Managing family expectations
You must have tough conversations with parents and relatives before you agree to help them financially
Follow six ordinary South Africans as they take up the Absa/City Press Money Makeover Challenge and undergo a money makeover boot camp over six months. Each candidate has been allocated their own Absa financial adviser. The candidates are required to complete certain financial tasks and stick to the budgets set out for them. Personal finance expert Maya Fisher-French shares their stories.
Many young, first-generation university graduates find themselves supporting their parents and other unemployed relatives. This includes helping with primary healthcare, education and housing costs, putting an immense financial strain on new income earners. They have their own costs, such as electricity, food and fuel.
Expectations of financial support may come from the parents who have made sacrifices to educate their children. In other cases, it may be from unemployed siblings, or even an older sibling who supported the brother or sister to complete their tertiary education and who now needs them to step up and help the family.
For product specialist Mlibokazi, the pressure to help her family grew after the Covid-19 lockdown.
“There were a lot of family members who needed my help,” says Mlibokazi, adding that it reached a point where she had no choice as she felt pressure from all angles.
“The guilt [I felt] of not helping out while I had a job played a part in my taking on debt to help them.”
Medical technician Zihle became the breadwinner when her mother passed away. She turned to credit to make ends meet and provide for her two sisters.
“I wanted to protect my sisters from my financial struggles so they could have a carefree childhood,” explains Zihle.
Setting boundaries
Through the Money Makeover Challenge, Zihle has realised that she has a future as an individual and not only as a provider and caregiver to her sisters.
“I realise I can start to plan for my own future. I can think about what happens when they finish studying, about getting a place of my own when I am debt-free and even saving for my retirement.”
“Before this [intervention], I could not see past my role as their caregiver,” she adds.
Zihle has set herself a goal to be debt-free in the next four years. This is motivating her to stay the course and take the hard decisions now. To protect her future, Zihle has had tough conversations with her sisters, especially the second-born who recently started an internship.
She admits that they have gone through a rough patch, but the relationship has improved as her sister understands what Zihle is trying to achieve.
“It has been difficult, I have had to say no to certain things that in the past I would have said yes to. I had to sit my sister down and warn her not to make the same [financial] mistakes I made,” says Zihle.
She says her sister wanted to sign a cellphone contract for a new phone: “I explained to her that the current phone works well and she must now save up for a phone and not buy it on credit.”
She recognises that, just as she was with her first salary, her sister does not understand the consequences of taking on debt.
“I showed her all my store cards and other debts. At first she was upset about not having a new phone, but now she understands why she needs to save [for it] first.”
Once her sister started earning a salary, Zihle made her responsible for the water and electricity municipal bills. “She was shocked at how much electricity costs. Before, she would forget to switch off the geyser in the morning. Now she remembers to switch it off,” laughs Zihle.
Mlibokazi’s finances can no longer support her whole family. She must now focus on paying off her debt.
“I have made it clear [to family members] that I am currently in no way shape or form able to help as I am also now trying to get back on my feet. It’s difficult, but I have had to set that boundary [with them],” she says.
Mlibokazi says she called a family meeting to explain her position:
“I tried to be as direct as possible and I’m sticking to what I said so far.”
Once her finances are back on track, she says she will have another conversation with her family about what is possible and sustainable.
Talking to your spouse
Another important conversation Mlibokazi had was with her husband about the state of their finances. She had not shared with him the extent of the debt she had taken on to help her family. She was also unsure of how much debt her husband had.
“We are now saving together for emergency funds, as little as it is, but we are trying. He also keeps me honest and reminds me of my goal to be debt-free,” says Mlibokazi.
She says her financial adviser, Khathutshelo Ravele, insisted that the couple draw up a realistic household budget, which they have to stick to.
When you are married and have children, you cannot manage your finances separately. If you are married in community of property, you are 100% liable for your partner’s debt and visa-versa.
Neither of you should have debt without the other knowing about it and agreeing to it.
1Find shared goals: Most parents share the goal of providing for their children and this is a good starting point for money conversations. What do you want your children’s future to look like? How are you planning for their education? Another goal could be buying a home together.
2Discuss family obligations: Mlibokazi and her husband must discuss their financial obligations to the extended family. They need to agree on what support they can reasonably give while striving to educate their own children and build their own future together. Ongoing family support may be a set amount each month, which they allocate in the household budget. Or it may be a separate emergency fund that is used when the need arises.
As a couple, they need to be open and honest about their obligations and expectations.
Setting boundaries with family members is always difficult, but if you do not look after your finances first, you will not be able to support them.
Family emergencies
If you support your family, consider having an emergency fund so that you wouldn’t have to incur the expense of a loan to deal with, for example, a family funeral.
Start an education fund
Educating the next generation is an investment, because, once they are qualified, they join the ranks of the employed and can help carry the financial burden of caring for the family.
If you have a group of friends or family members who are all working, consider setting up an education fund with them to help relatives or community members study further.
Instead of dipping into your emergency fund for registration fees or textbooks, you will have an education fund available for those youngsters who are committed to studying further.
But set limits and objectives. For example, the fund may cover application and registration fees.
Assist the family members to apply for bursaries and funding, including from the National Student Financial Aid Scheme.
It’s not always about money; information, knowledge and access are important too.
You don’t need a loan to help your family, you need savings
Guilt and feeling you need to help may result in a knee-jerk reaction where you take out a loan once you receive that first pay cheque. But the cost of that loan is wasted money that could provide longer, more sustainable assistance to your family.
Rather than taking out a loan, have a discussion with your family about their expectations and work out a plan to achieve those without putting yourself into financial difficulty.
For example, if you took out a R20 000 loan to help your parents finish off their house and paid it off over 24 months, this is what it would cost you:
Your installment would be R1254 per month.
This includes:
- Monthly service fee = R69
- Credit Protection plan = R53
Your total costs over the 24-month period are:
|
Type |
Cost |
|---|---|
|
Initial capital |
R20 000 |
|
Interest |
R5 960 |
|
Once-off Initiation fee |
R1 207 |
|
Total service fees |
R1 656 |
|
Total credit protection fees |
R1 267 |
|
Total cost: |
R30 090 |
By taking out a loan you have effectively paid an extra R10 090 so that your parents can have the money immediately. If you rather committed to saving the R1200 monthly installment, earning 5% interest, you could have R20 000 available with 16 months.
That would be eight months sooner than paying off the loan and you save R10 000. Ask your family to give you time, and then commit to an amount that you would have paid to debt and start saving.
Find out more about the contestants and their advisers here:
If you really want to get your finances in order, you have to start tracking your spending. If you cannot commit to that, it is unlikely you will be able to reach your goals.
City Press will follow the candidates’ progress on the first and third week of each month, as well as online on the Money Makeover page:
Follow the journey – and join in – @CPMoneyMakeover and #CPMoneyMakeover on Facebook and Twitter
Absa Enterprise Development assists SMEs with access to business development support, markets access and access to funding based on certain criteria’s being met. For further information on Absa Enterprise Development you can email ed@absa.africa
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