Helping Caregivers with Financial Planning
Family financial planning is different for every family - and caregiver. Let's talk about building a budget, finding tax and care credits, and accessing services.
First, who is a caregiver?
Caregivers are those who regularly look after a child or a person who is sick or otherwise incapable of self-care. Adults incapable of self-care often include dependent adult children, parents, a spouse, or a family member with a disability.
If you’re a caregiver, getting from start to finish in your financial plan can be daunting. To help get started on creating a financial plan, we’ve created this 4-part guide for caregivers.
In this Article:
- Budgeting for Your Family
- Accessing Credits & Care Services
1. Budgeting for Your Family
Approaches to Budgeting
Budgeting means planning to save and planning to spend. As a caregiver, budgeting will include additional costs, but also unique savings. Some common approaches include the 50/30/20 system, the envelope system, and the pay-yourself-first system:
- 50/30/20 system. Break down your income by category:
- 50% necessities, 30% wants, and 20% savings.
- Necessities will include food, home expenses, or debt payments like student loan payments.
- Envelope system. This might be old fashioned, since it’s usually done using cash. Put the amount of money you want to spend on certain necessities or activities into specific envelopes.
- Pay-yourself-first system. Prioritize putting money in savings. Decide how much of your income you’d like to put in a savings account every month. You can set up automatic transfers with your bank.
Budgeting for Caregivers
Caregivers also need to include expenses for dependents. Consider these expenses - which are necessities?
- Home care
- Personal care services
- Programming, such as day programs for adults with disabilities
- Medical expenses
- After school programs and activities
2. Accessing Credits & Care Services
Tax Considerations for Caregivers
If you have dependents, federal tax codes provide benefits that can pad your budget. Connect with your benefits team to learn more about resources available.
Child & Dependent Tax Credit
Parents can claim up to $2,000 for each child who has not turned 17 by December 31st of the applicable tax year. Under the American Rescue Plan, the age limit was extended to 17 years old through the 2021 tax year. Your total credit amount depends on your income. Find updated information on tax credits.
If your child is 17 years or older, they can qualify for the tax credit for other dependents, or adult dependents. An adult-dependent may be a parent, sibling, cousin, or even someone who is unrelated to you. They must meet the IRS’s requirements.
Find Care Services
- Visit Your State’s Department of Health Services.
- Contact local non-profits.
- For respite services, search the ARCH National Respite Network Locator.
- Search for your state on Childcare.gov.
- Contact your child’s school counselor.
- If employed, reach out to your human resources department to ask about care benefits.
- Contact the Family Caregiver Alliance.
Paying For Care Services
An important consideration in the family financial planning process is the cost of care services. In addition to tax benefits, other sources of financial support for caregivers include employers, social security, and other government programs.