It is important for everyone to prepare financially for the future. However, often as caregivers, we are so focused on looking after our loved one’s health and emotional needs that our own finances are pushed to the side. While this may work for a while, neglecting to look after finances can have serious consequences.
If you have no financial plan in place, there’s no better time to do it than now. Carry out a financial wellness check and take steps to ensure your finances are on track for the future.
Why is Financial Planning Important?
Caregivers are more likely to struggle financially. According to a study from Rice University, women, in particular, are at risk of financial issues as a result of caregiving. In fact, those who are caregivers are 2.5 times more likely to live in poverty after retirement than women who are not family caregivers. Caregivers also often have to sacrifice work, and, as such their earning power in order to take on the role.
With caregivers taking on so much responsibility for their loved one, they are often busy, stressed and overwhelmed. If their own finances are not in order, this can cause additional anxiety.
Financial Planning Checklist for Caregivers
The following are some of the steps that you can take to ensure your own, and your loved one’s finances are on track.
- First off, focus on your own finances. Create a budget and look for places where your expenses can be cut. Also, make sure you are putting some money into a savings account each week or month. This doesn’t have to be a lot – just as much as you can afford.
- Do the same for your loved one. Creating a budget will significantly help with their finances, and may help to identify things that they can pay for so that you do not incur additional expenses.
- Do not take on debt that you cannot afford. As a caregiver, your earning power is likely to be reduced. However, in many cases, carers will take on expenses for their loved one, as their loved one has no current or future earning capacity. If you decide to purchase things for your loved one, try not to use a credit card to do so. If there’s no alternative to using a credit card, try to keep the balance low and use low-interest offers.
- Look into the community resources and government agencies that are available in your local area to help lower caregiving expenses. The Australian government offers a number of carer support services to people who provide care to someone with a disability or mental illness, with a medical condition, after an illness or accident, or who is an older person with care needs.
- Before you change your work hours, consider the advantages and disadvantages of this. If you cannot work full-time while caregiving, you may be able to negotiate with your employer to work reduced hours or work on alternative days / times as opposed to finding a new job or leaving completely. Before you do so, however, check your contract so that you are aware of any benefits you may lose as a result of changing hours.
- When you’re stressed, busy and need money, taking from your savings may seem like a simple solution. However, this can have serious financial repercussions in the future. So, try not to dip into your savings.
- Ensure you stay focused on your own retirement plan by continuing to contribute to your own retirement fund as much as you can while you are caregiving. Many caregivers are tempted to withdraw from their retirement fund to fill financial gaps; however, in most cases, the penalties incurred as a result are not worth the access to cash. Try not to access your retirement fund unless you absolutely have no other option.
- Keep a small, ‘for fun’ fund to help boost your mood so that you know there is a bit of cash available if you really need it for a quick stress release.
The key takeaway is to be prepared and be organised with all financial issues. Most importantly, ensure you seek support. There are numerous organisations that are set up to give caregivers the help they need.
For more information on this article, or the other services that we provide, don’t hesitate to get in touch with Brain Sparks. We know that caregiving is a difficult but rewarding role. If you’re new to caregiving, a Brain Sparks workshop may help to ensure you don’t feel overwhelmed by arming you with advice and practical strategies to help with some of the responsibilities that you have taken on.