What Defines FINANCIAL HEALTH

Financial Priorities

Caregivers suffer financial stress for many reasons—difficulty in balancing jobs with caregiving, reduced wages, extra expense for another person, disorganization caused by overwhelm and little time, leading to late bills and higher interest. And in 2024, financial distress among caregivers is also rising due to inflation. It is important to prioritize your competing savings and other financial goals. Financial well-being begins with being conscious and in control of your finances. Despite the difficulties that you experience as a caregiver, it is important to set up a personal budget and stick to it. In order to develop a personal budget, calculate any income, then deduct expenses. Set aside the remainder for savings. Avoid impulse buying. Apps like Mint and Emma can assist in creating a budget and keeping track of how money is spent.

References

Personal budget

Caregivers suffer financial stress for many reasons—difficulty in balancing jobs with caregiving, reduced wages, extra expense for another person, disorganization caused by overwhelm and little time, leading to late bills and higher interest. And in 2024, financial distress among caregivers is also rising due to inflation. It is important to prioritize your competing savings and other financial goals. Financial well-being begins with being conscious and in control of your finances. Despite the difficulties that you experience as a caregiver, it is important to set up a personal budget and stick to it. In order to develop a personal budget, calculate any income, then deduct expenses. Set aside the remainder for savings. Avoid impulse buying. Apps like Mint and Emma can assist in creating a budget and keeping track of how money is spent.

References

Impulse purchases

Financial well-being begins with being conscious and in control of your finances. As a caregiver, you may experience a dip in your sense of well-being due to stress and overwhelm. When difficult emotions arise, making an impulse purchase (whether online or in-person) may give you a dopamine rush and make you feel better – temporarily. If impulse buying becomes chronic it can further impact you, as you feel “out-of-control.” After you come down from the “high” you may feel ashamed, and more anxious about your finances, more so than before the impulse purchase. To keep your budget on track (and begin to build a sense of financial well-being), it is important to avoid impulse buying, whether it’s a big sale in person, daily grocery shopping, or online shopping. Tips to avoid impulse buying include: 1) Develop a budget and stick to it; 2) Create a “one-week” rule. When you are excited about a particular purchase, give it a week and revisit the item and see if you still think it is a good buy; 3) Set a “no-buy” challenge for yourself. To do this, choose a length of time, whether it’s a month or a year, during which you will not buy unnecessary items; 4) Dealing with debt can feel painful, but don’t avoid it. Make a plan to lower your debt; 4) Keep a money journal. 5) At sales or when grocery shopping, make a list of necessary items and stick to it; 5) Avoid making panicked buys.

References

Earnings

Caregiving (usually by women) can cause income to take a hit of up to $1000 in the first three years. It can also disrupt employment. This can also lessen Social Security contributions. You might also use your savings or credit cards to cover the cost of care. Men usually only enter caregiving after there is insufficient labor to cover the caretaking. Less money can translate into more stress. You can either decrease your expenses to fit into a smaller budget, or you can increase your income. Some ideas for increasing your income (and keep flexibility in your schedule) include such jobs as: pet-sitting, childcare, writing, caregiver coaching, delivery driving, end-of-life doula, house cleaning, professional organizing, and more. According to the National Council on Aging “Medicaid [and MediCal] and Department of Veterans Affairs (VA) pay some family caregivers” but have strict eligibility criteria. “Some long-term care insurance policies pay “informal caregivers” which can include family members.” Family leave laws in certain states and Washington D.C. allow your income to remain in place, even as you take time off to care for a loved one.

References

Budgeting

Caregivers who are family members might experience a drop in income. How do you live within your means and still be able to maintain appropriate care for your loved one? Capital One suggests some ways to live within your means. These suggestions include: 1) creating a budget and sticking to it; 2) understand your current financial habits; 3) set financial goals for the future; 4) look for ways to reduce spending; 5) pay down debt; 6) save for emergencies, retirement funds, and major purchases; 7) be aware of spending more money as you earn more money (make sure you continue to save for emergencies before you remodel the kitchen).

References

Savings

The TIAA Institute found that “one in four caregivers has less than $1,000 in savings and investments; for non-caregivers, the ratio is about one in seven. Sixty percent of caregivers are women, and women on average have 30% less retirement income than men. The cost of living is going up, rent is rising, food is rising. Will your savings last as long as you do? To increase your savings, you may need to either raise your income or lower your expenses. To increase your income, you can look for flexible jobs that give you extra money. Make sure to save the extra money, not spend it! To cut your expenses, here are some ideas and questions to ask yourself from the National Council on Aging (NCO). 1) Cut your cable bill: do you need a landline? Do you watch all the extra channels? Do you require this internet speed? Have I investigated other companies’ plans? Have I checked for senior discounts?; 2) Eat at home instead of eating out or get Meals on Wheels; 3) Unsubscribe from subscriptions you are no longer using; 4) Modify your cell service: Can you get senior discounts? Different tiers of service and different plans can cut your costs, depending on your needs. Your provider can go over what you are eligible for; 5) Cut your premiums. Compare car insurance plans; see what possible discounts are available with the car or home/renter’s insurance that you have; and bundle the policies together to save money; 6) Discretionary expenses may be the easiest to cut. If you don’t want to give up on something you want (vs need), see if you can get a discount! Now that you’ve cut your expenses, remember to put all those savings into your savings account!

References

Adequate insurance

What happens to you or your loved one if something unexpected happens? Here are some basic insurance policies that you should have, according to Forbes magazine. Auto Insurance (Liability, Comprehensive and collision coverage, Personal Injury Protection, Medical Payment Coverage, Uninsured/Underinsured Motorist); Home or Renter’s Insurance (flood or earthquake not included); Umbrella Insurance-provides additional liability for car, home or renter’s insurance, if the liability is insufficient to cover a claim or lawsuit; Whole Life Insurance, death benefit and cash value component; Health Insurance – protects you from high cost of illness or injury but can cost a lot. Some types of Health Insurance include: Medicare, MediCal, Medicaid, ACA, Group or individual coverage; Disability Insurance includes Social Security disability, group disability through work, and an individual policy that you obtain on your own; and Long-Term Care Insurance-research this carefully. In recent years, people who had these policies were surprised by large premium increases. While these basic types of insurance are good starting points, it would be helpful to get an agent for each type of insurance that you need as there are many more choices to be made within each type.

References

investments

While investing can be a way of adding to your income, it does have risks. Investigate these carefully when considering an investment. Another facet of investing is when the caregiver also becomes the financial caregiver and needs to make investments on their loved one’s behalf. Beyrer (2024), a financial planning expert, suggests that acting as a financial caregiver you should: 1) first consider the income needs of your loved one; 2) assess the risks of the investment; 3) make sure there is enough liquidity in the investment to cover spending needs without having to take a loss or pay large fees; 4) make sure the investment can stand up against inflation; 5) limit taxes and expenses; 6) Understand your fiduciary duty which is to act in their best interest and hold them above your own; and finally, 7) Get help from a professional.

References

Financial statement

Drexel University defines financial health as the “ability to manage expenses, prepare for and recover from financial shocks, have minimal debt, and build wealth.” As a caregiver, you may have had several financial shocks including not being able to work as many hours as you would have, previous to caregiving; losing savings or incurring debt to help your loved one; not being able to manage expenses due to time or financial pressures and not enough support. Nevertheless, you can create financial well-being. Financial well-being begins with being conscious of your financial state, is achievable and can be learned. Financial well-being consists of being conscious and in control of your finances. Knowing that your finances are under control can help with how you experience other stressors.

References

Debt free

US News & World Report found that “almost 50% of caregivers say their efforts have negatively impacted their finances: Many feel they have no choice but to withdraw money from savings, take on debt, pay bills late or cut back retirement contributions.” This amount of financial stress takes a toll in mental, physical, and emotional health. It can hurt your credit score and make a mortgage more expensive by raising the interest rate. One step toward financial well-being is to get out of debt, to be debt-free. Beattie (2024) suggests that there are eight steps to get out of debt. First, understand your debt. How much are you paying in interest? What is your monthly debt payment? Will you need to negotiate with creditors if you can’t meet your essential needs such as food, energy, housing and car payments? 2) Plan your repayment strategy. Which debt do you want to pay down first? Aiming for high-interest debt will save the most money, but paying off your smaller debts first may keep you on target and motivated. 3) Understand your credit report. You can get free credit reports from the three bureaus. Are there inaccuracies? Do you have late payments? Are you topped out on most of your cards? 4) Consider a consolidation debt or a credit card with a balance transfer offer; 5) Increase the amount of payment. This will speed up how fast you are out of debt and lower the amount of interest you accrue; 6) Reduce unnecessary expenses and put more money into paying off debt; 7) You might consider consulting a financial advisor who comes with good references and who does not charge exorbitant fees; 8) You could negotiate with lenders, through debt relief companies, but this has drawbacks as it may negatively affect your credit for years and not all the debts may be paid if they cannot reach an agreement with your lenders.

References