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How to Manage Your Finances as a Caregiver


More than 34 million Americans currently provide unpaid care to loved ones over the age of 50. This can include dropping by to check on their loved one’s well-being, shopping for groceries and assisting with the activities of daily living (ADL). It can include ferrying older people to doctor’s appointments, physical therapy or hospitals. Caregiving can also involve monitoring prescription medication and making sure doctors’ orders are followed.

These multiple caregiving activities have one thing in common: they can erode or even severely damage your finances.

It’s very easy to start spending your own money in caregiving activities. It may start as a bag of groceries or a home-cooked meal. But it can also get larger and deeper very fast. You may renovate your parents’ home to make it safer for elderly living, or you may need to pay part of their mounting medical bills.

Among Americans, 46 percent spend more than $5,000 of their own money caring for elderly relatives yearly. Another 30 percent spends up to $10,000 yearly.

Before you know it, your own finances are in danger. You may have difficulty paying bills. You may take out a second mortgage on your home. You may max out your credit cards or use up rainy day or retirement savings.

The sums spent are compounded by the fact that caregivers often cut back on paying work to give care. Many transition to part-time work which can lead to less cash coming in just when you are spending more.

Fortunately, there are ways to more effectively manage your finances as a caregiver. All caregivers are entitled to look after themselves. After all, if they don’t, they won’t have any energy or patience left to give care with.

Here are the most important ways to manage your finances.

Create a Budget for Yourself

It’s essential to create a budget. Without it, people may tend to be somewhat in the dark about what they are actually spending their money on, and how frequently.

The first step is to start keeping track of what you spend every day, week and month. There are several software programs that allow you to do this — and a spreadsheet or even a small notebook can do the trick as well.

Don’t just guess. Guessing may lead you to believe you are spending $10 on coffee per week when stress has made you spend closer to $10 per day.

Only when you see these figures laid out in front of you will you know how much you are spending. If it matches or is less than your income, great! If it exceeds your income, you need to make some cuts or raise your income.

Create a Budget for Your Loved One

You need a budget for your loved one. You should know how much income your loved one has coming in.

You also need to create a spreadsheet of how much your loved one is spending per day. Then begin to enter it on a spreadsheet for each week and month.

If your loved one has income such as Social Security, retirement distributions or a pension, see how much of their daily expenses it covers. Be sure to leave enough for health insurance and deductibles.

Discuss the Budget With Family Members

If you have siblings or other concerned family members, it’s time to have a meeting once the budget is done. Include your loved one, of course, if that is feasible. If your loved one’s income meets their needs, it’s time for you to stop spending your own cash.

If the income exceeds their needs, broach the idea of the caregiver being paid out of the surplus. It’s not unreasonable for all needs of the loved one to come out of their own funds. Some older people may need help with paying bills and balancing checkbooks.

If the caregiving is extensive and the caregiver has curtailed work, see if the caregiver can be paid out of the loved one’s funds. You want to hold a family meeting so that the use of the funds is transparent and doesn’t cause misunderstanding or hard feelings. If you can be paid, keep a record of all payments for future reference.

Discuss Sharing Arrangements

If the loved one’s funds aren’t sufficient to pay a caregiver, discuss other options with your family. Some common options are:

  • Share caregiving duties with other family members.
  • Engage respite care to give the caregiver a break at least once a week.
  • Hire a live-in caregiver at least part of the time with family members chipping in on the salary.
  • Move the loved one to be closer to you if that eases the financial burden.
  • Move the loved one to an assisted care facility, nursing home or specialized care facility.

If none of these options is realistic for your situation, it might be time to look for other sources of funding.

Look Into Other Funding Sources

Multiple organizations offer potential funding. Medicaid options vary by state, but some offer an allowance for care. They also sometimes have information on other funding sources.

If your state or municipality has services for seniors, ask about what they offer in terms of respite care and funding.

Veterans of the U.S. armed forces should contact the Department of Veterans Affairs (VA). Veterans who might otherwise have to move into a nursing home have access to a Veteran-Directed Home and Community-Based Services program. It has provisions for managing care, including paying hired caregivers.

The takeaway here is that you don’t necessarily have to compromise your own financial peace of mind to care for an older loved one. Instead, look into these potential sources of help.

Authors Bio: Kayla Matthews is a lifestyle and productivity writer whose work has been featured on Lifehacker, The Next Web, MakeUseOf and Inc.com. You can read more posts from Kayla on her blog, Productivity Theory.

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