Keeping a Budget as a Caregiver

In this blog celebrating National Family Caregivers Month, we’ll take a look at another important issue for caregivers—budgets! Being a caregiver can have financial consequences, both long term and short term. As mentioned in our last update, caregivers pay an estimate of $5,531 out of their own pockets each year. It is therefore extremely important for caregivers to understand their budget and make sure they keep track of their spending and saving. In this post we discuss simple steps you can take as a caregiver to ensure your own financial future is not damaged.

Step 1: Track Your Spending

SpendingTake a notebook with you for a month and write down all of your expenses, big and small. Once you do this for a few weeks, organize your spending into categories like food, household items, transportation, and clothing. Make sure that you include bills you must pay on a regular basis, like insurance, rent or mortgage, and medical payments. Organizing your spending will help you understand on what items you spend the most and how much your necessary items cost you.

Double check to ensure you included everything.

We have a worksheet at the end of our guide for caregivers that will also help you account for expenses that result directly from caregiving.

Step 2: Compare Your Expenses and Income

Now it’s time for a little math! But don’t be afraid. It is very easy to do with a calculator!

Add up your expenses. Since you tracked them for a month, just find the total.

Now, add up your total income, including salary, benefits, and any earnings form investments. This number gives you your annual income. Divide it by 12 to calculate your monthly income.

Subtract the total of your month of spending from this monthly income.

Step 3: Make Budget Decisions

In the perfect scenario, you should have positive number when you subtract your spending from your income. Less ideally, these numbers will be the same and when you subtract them you will end up with zero. You may also end up with a negative number. If your income is not covering your expenses, or barely doing so, it is time to reconsider your spending.

And my money goes to...Take a look at that itemized list of your monthly spending. Are you buying anything you do not need? Do you spend more money when you eat away from home? Is transport to and from your caregiving duties costing more than you thought?

If you notice a trend in your own spending such as buying unnecessary items, or spending more when you are traveling, then consider ways you can reduce these expenses and reduce your debt.

If you notice that you are picking up expenses for the person you are helping taking care of, consider talking to family members to help you offset these expenditures. Transportation can be a huge contributing factor to caregivers’ expenses. If some of those costs come from the fact that the person you care for cannot cover her/his own expenses look into ways she/he can save such as different plans for Medicare or see if she/he qualifies for dual coverage under both Medicare and Medicaid. If you’re not sure that the person you care for qualifies for assistance, the National Council on Aging offers a free services called Benefits CheckUp. Benefits CheckUp helps individuals determine if they are eligible for assistance with health care costs, food, utilities, transportation, housing, and other needs.  Check out the Consumer Finance Protection Bureau’s guides to managing someone else’s finances for more tips.

Step 4: Save for Retirement

pink piggy and hand

Despite the added costs of caregiving, and likely the decreased income from rearranging your work hours, you cannot give up on saving for retirement! You will need a way to cover your own expenses as you reach retirement. Check out WISER’s Retirement Calculators fact sheet for easy-to-use calculators that can help you see how much you need to save for retirement. Use that result as a way to know how much you should be putting into your retirement funds.

Stay tuned for more information this month to help caregivers manage their finances!

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