Maintaining financial health as a family caregiver
As a family caregiver, it’s very common to focus all of your attention on your care-recipient. Unfortunately, this can mean neglecting your own health and happiness as a result. This is especially common when it comes to your own financial life, as a bulk of your time and resources are likely spent on your care-recipient.
There are many financial resources available for your care-recipient, and no shortage of advice on managing finances in retirement. But what about you, as the caregivers? Family caregivers face unique financial burdens, and their needs are often forgotten in financial discussions.
That’s why at Aidaly, our focus is on you, the caregiver. While you’re busy taking care of your loved one, we’re here to ensure that you’re taken care of as well. In today’s blog post, we’re sharing tips focused on how you can maintain financial independence as a family caregiver.
Financial toll of family caregiving
Becoming a family caregiver can take a tremendous toll – even if it’s one you’re happy to pay. But it doesn’t just impact you physically, mentally, and emotionally. It can drain your personal finances too.
This financial sacrifice can happen in two main ways. First, you may spend your own money on your care-recipient's health and upkeep. Second, you will likely experience lost earning potential, as you put aside your own working life to focus on caregiving.
The 2018 Northwestern Mutual CARE Survey found that 68% of family caregivers have provided their loved one with financial support – in addition to the countless hours of care. Additionally, 63% of people have withdrawn money from their savings or sold assets, to provide care to their loved ones. A Merrill Lynch study reports that 68% of family caregivers are “financial contributors,” spending an estimated $190 billion a year on their care recipients for out-of-pocket, care-related expenses.
Countless caregivers have also sacrificed their own work and earning potential, as their time is now focused on their care-recipient instead. Remember that this doesn’t only affect today’s income, but also next year’s earning potential, as well as a less compounded growth in retirement accounts.
Tips to maintain financial independence as a family caregiver
While we know you’re happy to be able to provide care for your loved one, we want to make sure that you maintain your own financial health and resilience as well, so that you’re prepared for life after caregiving.
Here are our top tips for maintaining financial independence as a family caregiver:
- Keep a separate bank account from your care-recipient. Even if you live with your care-recipient and the majority of expenses are shared, it is important to have your own access to funds. Though you might still choose to pay living expenses from your care-recipient’s primary account, having your own bank account will remind you that you are an adult with your own needs. Caregiving is part of your life, but you have your own identity and future as well.
- Give yourself an allowance. Many caregivers and their care-recipient live on the care-recipient’s Social Security, pension, or retirement income. Because caregiving is often a full time job, many caregivers don’t have a secondary source of income and therefore rely on their loved one’s income. This can create a tremendous amount of guilt, and as a result many caregivers don’t allow themselves to spend any money on personal care or entertainment. We recommend that you give yourself an “allowance” (transferred to your own bank account!) that you can spend guilt-free. It can be a small amount, but it will help you maintain independence and remember life outside of caregiving.
- Contribute to your retirement account. If you earn any income, do not forget to contribute to your own retirement. We know that your life might be fully focused on your care-recipient right now, but you must also protect your own future. Whenever possible, contribute a small amount to your retirement accounts every month. It’ll be “out of sight out of mind,” but your future self will thank you.
- Consider life insurance for your care-recipient. Depending on your care-recipient’s age and health, this may or may not be feasible. But consider looking into a life insurance policy for them. You dedicate so much of yourself to their care, but it’s important that you have resources and a plan for once they pass away. This is especially important if you primarily rely on their Social Security benefits or pension, as you’ll no longer receive that income when they pass away.
- Ask for and accept help from other relatives. Do you have any relatives who are able to help you and your care-recipient out financially? If they could contribute a small amount every month to the household, that would free up some resources so that you can focus on your own financial health. Remember, your caregiving labor is of benefit to the entire family; you are not the only one who should be making sacrifices for your loved one.
Getting compensated for your caregiving work
We know that none of these tips are useful if there’s simply not enough money to go around. That’s why at Aidaly, our primary focus is on helping you get paid for your caregiving work. A 2020 report from the National Alliance for Caregiving and AARP found that 19% of caregivers in the U.S. are providing unpaid care to an adult – and that just has to change. Get started with Aidaly today, so that you can begin getting paid for the work you already do.