How to help your parents financially — without going broke yourself

What you need to know:

  • Do not wait until your parents are elderly and ailing to set up a financial support system.
  • In business, the cardinal rule is that you must never mix your personal and business money. You must have two separate accounts.
  • To avoid getting strained financially, look out for policy covers that are tailored for elderly people.

Your parents raised you, provided shelter, education, and financial security for you until you grew up. Now that they are old and weary, you feel indebted. How can you ever repay them? With this indebtedness, you can break your bank if it'd mean giving them comfort. This guilt can leave you broke. It's often referred to as the 'black tax', where one feels the pressure to share their income with struggling family members, making it difficult for them to build generational wealth.

Here is how to take care of them without straining yourself:


The big talk

Do not wait until your parents are elderly and ailing to set up a financial support system. Have the money talk on their financial future now. "You should talk about how you can both benefit," says personal finance coach Edward Okumu. If there is significant estate involved, draw up responsibilities, in case your parent is unable to fulfill them. "The estate planning law in Kenya has provisions that allow for the financial power of attorney. This can allow you to make financial decisions on behalf of your elderly parent," says Okumu. Instances where you can apply for the power of attorney, include the occurrence of age-related ailments such as dementia and Alzheimer's. Okumu cautions that you must realise the money you'll handle on behalf of your parents isn't yours unless an estate plan has stipulated so.


Organise their money

If your parents have bank accounts, and investments such as shares, update, automate, and enroll their accounts online. This will facilitate easy monitoring and access to any funds such as pension payments. "The aim is to have your parents go through their life without having the trouble of visiting the traditional bank," says Howard Gleckman, the author of Caring for Our Parents. Find ways you can simplify and trim their budget as much as is comfortable. "Don't overspend. An elderly person may no longer need lots of luxuries such as premium pay television and high-end cars. Their needs are pretty simple just as their lives are," says Okumu.


Separate your finances

In business, the cardinal rule is that you must never mix your personal and business money. You must have two separate accounts. The same rule applies when it comes to the business of the family. Do not mix your personal finances with your parents'. This includes the habit of digging out your personal assets and investments to help your parents. "Remember that you too have to think about your retirement," cautions Okumu.


Health insurance

Multiple health conditions inevitably crop up as parents age. Some of these can be long-term and costly to treat or manage directly from your pocket or bank account. To avoid getting strained financially, look out for policy covers that are tailored for elderly people. The majority of these covers cater for hospitalisation, surgery, physiotherapy, drugs, and dressings. Some cover for extra expenses such as treatment and surgery in foreign countries. "Look out for the age limit, medical history, underlying health conditions, and the minimum limits in a cover," says Nancy Aketch, the managing director of Taraji Insurance Agency.


The funeral cover

Due to cultural attitudes, not too many people are willing to take a funeral or last expenses cover. Everyone fears death, and in the African setting, taking a funeral cover on behalf of your elderly parents might raise eyebrows. But funerals are among the costliest expenditures that families undertake. The children left behind by a departed elderly parent feel obliged to give them a decent send-off.

A survey by the Association of Kenya Insurers in 2018 revealed that only three percent of Kenyans have taken funeral insurance. The same survey revealed that funeral expenses in Kenya cost families between Sh50,000 and Sh2.5 million. Taking a funeral policy is not a call for death.

All leading insurers in Kenya provide a form of funeral plan that caters for the expenses during burials.


Social programmes

Your parents may no longer be earning. But there are still avenues they can use to get some little money in their pockets every end of the month. One of these is through social programmes that cater to the elderly. The most popular of these is the Inua Jamii Cash Transfer Fund that is operated by the Ministry of Labour and Social Protection through the State Department for Social Protection. This programme allocates Sh2,000 per month to elderly people aged 70 and above monthly.


Siblings duties

There is a family tendency of the well-off child taking up all financial responsibilities for their parents. This can be financially and emotionally draining. If you have other siblings, divide the responsibilities. "One sibling can take up the day to day duties while another can take on the more complicated long term financial duties such as the health cover," says Okumu.


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