7 Strategies To Protect Caregivers’ Financial Health
Not only does caring for others affect you physically, mentally, and emotionally, but it can also have a detrimental impact on your financial situation. Discover 7 strategies to protect caregivers’ financial health
Taking up the role of family caregiver has financial consequences as well as physical, mental, and emotional consequences.
According to a 2018 Northwestern Mutual poll, 68 percent of family caregivers have offered financial support to their loved one on top of their other responsibilities, and another 67 percent of caregivers who took on these obligations had to cut back on their own expenses to do so.
7 Ways To Protect Caregivers’ Financial Health
If you’re a caregiver now or plan to be one in the near future, you should be aware that your financial health may be threatened.
We’ll go through seven measures to protect caregivers’ financial health in this article.
While caring for a family member, there are seven proactive activities you can take to assist secure your finances.
1. Extend your understanding of what constitutes an emergency expense.
While caring for a loved one, you shouldn’t have to dig yourself out of a hole — monetarily or otherwise.
When the unexpected happens, having an emergency fund to draw on can help you avoid going into debt.
And, while standard counsel suggests having three to six months’ worth of savings to cover your basic expenses, as a caregiver, you’ll want to make sure you have enough money to cover your loved one’s needs as well.
“Time may be an ally in some circumstances,” Schulz argues. “Putting money away to prepare for the possibility of becoming a caregiver in the future can be quite beneficial.”
Consider opening a new account (bonus points if it’s a high-yield savings account) to act as a slush fund to help cover the costs of unexpected medical bills, specialty food to meet dietary requirements, and cash for home improvements that can make living at home more accessible if you want to keep your finances separate.
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2. Improve Your Credit Score
A good credit score can help you get a higher credit limit on your credit card, qualify for better financing programs with better terms, hence helping to protect caregivers’ financial health.
“Having a decent credit score provides you options,” Schulz explains. “It’s critical when you’re a caretaker.” Being a caretaker can be an expensive job in and of itself, but having strong credit might help you keep those costs down if you need to borrow money to cover some expenses.”
Furthermore, enhancing your credit score will ensure that your financial prospects aren’t significantly harmed once your caregiving responsibilities are completed.
Your payment history and account balances are the two key criteria that affect your credit score, so focus on them while trying to improve your score.
Set up automatic payments to ensure that you never miss a payment.
Pay down and stay out of debt as well, which has the extra benefit of freeing up more money for you and your loved one.
Consider signing up for a free credit monitoring service to keep track of your progress. Some even provide specific recommendations based on your financial profile to help you increase your score even more.
3. Make saving for retirement a top priority.
You’ll want to start contributing as much as you can to your retirement fund, even if it’s only a little bit here and there, once you’ve met your emergency fund target and improved your credit score.
- If you work full-time and your employer matches your contributions, take advantage of it – especially if caring for a loved one requires you to work fewer hours or finally quit.
- Only take money out of this account as a last resort, as you’ll miss out on the benefits of compounding interest over time.
If you do need to utilize these money, work on contributing as much as you can in the months afterward, just like you did with your emergency reserves.
4. Think about your investments.
Consider investing any money left over after maxing out your retirement contributions in other assets to help it grow.
But keep in mind that investing entails some risk, and profit isn’t guaranteed.
Reduce your risk by following these guidelines:
- Put your money in a variety of assets and industries to diversify your investments. If one of them loses value, your losses will be minimal because your other assets are unlikely to have lost value as well.
- Dollar-cost averaging is the technique of putting a certain amount of money into your assets on a regular basis.
This method helps you avoid making emotional investment judgments by balancing out the market’s short-term boom phases and falls over time.
5. Explore Passive Sources Of Income
Taking care of others can feel like a full-time job in and of itself, so you may not have time for a side business.
Passive income streams can help you raise your accessible finances with little to no effort in this situation.
Here are a few basic ways to supplement your income:
- Rent out a spare room in your house or put it up for rent on Airbnb.
- Your car or household belongings, such as a stroller or leaf blower, might be rented out.
- Begin a blog about your caregiving duties, with the goal of obtaining affiliate marketing links. You can sell your unwanted stuff On Facebook or eBay,
- Put advertisements on your vehicle.
- Make money by selling stock images.
6. Investigate the possibility of paid family leave.
Although the federal government does not require private companies to provide paid family leave, certain states do.
Keep in mind that while some states provide employment protection (allowing you to return to work after your leave), others do not.
The Family and Medical Leave Act allows for up to 12 weeks of unpaid leave from the federal government (FMLA).
This law has some limitations, but it’s worth checking into if you’re seeking for an alternative to paid leave.
7. Learn ways to earn money as a caretaker.
According to a 2020 research by the National Alliance for Caregiving and AARP, 19% of caregivers in the United States provide unpaid care to an adult with health or functional needs.
This does not, however, imply that you must also sacrifice your financial health as a caregiver.
Look into Medicare, Veterans Affairs (if your loved one is a veteran), and other government programs to see if they can help with financial assistance.
You may be able to utilize your family member’s long-term care or life insurance policy to pay for your caregiving expenses as well.
If you’ve reached a stalemate, consider asking a loved one or other family members to reimburse you for the care you’re providing.
This may make you feel uneasy, particularly if you feel obligated to assist. However, if you’re assisting in the care of your family, you shouldn’t have to give up your money or your financial stability to do it. The strategies discussed above have a long way to go in protecting caregivers’ financial health.