Caregiving comes with a huge financial price, but the stress of paying for someone else can be greatly reduced with some planning. It is extremely important that all caregivers assess the income that they have as well as all of the expenses that caregiving brings. By assessing this, you, as a caregiver, can feel comfortable and financially secure so that you can concentrate on helping your loved one.
First, all caregivers must have a budget. To create an effective budget, start off by recording all of your sources of income for a period of time. (Most caregivers find it optimal to work a part-time job—this allows them the time necessary for caregiving while providing a decent, stable source of income.) In your list of income sources, include pension, your income, social security, dividends, interest, food stamps, money from other family members, donations, and/or any miscellaneous income sources. Combined, these are all of the assets that you have to support yourself, your home, and your loved one.
Once your income has been recorded, the next step in finding your budget is listing all of the expenses associated with caregiving. The caregiving expenses are often much higher than a caregiver may initially anticipate, so make sure you record each of these sources of expense so that you get a realistic and accurate number.
Food/Medicine: Keep track of all food and medicine purchases. This is relatively simple—it only requires the caregiver to save receipts.
Utilities: Record all the utilities expenses that were incurred for the purposes of caregiving only. These utilities may include heat, electricity, water, cooling, internet, phone, and any other utilities that your loved one uses.
Services: Find how much medical services (as well as any other services your loved one uses) will cost. These services include doctor’s appointments, insurance, hobbies, etc.
Mortgage/Taxes: Write down the mortgage and tax expenses, as these also must be subtracted from your sources of income. (Note that if you are a caregiver, you may be eligible for tax breaks which are often unfortunately unused by caregivers. These expenses may be deductible in the same way medical expenses are, but of course, certain restrictive limitations must be met. Check if you are eligible for a tax break to ensure that you are getting as much money as possible for your loved one.)
Other Family Members: Account for all of your expenses and make sure you set aside enough money for anyone else living with you. For example, record car payments, dining out, your savings, college funds, gas money, household care, vacations, clothing, pets, and your utilities. (Separating the costs of your utilities from the costs of your loved one’s utilities helps to organize yourself financially and can help with getting tax breaks, as well.)
After recording expenses and figuring out how much of your income goes towards them, it becomes much easier to understand exactly how much money you have to devote towards each aspect of the caregiving process. In many cases, your budget will come as a reality check; many understand that caregiving is a financial burden but they forget to account for expenses such as utilities and medical services. If this occurs, the caregiver will need to find another source of income or will need to find a method of cutting down the expenses; usually, the caregiver will have to cut down personal expenses in these cases.
All caregivers, however, can benefit by cutting down personal expenses. It is imperative that all caregivers set aside enough money to plan for unexpected events or problems. Therefore, it is wise to make some personal sacrifices and plan for the future so that both the caregiver and the loved one feel financially secure.
In some cases, after determining your budget, you may even find that your income greatly exceeds your expenses and that you have a large surplus. In this case, you can reapportion your expenses to spend more on your loved one, or save more in planning for the unexpected. In any case, finding the financial costs of caregiving and your budget can help you give your loved one the best possible care in the time that he or she needs it most. If you find that you need help with your finances, or require financial support as a caregiver, there are some resources available to you, so do your research, and create the most viable plan for you and your loved one(s).
Angie Picardo is a staff writer for NerdWallet, a personal finance website dedicated to helping caregivers find the best rewards credit cards.
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