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Reasonable % Parental Contribution?

lyn*

(website)

Veteran

Hey YLF-ers!

I understand a lot of you guys are parents, and in turn, also have aging parents. My dad had a health scare this year and is thankfully okay. He plans to retire in the upcoming year, and as a result, my parents are dropping from a two income household to a one income household. I'm sure they can get by on this, but I mean, "getting by" isn't something I'm comfortable with them just doing.

What is a reasonable % of my income I should set aside for them? I don't think they will accept a straight up cash transfusion, but if I can buy them things to make their life easier, then I think I will feel better. It feels amazing that I have the income to do so - I am already supporting my sister, so that helps out a lot (I think) around the house; and I pay (of course) for all my own expenditures.

I also don't mind putting aside my wardrobe funds for this; but I'd be a SYB more than a SYC (although that might not be too bad, because I have tons of awesome stuff that totally need to be worn!) - I probably spend about 25% of my income right now on wardrobe which I call my hobby fund

Mortgage: 40%
Hobbies and Clothing: 25%
Savings: 5 to 10%
Car/Transport: 5 to 10%
Food/Household: 15 to 20%

Thanks for your expertise!

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22 replies

Latest reply was from lyn*

Raisin

Veteran

That's really nice of you to want to help them out Lyn! Not everyone can, or is willing to do this.

Well just looking at your budget as is there, it would appear that the only category you can take from is hobbies/clothing. I assume the others are fairly fixed? Unless you are willing to give up cable/cell phone, etc.

My thoughts are this. How long will you save for them? Are you going to give them money for the rest of their retirement? I don't know how old they are, but assumably, that could be 30 years or more! I don't think you should cut yourself too short. Hobbies and clothing is the only area where you get to spend money as "fun", and really, you work too hard and long to have nothing left for yourself at the end of the day. I don't know if it's really right to give you an exact number, but honestly I would say not much more than 5%. I am assuming you have some sort of pension plan as well right? Otherwise, you should definitely bump up your own savings. You will have to retire some day too!

If you really want to help them out and your parents don't feel ok taking money, I can give you an example of something my mom does to help out her dad. My grandmother died when I was 9 and grandfather has a girlfriend now and lives with her. He has no money though, he barely covers his payments. But he's very proud and doesn't want money from my mom and aunt. So my mom took over a couple of his bills, like phone/cable. He feels better about this then getting straight money, and it gives him a little more wiggle room each month. Also, at Christmas and birthdays we all try to give him some cash or Gas/Grocery gift cards to help out.

Good luck, you're a very sweet daughter!

Krista

Veteran

Hi Lyn,
You are such a good daughter! My first question is - do your parents actually need your financial support? You haven't shared whether or not this is the case and it might be more fair to discuss this honestly with them before you plan to support them financially. Is it fair to assume that they have planned for retirement and for them to gradually move into mutual retirement where one retires first and then the other? My parents moved into retirement like this several years ago and it was very interesting to observe - I was worried that they wouldn't "survive well" either, but both have a form of a pension, they had RRSPs set aside, and they had already paid off their home before they retired. Life without a mortgage makes things much much easier! My parents now spend 4 months of the year in Florida and are living one heck of a retired life.

If your parents have a financial plan for retirement already in place and don't need your help, I'm wondering if it wouldn't be better for you to put money aside for when they are no longer able to live on their own and need to live in some form of home (or you may even choose to have them live with you). These arrangements are definitely expensive and require lots of planning; my father-in-law is currently in such an arrangement and it takes quite a bit of teamwork on the part of the family.

In any case, I would suggest speaking with a financial planner (someone with your bank is a good start) - either on your own for future planning or making sure your parents have one as well. My husband is a financial planner and he is super passionate about making sure people are prepared to take care of themselves financially in retirement; an FP could really help you out in this situation as it seems quite complex.

You can PM me if you have further questions about financial planning and I will pick DH's brain for you

cheryle (Dianthus)

(website)

Veteran

If your father will receive a work pension, their income may not be reduced as drastically as you think. I had a conversation with a friend who retired recently with a 58% pension and he said his take home pay was 80% of what he earned working. If you adjust for transportation and parking, lunches, and other work related incremental costs, it is almost a wash. So like Krista, I think it is important to assess need as a starting point.

My parents retired years ago as my father had a second serious cardiac incident and they are on a fairly limited income. They were always careful with money though so are not having trouble making ends meet. I try to buy things for them that are luxuries that they might not have bought themselves. Two years ago, I bought them plane tickets and had them stay with me in Mexico for 10 days. I will pick things up for them and then "forget" to take the money whenever possible too.

It is very generous of you to re-allocate your fun money to your parents. They must be very proud.

Kalli

Since I'm in the same situation as you are, although my parents aren't working at all! This is how I handle it: I don't go by a certain percentage of what I make, I try to aim for a fixed amount that I keep in a fund and I use that to take care of things (my siblings also contribute so I'm lucky there). I've used it for things like a broken washer, a new computer, etc etc.

Your parents won't take money from you outright is true. However hopefully your sister doesn't ask them for money. Also I wouldn't take too much away from your future to help them out (I have to tell this to my siblings all the time - my mother can go on less trips, she doesn't need so many luxuries).

Generally I get away with filling my mom's car up with gas, aka I ask to borrow the car and then fill it up. At the same time I ask her if she needs me to pick up something at the store since I'm already going, this is when I grab the household shopping list and purchase everything.

As time goes on, I feel that I just need to make sure my parents have what they provided for me as a child, just a little more than the basic necessities. Don't get me wrong, I love taking care of my parents, it's a real privilege however don't go overboard, they will live a long time and when they get used to you helping them out in such a manner, you won't be able to cut back or stop. So take baby steps.

Isabel

Veteran

Wow, you are just fantastic. I say that you quietly put aside some money. And then, use every possible occasion to get them "gifts" of things. When I first got married, I started putting away $150 every month into a mutual fund for my in-laws. They haven't needed it and they don't know, but 16 years later we have a really good chunk of change for them. With my parents, I gift. I just bought them each a vacuum cleaner ( yes they live together but each wanted their own...don't ask ) and had asked my advice on the brand. So I went out and just showed up with two and said that it was an early mother and father's day gift. I made of big deal out of the fact that I don't know what else to give them.

Every year for Christmas I give my mom a big box of stuff that she uses : hairspray, blush, powder, toothpaste, deodarant, socks and so on. Enough to get her to next Christmas. She LOVES it ( or she lies ) . My thinking is that she then doesn't have to spend her money on this stuff and she has a little extra for other things. Where I live, I can also call the oil co. or the phone company and buy them services that show up as a credit on their account. This saves everyone's pride and frees up the money for necessities for other things that they can choose and do for themselves. This way I never give them anything with the message , " I know that you cannot afford it. " But rather, " I just don't know what else to get you and I know that you will use this...."

Lyn *, if they just "get by" now, it will only get worse as they get older. So please consider setting up some sort of account that builds up over the years that you can draw from as they age. You will also have more and more financial responsibilities as you age so there may not be as much available for you to take from your salary.

PS. With everything that you have going on, I think that you should up your savings. Even if you just squeeze in another 2-3%.

You are a gift.

cinnamon fern

Veteran

Lyn, I just want to be another voice saying that you should look after your own financial future as well as your parents! Right now you are supporting your sister (BTW, where does that fit into your budget): you are already making a huge contribution to the family. It is great to want to help your parents, but, I would really like to see you saving more for your own long-term future as well.

Anonymous

Mmm, I am a daughter and a mother of 2, one of which will go to uni in 1.5 years.

I pay my bills, save for the future and there is not much left. My parents live on a very limited budget, very happily and would be horrified if I contributed. However, when I visit, I bring all the food 'extras', junk, snacks, wine etc. we also went on vacation together last year and I paid for the hotel and some of the meals. At christmas and birthdays, i buy gift cards for special things, like the fancy deli they like. I think you should tread carefully. I put myself in their shoes and I would not like my kids to continuously pay my way unless i was going to be homeless or hungry, frugal is ok. just my 2 cents

bj1111

Veteran

lyn*, i would divert money from your wardrobe fund into rrsp for yourself. retirement seems like such a long way away especially since you are not a grown up doc yet. docs do well in canada, though i'm not as familiar with your specialty. think of this as a freedom fund...freedom not to be a burden to your children, freedom to walk away from medicine in 20 years and do something else or nothing else.

re parents, mine don't need a hand, so i buy them luxuries...a little something toward a vacation. with my mil, she needs much more help, so we pay taxes on her house and throw in some money to "reimburse" her for whatever she bought for our house. i view this as an investment in my marriage, otherwise i would resent it.

re your parents, only you can decide what is appropriate. but i would start with an indirect conversation with your parents about finances. you may already know a lot since you feel a need to support your sister.

i'm inferring that you are the older (est) child and that your parents emigrated? i totally understand the cultural expectation on the parental side for support --whether it was stated or not. i also totally understand that you are a caring person and want to help because you perceive a need. i think you need a better understanding of what "getting by" means.

Jules

Veteran

Honestly, I think supporting your sister is enough. I realize the cultural expectations are different though. However, it seems wise for your parents to arrange their lives such that they can pay their fixed expenses on their own income. This would be my advice to any adult, actually! Then your contributions are for extras and are not being counted on as part of their basic budget. If then they truly can no longer afford their home, cars etc then you can figure out how you feel about that. If you're subsidizing their mortgage then there can be documentation of this such that you get some of that equity (maybe you will decide they need it more than you do sometime down the road, for example for long term care, but that would be your decision). I just don't think setting up the expectation of continued, constant monthly support is the way to go just yet. If you plan to have kids someday, daycare and other costs will take a chunk of your income.

Anonymous

I don't think this is a percentage sort of issue. Give whatever you can.

lyn*

(website)

Veteran

Thanks so much for your thoughtful replies!

My parents have an odd financial situation - my mom made some bad investments some years ago, and they have kept that very hush, so I'm thinking they are worse off than they plan. My father is not going to get a retirement pension aside from the government funds (only a few hundred a month because he came to Canada as an adult). I am pretty sure my mom can get by on almost nothing, but I am most worried about my dad.

Supporting my sister is just balled into my own expenditures. She is a full scholarship student (so there is no tuition), but she lives with me and I cover the house expenditure. She just buys groceries on my card.

Sometimes I don't think my dad is the best judge with his money - he will skimp and save, but he recently was asked by the doc to eat more veg and fruits, so I said I would buy him a smoothie (he likes Booster Juice). I asked him to go online and find one he liked, and I'd buy it for him. He picked a $400 blender. I nearly blew a coronary. I didn't KNOW $400 blenders existed! I told him I'm not buying him that one, and I'd only give him $150 and he can make up the rest himself :p I felt a bit bad, but also like a parent!

For my personal finances, I max out my RRSP every year, and I have funds coming to me in terms of a raise every year for the next 5 years. Following that, my income as an attending (staff) physician should go up about 4 or 5x what I currently make, so I'm not really worried that far into the future. I wonder if I can afford a car payment though, if my sister needs a car.

As for when my parents can't stay in their own home - I am very, very, very scared of this. I have no idea what I am going to do. My parents are "older" so I think I will have to plan for this sooner than I think. My mom I am pretty sure will try to take care of my dad for as long as she can (especially since she is a nurse). I know that assisted living is quite costly, but having personal experience on the staff end knowing how terrible some public facilities are, my parents are getting private care if they need it. I don't know if it is feasible for my parents to live with me - although my dad would love it - depending on my own social situation. I think it would be great if I had kids for my parents to live in the home; they have said multiple times they would love to move in and provide child care.

Finances this year were pretty tight for me, but I didn't have to borrow against anything yet. There have been times when I only had $20 left until next pay day, but I think next year will be a lot better when I make more money.

Sometimes I wish my sister would get a part time job and help pay the housing or the food (especially since she is an organic vegan, and man, some of that stuff is super expensive! I eat whatever crap I can shove in my food hole ...) - but she's never worked a day in her life, and I dont' think she's going to start soon! I'm glad she's actually planning on working; up until last year, her life ambition was to live in my basement (so totally not happening).

qfbrenda

Veteran

I'm not familiar with the cultural issues involved, but I would be careful about supporting your sister too much. If she's capable of working, then she could do that even while in school. Lots of people in non-medical fields have jobs while in college. The more you help her, the more she will depend on that and be less likely to help herself. And please don't consider paying a car payment for her. She can work, save cash, and use that money to buy a used car. Though know my bias... in 17.5 years of marriage we've never had a car payment. We save and use cash. It saves a ton of money to do that. But even if I was ok with a car payment, I would not do that for someone else.

Many financial planners say to save about 15% of your income for retirement, so if you are able to do that, I would. 25% for hobbies/clothing seems really excessive to me but I know your situation is very different than mine. But if I applied that percentage to our smaller income, that would mean I would be spending over $12,000 a year on clothes, which is quite a bit for a hobby.

If your parents need your help, then I would find ways to help the way the others suggested. I tend to agree with saving money now to help them more in the future. It is very sweet of you to be wanting to help them as they age.

Isabel

Veteran

Lyn*, please don't keep enabling your sister. I beg you ! Pretty please. I have an older sister who is disabled ( mentally ) and she lives with my parents but me, her social worker and her personal care attendant insist that she chip in some way. When we go to lunch, even if it is just $2, she has to contribute something ( unless it is a special occasion and I treat her ). she also does some vaccuuming, laundry, taking some of her money and paying for household costs like a portion of electricity. It is not much, but it makes her feel really good and "responsible". It also makes her feel less afraid that she is totally dependent on my parents.

You have a life too young lady. : )

Do you guys have long term care insurance in Canada ? If so , you may want to look into it. And you might want to find out if your hospital offers and perks like a financial planner or financial advisor. It wouldn't hurt to talk to someone.

lyn*

(website)

Veteran

There are financial planners available, but they mostly help you manage your educational debt (most of us have an average of $150K or so debt).

I guess 25% for clothes is probably too high; I was going off 25% per pay cheque, but then I forgot I got three pay periods in a month :p So it's about 1/3 of that. HAHA. I was going to say, I don't think I spend like thousands on clothes every year!!!!

I have talked to my parents tonight ... they are planning a trip to Hawaii, and then to Hong Kong, and then to Australia, and then to Japan! HAHA. I guess they're better off than I planned and my dad just likes to complain! I will buy him the blender.

As for my sister, she does help out around the house quite a bit - especially when I work late, she always cooks and makes sure I have dinner in the fridge, which is really nice. I have stopped paying for her cellular phone (and as a result she cancelled her policy) and I don't pay for her transit (she has to do it through school and use her scholarship money).

I personally drive a 12 year old car. I think if I needed a second car, I'd give her the old one and get a "new" one for myself. I've gotten a few people asking me to show ID to prove I can park in the physician lot... so maybe that's saying something. I don't think I'd ever buy a spanking-fresh car - they depreciate so much just driving it off the lot! But I will talk to a financial advisor about this - I may be able to write off the lease.

Thanks again for your thoughts!

My parents were surprised I wanted to give them money. My mom got kinda mad at my dad for the blender, though.

Kristin L

Veteran

I don't have any advice or ideas, but thanks for posting this lyn*! When I get a real job (not the grad school stipend where I live paycheck-to-paycheck), I want to be able to start putting aside money to help my parents (even though I think they'll be ok) and for my future spouse's parents.

Isabel

Veteran

Lyn* that is hysterical. I guess that they are in good shape ! Now start taking care of yourself. I agree that one of the worst financial moves is buying a new car. So maybe you could start putting away money is a separate account for a car...you are going to need one pretty soon. And can you add a little extra to your school loan every month ? Get that sucker paid off a little quicker ?

I am also glad to hear that your sister is kind to you and does contribute in some way.

claracluck

lyn im really fretting reading your situation.let me tell you a tale.....my younger sister is a nightmare she has never took responibility for herself.she is now 44 by the way. my mother have constantly bailed her out of situations with money simply because she is asingle mom with four children who now starting to act in the same way.my mother has always helped my sister with money,cars ,houses and 12months ago i stepped in to help because my mother was virtually having a melt down.i know your family isnt crazy like mine but it could become a monster you cant turn back from.please you are not abad person in fact you are the opposite,please think about your own future.i am virtually in tears typing this its nearly desroyed our family relationships.

lyn*

(website)

Veteran

Oh; I'm pretty sure my sister will be okay, I just like to complain about her once in awhile. She doesn't talk to any of us very much, so it's hard to know what she's thinking about.

I would be gushing to pay back debt, but I don't have any that isn't going to be forgiven. Yay. I lived pretty thriftily when I was a student (which is partly why I want STUFF now) - and didn't go on any of the expensive trips and didn't buy a new car, or any of the stuff that got people into mega debt. (One of my classmates has over 300K in debt). So thankful. I also worked during the summers (two or three jobs) and I didn't travel (which kinda sucks, but oh well!)

Gaylene

Veteran

Lyn, the responses to your question just point out how different we all are when it comes to money and family. I think that your willingness to help your family members says quite a bit about your character; your patients will be lucky to have you as their physician.

For what it's worth, I'll give you the same advice that my husband and I gave both my sons when they finished school and started earning a good income:

It's not easy to transition from a very frugal student lifestyle to one where money is not such a major concern. Pay your bills on time, stick to a schedule to pay down major debts like student loans and mortgages, put some funds aside for a rainy day in a tax-free saving plan, contribute regularly to an RRSP, consider carefully before taking on more debt, and, last, but not least, enjoy your life. Do some of the things that you want to do: travel, indulge in a hobby, have dinner with friends, go to concerts, or whatever makes you happy. As you grow older, your life will become more complicated and consideration for others might have to take priority over your wants and desires. But, right now, you have the opportunity to indulge yourself without hurting others. Take advantage of it.

Strangely enough, it's the last part of the message that was the hardest for both my sons. But, my thinking has always been that it's better to indulge in being young and a tad foolish when you are young than to give in to that pent-up desire when you are older, especially if you have a family by then who will be affected by your choices. It sounds like your parents can make their way without your help right now, but they may well need you in the future. By all means give them a treat now and then, if it makes you happy to do so, and put aside a bit of money in an account where you can draw from it if they need help in the future, but, know also, that you've earned the right to enjoy yourself by spending some of that extra income on things that make you happy.

MsMary

Veteran

Lyn*, you are an amazing woman and I don't really have much to add!

Well, maybe one thing -- are you familiar with the concept of the zero-based budget? It's basically giving every dollar a job to do so your money doesn't slip through the cracks and you tell it what to do instead of it telling you what to do. You might want to check out You Need a Budget, which is an online service that lets you do a zero-based budget and plan and save for future expenses.

I've been doing a zero-based budget for years and it's been a lifesaver!

nancylee

Veteran

Lyn, you are clearly a kind and generous woman to care so much about providing (at such a young age!) for your parents and sister. Setting aside some money in a savings account and using it to buy special (needed) things for your parents that can be seen as "gifts," rather than straight cash support, is probably the best way to help them out at this point. That way you'll help them protect their pride (because no parent wants to depend on their children for support) and not bankrupt yourself.

It sounds like you are allowing your sister to take on a little more responsibility for her own finances, and that's good! I don't see anything wrong in giving her your old car when you decide to get a new one for yourself. You might want to look into a certified pre-owned car or contact someone who deals in car auctions. We buy all of our cars this way and it's a great savings. You can get a car with maybe 2,000-5,000 miles on it (almost new) for a very good price. Usually these guys work via word of mouth, so I'd ask around if anyone knows about car auctions in your area.

I guess my overall advice is to keep yourself financially stable and help out your family to the extent you can...but to an extent that won't put you in financial jeopardy. Just remember that you can't help anyone if your own ship is sinking.

lyn*

(website)

Veteran

@ MaryK - Thanks for the link! I think learning to live on last month's income is going to be my biggest challenge. Learning to live on -last paycheque's income- is more my thing right now. Haha. Oh well, I need to stop making purchases when I am blue.

@ Nancylee - I definitely will look into certified pre-owned; my current car came to me that way; it was previously owned by a doctor who got sick of driving the same car for more than two years. SCORE. Nice car for me She was a bit plump though, so she cracked my driver's side leather