How the ‘Family Savings Fund’ supports #FirstGenKids parents

  • Many first-generation Americans support their parents or other relatives.
  • Traditional financial planning doesn’t take this into account, so I developed new tools for my clients.
  • I recommend setting up a “family savings fund” for relatives so you always know what you have to offer.

I sat across from a client at brunch and asked her if she had worked with a financial advisor before.

“I have,” she said.

“What was your experience?”

“Well, he looked at my budget and found that I often send money to my brother. He said if I didn’t send him money, I could save. It took me two years to try again and see one.”

I’ve told this story at multiple workshops, and at almost every workshop, someone chimed in to say it happened to them as well. Most financial planning does not address the multigenerational needs of people of color.

Many first-generation Americans are supporting parents and others

Many of my clients are #FirstGenKids. They are the first generation of the country, the first generation of college graduates, the first generation of high-paying people, and sometimes all three. They are more likely to have student loan debt, less likely to have a history of homeownership, and more likely to send money back a generation. They are often the first in the family to have the opportunity to create generational wealth.

My parents are immigrants, but we are lucky in many ways. My mom came here through a Filipino nursing program, a stepping stone to a well-paying job and benefits. My dad got his college degree in the Philippines and he was invalid when he immigrated so he stayed at home.

As far back as I can remember, they were homeowners, which allowed us to have financial stability throughout our childhood. There was never any indication that my going to college meant I would support them when I got my first job. I was able to pursue a degree in literature without guilt. Not having the stress of finding a well-paying job is a privilege I’m still grateful for. Many first-generations do not have this experience.

For many of my first-generation clients, the most common financial challenge is how to take care of other family members while taking care of themselves. My client covers the rent for the parents, the phone plan for the family, and the “money man” in the event of a family emergency.

They tapped their personal savings to cover these expenses and did not keep track of how much they spent for their families. They came to me tired of these financial obligations, but also said that one of their values ​​was being able to support their family.

This is where I recommend a family savings fund.

How the “Household Savings Fund” Works

A Family Savings Fund is a simple but powerful tool that allows you to contribute to family members, set personal boundaries and make room for your family values.

First, figure out the fixed amount you can pay your family. It can be the monthly or annual amount you are willing to give away.

Then, open a separate savings account (you can even label it a “household savings fund”) and make regular transfers to that account. If you have an annual amount, divide it by 12 to find your monthly contribution.

Most likely, the family will ask you for help at the last minute because they really don’t want to disturb. Setting up a home savings fund means you can be prepared for these unexpected emergencies. You don’t know when you need it, but when you and they need it, it’s there.

The fund will also draw a line for you when you can’t support your family—if you don’t have money in the account, you can refuse and create this line until you build up your reserves again.

When my mother-in-law needed extra financial support, we started sending her $300 a month. After about a year, she said she no longer needed it because she was able to cover her daily expenses.

We started transferring $300 a month into a savings account with her name on it. If she needs to fix brakes or new furniture, she’ll come to us. We even used her savings fund to help her move into a new apartment.

The Home Savings Fund gives many of my first generation clients (including my family!) peace of mind in a way that aligns with their values. You can give back to the loved ones who helped you get this far and make sure you can take care of yourself and the next generation.

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