Finances can be tricky for family caregivers. Not only managing your parent’s or senior loved one’s finances, but also your own can be expensive.
Here are six financial goals that you can stick to, to help save everyone money.
The aging population is growing rapidly. In fact, by 2030, there will be 81.2 million Americans over the age of 65 and many of them will need help with everyday care needs according to the National Alliance for Caregiving. Today, the number of caregivers and even sandwich generation caregivers, caught between caring for adult children and senior parents, is higher than it has ever been historically.
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Having less in your bank account as a result of caregiving may not seem like a big deal, but small amounts of expenses can really grow debt over time. Research shows that caregivers often deplete their own emotional, financial and mental resources. Many caregivers sacrifice wages due to career sacrifices and tap into their own savings to ease the stress on others; sometimes even threatening their own financial security.
If you are juggling caregiving responsibilities for your loved ones, keep these six tips in mind to take care of yourself and your own finances so that you can navigate them with confidence:
Setting up automatic direct deposits from a paycheck to an investment or savings account can build compound interest and a financial cushion. Remember to keep contributing to your retirement accounts as a caregiver, even if it is just a small amount each month. If you dip into a 401k or individual retirement account to pay for caregiving expenses, work on rebuilding your fund. Caregivers often take hardship withdrawals and loans from retirement accounts to cover financial gaps, but the penalties often are not worth the money. Leave your own retirement savings alone and get financial help elsewhere where it won’t cost you in the long-run.
Enlist the help of a trusted and well-trained professional to help you work through your financial caregiving issues. When it comes to financial planning, it is always helpful to have another trusted set of eyes on your planning. Fiduciary financial advisors are legally bound to put your interests first, above their own. They can be a priceless resource in reducing financial anxiety and even see missed investment opportunities, spotting ways to increase income in retirement.
If finances are already tight or your parent or senior loved one doesn’t have enough retirement savings, it may be very tempting to put expenses for a loved one or yourself on a credit card. If you do so, remember to keep balances low and take advantage of low-interest offers. It is easy to accumulate debt on high-interest credit cards that can be nearly impossible to pay off if you’re not bringing in enough income and all your money will go towards paying interest charges rather than investing in your own future. There are community resources that can help with lowering caregiving expenses such as your local Area Agency on Aging.
Before leaving a fulltime job to be a caregiver, weigh your options. Write down the pros and cons to see whether cutting or changing work hours will really benefit the ‘big-picture’ situation. For example, maybe bringing in a daytime nurse or taking your loved one to adult daycare makes the most sense financially. If you decide to leave a full-time position, explore ways of working reduced hours or part-time hours with your employer. Remember to consider your benefits and whether you will you lose benefits by leaving your job or changing your hours as that could be costly in terms of sacrificing employer retirement opportunities such as 401k or dental and medical benefits.
Did you know that 4 in 10 Americans can’t cover emergency expenses, according to a new report from the Federal Reserve Board? Lack of financial preparation is wreaking havoc on American households, especially for caregivers and for those approaching, or in, retirement. In the day-to-day stress of caregiving, dipping into savings is easy, but you may regret it when you are on the other side of caregiving and looking to rebuild your own life.
It’s important to prioritize your own finances and retirement savings. Many caregivers sacrifice their own well being by prioritizing their loved one’s needs first. One of the main rules for caregivers is to make sure their needs are met first. To put your own finances first, create a budget for you and your loved one. Consider ways to cut expenses and increase savings opportunities, whether it’s preparing meals in advance, looking for ways to cut costs in senior living or getting a sibling’s help. Finding creative ways to financially survive caregiving by saving a little extra each month and investing can really add up to help you with your own retirement plan.
It is normal for caregivers to have anxiety and concerns about finances. But, by taking an honest look at your finances and coming up with a strategic plan with a trusted financial advisor, you can help relieve financial frustrations for today and tomorrow.