Every day, millions of people give their time, energy, and even money to the task of taking care of others. This workforce is not managed by governments, corporations, or well-known nonprofits. Instead, average folks from all backgrounds, income levels, professional sectors, and geographic locations volunteer their time and resources to help others.
On average, family caregivers spend 26% of their income on caregiving activities. This money may be used to pay bills or copays, to buy food, for transportation, or to provide time and personal attention at someone else’s home.1 If you are new to or already involved in financial caregiving, here are some tips to manage the situation and make sure it doesn’t significantly disrupt your personal life:
1. Consider for Whom and When Your Role May Apply
Set aside half an hour to think carefully about the people in your life for whom you may find yourself providing care in the future. Most folks tend to think of their spouses, children, and relatives. How about your close friends? Will you commit to caring for them as well?
2. Make Early Insurance Decisions
Long-term care insurance addresses what normal health insurance does not: all the care expenses that occur after immediate hospital treatment and drug prescription. Taking out long-term care insurance can also make a big difference in terms of personal care. It is worth thinking about paying a low cost now versus paying higher costs later due to indirect charges from a care service.
3. Educate Yourself
Spend 10–20 minutes each day learning about finance for caregiving. This could involve reading books or listening to audiobooks from libraries while commuting to work. Both will greatly expand your knowledge.
4. Don’t Forget Yourself
Caring for someone is an immense job and commitment, and it can overwhelm your own life. Don’t forget to protect yourself and your own wellbeing by maintaining your health and getting enough sleep.
5. Don’t Stop Working
You may feel that your care commitment is essential and that your spouse’s income can cover you both while you care for someone else. Therefore, you may think that it is best to stop working. Don’t do it. If you can maintain some earning power, this will help to preserve your Social Security benefits, retirement savings, income that may be needed to pay bills, and assets that you will need when it’s your turn to seek care.
6. Consider How to Control and Protect
If you will likely oversee someone else’s finances, which is a significant responsibility with several risks, make sure you have a plan for checking that every expense is valid and that you protect yourself with documentation. Don’t take it all on yourself, either; work with a family partner or a trusted individual so that you have appropriate support if there is any dispute.
7. Don’t Guess, Get Help
Find a trained financial professional from whom you can seek advice and counsel on how to proceed. This could be a lawyer, financial adviser, banking adviser, or financial expert. They can provide an objective perspective on how to deal with tough issues and protect yourself at the same time.
8. Consider a Tax Approach
You may wish to incorporate the person needing help as one of your dependents.2 For example, if they are a relative. This is a considerable commitment, but it could allow you to gain a valuable tax benefit for expenses that you may otherwise not be able to deduct. It is vital that you talk with a tax adviser before following up on this option.
9. Know When to Stop
You cannot solve every problem. You need to know your limits and be prepared for when you must say no to a request. This will be emotionally hard, but it can be a little easier when you have your limits defined ahead of time.
10. Share the Burden
Too often, especially in families, one person takes most of the care burden, while others just enjoy visits and good times. Be bold and direct; when a burden should be shared, make sure to engage those who should be involved.
In all cases, make sure to keep your finances well-organized and separate from those of whom you care for. Even though it’s easy to combine resources, be disciplined about keeping cash, accounts, and payments separate. This will help avoid a legal mess later, for example, if relatives come hunting for inheritance alternatives that they think they are owed from your bank account.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.