an emotional conversation, and do not blame them for having expectations. Just communicate what you can, and cannot do, despite their justified expectations.
It helps to remind them of times that even they had to lower their expectations and cut down on luxuries because they were struggling financially. Times they asked YOU to lower your expectations.
2. Be clear about lending versus giving. I keep saying that having a credit line with your friends and family is a life saver. There are however rules on how to set this up, which I have written about. When it comes to our loved ones, there are two types of money flows:
- Loans – this is money lent out that should be repaid back at an agreed upon time, and
- Giving / Donations – this money is not needed back.
If your family does not have a culture of giving loans, it is important to introduce it and have a frank talk with your parents about this. Why? Because sometimes you may have money to loan out for a period after which you will need it, while you do not have money to give. Same case for your parents, they may be just in need of a temporary reprieve.
I am privileged to have this kind of relationship with my mother, and it has gone both ways. She’s bailed me out several times, and vice versa. The key thing is to have clarity when giving them money – are you loaning it to them, or giving it to them?
3. Encourage your parents to have multiple income streams; This almost sounds like Parenting 101 because it is basic, but is key. Our parents are living longer in retirement (something to be grateful about). If they retire at 60, they have another 20 or so years, and in the absence of a pension fund, they expect your support for those 20 years.
If you are like most of us, this expectation of support will come when you need the money most for your kids university, and your own retirement. It then becomes important that they find a way to generate income, and also to keep busy and purposeful which helps extend their lives even more.
Help your parents identify opportunities and areas they can develop fresh interests in. If they live upcountry, this can be in agriculture (fish/dairy/chicken) or in trading (shop/ hardware etc). If you are business savvy, help them set up the operation in such a way that their role is managing it and not doing the actual work. Remember, for a relatively small investment, you could set them up with something that replaces your support, thanks to the relativity of earnings I highlighted in point (1) above- a dairy cow that brings in 10,000 bob net per month could be all they need. According to Ndii, livestock ranks very highly on the parental retirement plans list, so get some dairy cows for them 😀
— David Ndii (@DavidNdii) January 24, 2017
4. Rope in all your siblings. In many instances, you find that the nicest sibling carries most of the financial load. This is because they feel the most burden towards helping parents, but they are also easiest to guilt, and therefore the first option for parents when help is needed. If you are the nicest sibling, do not be long suffering. This is an obligation to all children, as long as they have an income. Include your siblings in the discussions. If you do not have the authority to do so, ask your parents to include everyone. If formal discussions are totally impossible, divide the amount required among all the siblings, and contribute your portion.
Ultimately, the responsibility to make everyone do their share should rest with your parents. The same authority they had when raising you should be at play when asking for support.
5. Consider investing in passive income sources for your parents. This is connected to (3) above. If active business is not possible, look at what passive investments you could make for your parents. Passive investments generate money without requiring constant supervision / work from you or them. For example, you can help them construct some rental houses at the local shopping centre, or even invest in a REIT/ mutual fund / money market fund for them.
Though the returns for passive income sources are low, psychologically they are freeing because you do one major project, after which you are no longer required to give financial support. This is especially ideal when your siblings are unwilling to contribute – one major project may be an easier sell to them, than monthly contributions.
6. Small regular amounts are better than ad hoc requests for cash. Sometimes (3) and (5) are not possible because of your own limitations. In this case, sending your parents a fixed small amount every month is better, than to wait for them to ask for money. This makes it easier for you to budget, and relieves your parents of the psychological burden of always asking for money – no one likes to borrow all the time. Also, once it is in your budget as a regular bill, it is no longer painful, the same way we do not sweat about paying rent every month after the first few months.
7. Learn to say no. “No” is a complete sentence. If a request is beyond what you can do, then it is ok to say so, and walk away with no guilt. Guilt is not a helpful emotion.
8. Avoid taking debt. Unless it is for an emergency or to meet a real need (school fees, food or medical expenses), do no take debt to support your parents.
Last year we had a family project (read: parents’ project) that required a lot of money from us. My first thought was that we could all take X in loans, give it to the parents and we move on. My uncle advised me to not take a loan for it. It was my parents’ project not mine, and if anyone was going to take a loan for it, it should be the parents. He said that a loan would build resentment because every time I paid it, or ended up forgoing something I need to do because of the loan, it would remind me that this was not even for my project. It would also limit my willingness to assist in real emergencies.
He instead advised us to give what we can, the schedule the project according to the parents’ cashflows. It was not an emergency, and they should own their project. That is what we did. We are now done with Stage 1, the project continues later this year if money allows. By not funding it all, our parents also had to be innovative in how they scheduled the project. It also left us with room to support them in repaying the debts as we prepare for Stage 2.
Those are my 8 top tips. We also had a discussion about this on Twitter, and though I am still a Rookie at it :D, I managed to Storify some of the tweets. Click on the individual tweets to see the responses and to learn from others.
We are all about knowledge sharing, so please share your tips on how you deal with financial obligations to your parents, by either leaving a comment below, or Tweeting me. What is your relationship with your parents like when it comes to money?
In the meantime, have you heard about the #52WeekChallenge with Mshwari? We are making savings something we do daily and consciously for the next one year. Join the challenge by printing the worksheet and starting to save little amounts from your daily spending. We are using the MShwari Lock Savings function to track our savings and also stash them away. Do not forget to connect with everyone else on the challenge on our Telegram Group on Twitter where we chat about this constantly using the hashtag #52WeekChallenge .