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How To Manage the Finances With Financially Dependent Parents? - ABSLMF Blog

How to support dependant parents without a financial strain?

Jun 26, 2019
6mins | Views 7101

Managing finances in today’s world is not an easy task. The difficulty level gets further aggravated with an increase in the number of dependents. It could be a newborn, dependent siblings or our parents. Also known as the sandwich generation (as they take care of the earlier generation and the next one), they need to strike the right balance between the needs of all the members with their limited income.

However, a wise man had once said, “it is not your salary that makes you rich. It is your spending habits”. With careful and timely planning, one can manage this seemingly impossible task without any problem.

In this article we will focus on how to manage the finances when we need to support dependent parents.

The early bird gets the worm

Financial planning is something that should be started as soon as possible, especially if one must support dependent parents. Timely and effective planning will ensure that all aspects of your lifestyle are well-taken care of in a smooth manner.

If one starts this process early (at a time when you have lesser financial responsibilities), one can have a more aggressive investment strategy and go for high risk investment opportunities such as stocks and equity. Regular investments through systematic investment plans (SIPs) are also a good way to build a robust corpus in the long run. Diversified equity MFs can help to fund child education in the future.

Starting early helps one manage the enhanced responsibilities without much financial strain.

Stick to the budget

Financial planning does not end with making grand saving or investment plans. It is equally important to stick to those plans. Controlling unnecessary expenses or impulse spends is a crucial factor. But if you want to ensure that you stick to the budget, then make a plan which is sustainable. Do not eliminate fun or entertainment completely from your budgets as then you are more likely to stray.

Also, it is a good idea to create a separate corpus for parents. A Systematic Withdrawal Plan (SWP) would also allow them to receive a certain sum of money at regular intervals from there.

The combination of efficient planning and disciplined implementation can help bring down the stress.

Health is wealth

With elderly dependent parents, healthcare expenses form a major chunk of the financial responsibilities. These expenses can burn a deep hole in one’s pocket if not covered through the right Mediclaim policy. Hence one should ensure that all the family members are adequately protected with medical insurance. There are numerous health insurance plans available in the market these days. In fact, many companies also offer policies which are specially designed keeping in mind the requirements of senior citizens. Also, there are family floater plans which can take care of the medical expenses of the entire family.

Tip: If your employer or organization provides Mediclaim policy and has a top-up facility, explore that option. The premium charged in such cases tends to be lower as the insurance provider levies a group or a discounted rate for the corporates.


Though this may seem like a no-brainer, but insurance becomes even more critical when you must support family members including parents. Give highest priority to a term cover which can replace your income and pay back your liabilities, in your absence.

For crisis situations, an emergency fund also provides a good cushion. It is advisable to set aside some amount every month towards this fund.

Make parents more financially savvy

Parents tend to usually put their retirement corpus in traditional and low risk instruments. One can educate them about the other investment opportunities available that have the potential to fetch more returns. A diversified well-balanced portfolio will make them more financially stable in the future.

Don’t forget yourself

One of the biggest mistakes that people make while supporting their family is forgetting themselves. We remain so pre-occupied with arranging for the kids’ future, parents’ health and the daily rigmarole, that we forget that one day we too will retire. Along with our current expenses, it is important to ensure that we set up a retirement fund for ourselves. One can begin with small contribution and increase it gradually. Investing in equity funds through periodic SIPs and pension schemes could be good options for this purpose.

While this task may look impossible in the beginning, it is not so. With careful planning and disciplined execution, you will be able to sail smoothly in the most tumultuous financial hurricanes as well.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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