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5 Ways Family Caregivers Can Protect Their Financial Health

By Danielle Miura November 14, 2022 Caregiving

Being a family caregiver doesn’t only impact you physically, mentally, and emotionally – it can also hurt you financially.

It is not uncommon for family caregivers to utilize their financial resources to care for their loved ones. According to an AARP survey, one-third of caregivers stated that they have had to dip into their savings to cover caregiving-related costs.

Finding the right balance between caregiving and personal well-being is essential for your financial future. Make sure you protect your financial health while caring for a loved one. Here are five ways to protect your finances as a family caregiver.

Build Your Credit Score

A high credit score can help you qualify for lending programs with better terms and conditions. Essentially, having a better credit score can help you have more options. In addition, improving your credit score can help ensure that your financial responsibilities are cared for once your caregiving responsibilities end.

For example, if your loved one leaves you their home when they die, your credit score will be prepared if you refinance the mortgage loan.

If you haven’t seen your score in more than a year, using companies that offer a free credit check, like Experian, Transunion, or Equifax, can tell you whether you need to improve your score. The two significant factors determining your credit score are your payment history and credit account balances. Therefore, focusing on these two factors is essential to boost your score.

Here are three ways to improve your score:

  • Set up automatic payments to ensure that your payments are never late.
  • Pay down and stay out of debt.
  • Monitor your score as it improves.

Don’t Neglect Saving for Your Future

It’s common to focus on your immediate needs but forget your long-term care goals. Remember that when it comes to investing, time allows your money to grow through compound interest – making saving a priority, even if that means only contributing small amounts here and there.

If you are working full-time, take advantage of employer-matching contributions. If you expect to reduce your hours or eventually quit to be a caregiver, employer contributions can be a bonus saved up for your future.

If you are working part-time, contribute to an individualized retirement account (IRA) as you usually would with a 401(k) plan.

If you have already retired, build or analyze your current emergency fund for unexpected expenses that may arise.

Keep Your Money Separate

Even if you live with your loved one and share most of your expenses, it is essential to have your finances separated. Consider creating two monthly budgets, one for you and one for your loved one. A budget will help create awareness about how much you are paying out-of-pocket to care for your loved one.

If you are paying more than you can handle, explore ways to ask for help through family members, social workers, financial professionals, community-based resources, and government-subsidized programs. It is essential to be aware that even though you may be using your loved one’s account to pay for living expenses, you are an adult with your own needs. Caregiving may be part of your journey now, but you can decide what happens after caregiving ends.

Learn About Favorable Tax Deductions and Credits

Caregivers often qualify for federal tax deductions and credits, which can decrease their tax burden. For example, the IRS allows you to claim a tax deduction if your loved one qualifies as your dependent. To qualify, your loved one must meet specific conditions, such as depending on you for the majority of their living expenses or living with you for most of the year.

In addition, some out-of-pocket caregiving expenses may be deductible. However, any expenses you deduct can’t already be covered by insurance. To ensure you get all the tax deductions available, it’s advised to work with a tax or financial professional.

Discover How to Get Paid as a Caregiver

Even though 19% of American caregivers provide unpaid care to an adult, it doesn’t mean you need to sacrifice your financial health.

Look into programs such as Medicare, Veterans Affairs, and other government agencies to see if they provide financial support. If your family member has long-term care insurance or life insurance, you can use the policy to hire a family member as their caregiver. However, please read the insurance policy terms before assuming that the policy will pay for you as a caregiver.

If you have no choice, consider asking your loved one or a family member to help pay for your caregiving services. It may be uncomfortable to ask for financial help; however, you shouldn’t sacrifice your financial health to care for a loved one.

Let’s Have a Conversation:

What have been some of your financial struggles with caring for a loved one? What do you do to protect your financial health?

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The Author

Danielle Miura, CFP®, is the founder of Spark Financials, a Fee-Only Financial Planning Firm focused on serving the needs of caregiving families nationwide. Danielle specializes in comprehensive financial planning, financial education, and tax law research. Find out more at and contact her at

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