Don’t Let Family Caregiving Ruin Your Financial Future

Create an advisory team. Assemble a group of experts who can help you navigate the emotional and financial demands of caregiving. The members can vary depending on your needs, but consider a skilled accountant, a financial adviser, an eldercare attorney, and possibly a care manager or eldercare consultant. 

Appel, a certified financial planner and the founder of Kindness Financial Planning, says hiring an experienced eldercare consultant was tremendously beneficial.

“They do this day in and day out,” he says. “It’s nice to have an objective third party who isn’t family or intertwined in the situation.” 

Separate caregiving-related spending. Even if you live with the care recipient, it’s important to keep your finances separate, says Danielle Miura, a certified financial planner and founder of Spark Financials in Ripon, California. She recommends creating one monthly budget for you and one for your loved one.

An easy way to separate spending — and keep track of your outlays — is to use a specific credit card and checking account for all caretaking-related costs, Appel says. 

Small expenses can quickly add up to “a pretty good sum,” he says, citing examples such as buying gas to get to medical appointments, food when you’re on the go, and a charging cord or new phone if a care recipient misplaces theirs. 

Laura Vaillancourt, founder of counseling and care management firm Eldercare and Appel’s consultant, says having a care recipient’s income, such as Social Security benefits, deposited into a specific account is helpful. To simplify access, add your name or the name of whoever uses that money for expenses to the account. 

Solicit family support. If you’re providing the majority of care for a family member, “ask siblings or other relatives to pitch in with caregiving responsibilities or to provide financial assistance,” says Cameron Huddleston, author of Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances and a former 12-year caregiver for her mother. “They might not realize you need help until you ask. So be specific about what sort of support you need.” 

Professionals on your advisory team can counsel you on how to have productive family discussions, as well as how to bring up the topic if you’d like to get paid for caregiving.

“A third party that is not involved can be super helpful to lead the conversation, as a lot of emotions are often involved,” Appel says.

Put all financial agreements in writing. Clearly document who will pay for what expenses. Family caregivers who will be compensated by the recipient or others should consider creating an official caregiver contract, also known as a personal-care agreement, among other names.

This contract clarifies the relationship between the caregiver and the recipient; establishes expectations; states when the caregiver will provide care; and outlines the rate and frequency of pay, Miura says. Such an agreement can mitigate potential money-related misunderstandings and conflicts.  A professional can help you create a solid contract.

Tap into all workplace benefits. Ask your employer about arrangements such as flexible schedules and paid leave so you can remain employed while meeting your caregiving duties, says Sandra D. Adams, a certified financial planner and eldercare financial planning specialist, and a partner at the Center for Financial Planning in Southfield, Michigan.

One-third of employers offer paid leave to care for immediate family members, while nearly 20 percent provide paid leave to care for extended family, according to the Society for Human Resource Management’s 2023 Employee Benefits Survey. In addition, more than half of employers offer flextime during core business hours. 

Lean on outside expertise. “Don’t try to do it alone,” Adams says. “Make sure you utilize all of your resources,” which can include community groups, religious organizations, government programs, and non-profits.

Many groups provide free and no-cost services to help you and your loved one, as well as offer free information and training on financial literacy for caregivers.

In addition to AARP's Caregiving site, resources include the National Association of Area Agencies on Aging; Eldercare Locator; the Family Caregiver Alliance; and the Caregiver Action Network. The Well Spouse Association addresses the needs of those caring for a spouse or partner.

Plan for when you may need care. The emotional toll of caring for a loved one often triggers people to reevaluate their own long-term care plans, says Pam Lucina, chief fiduciary officer at global financial services firm Northern Trust.

A financial expert can help you determine strategies to lessen the load on others if you need assistance in the future. Potential steps include buying long-term care insurance and putting aside enough savings to cover the costs of professional aid or assisted living.

You can also help future caregivers by keeping your financial documents organized, consolidating your financial accounts, and understanding the benefits of giving a trusted person power of attorney.