Tips to Managing Your Finances as a Caregiver
For many caregivers, daily responsibilities can put financial planning on the back burner. Following just a few financial tips can help ensure financial security in the long-term, especially if your caregiving responsibilities limit your ability to work full-time.
A Financial Checklist for Caregivers:
Create a budget for you and your loved one. Consider ways to cut expenses and boost saving, no matter how small the amount.
Make an effort to limit your debt. This is especially important if your earning power is limited due to your responsibilities as a caregiver. Of course, it can be very tempting to put expenses for a loved one or yourself on a credit card. If you do so, keep balances low and always pay off your balance at the end of the month.
Consider the advantages and disadvantages of cutting or changing work hours before you do so. For example, before leaving a full-time position, explore part-time options with your employer. It is also important to keep an eye on your benefits; will you lose your health insurance or other important safety net?
Maintain an emergency fund (of perhaps 3-6 months expenses). Amidst the stress and busyness of caregiving, it is easy to dip into savings without a second thought. However, keep in the mind that you want to age gracefully too, and secure savings is very important in the long-run.
Prioritize your retirement savings. Continue (or start) contributing to your retirement accounts as a caregiver, even if it is just a small amount each month. This is especially important if an emergency or other unexpected event has caused you to dip into a 401(k) or individual retirement account. Keep in mind that due to penalties, it is best to leave your own retirement savings alone unless you have no other choice.
Prepare now for your graceful aging. Make sure to purchase quality long-term care insurance and ensure you have a medical power of attorney, a will and a living will (best to consult a professional for these). Lastly, make sure a trusted person knows where and how to access your account information (numbers, passwords, bill pay) in case of emergency.