When we start caring for an aging parent or family member, we expect the added responsibilities and emotional toll to cause some stress in our lives. What we might not realize is that our caregiving role often strains us financially, too. Our loved one’s health care costs, day-to-day caregiving supplies, durable medical equipment, home modification costs, and more can add up quickly. And we may be tapped to provide financial support. 

According to AARP research, family caregivers spend an average of more than $7,200/year in out-of-pocket costs to provide care. This added financial burden can quickly overwhelm us, impacting the care we provide as well as aspects of our personal and financial life, and even our own health. 

RubyWell has put together the most relevant information and actionable steps to reduce the financial strain of caregiving. Because when we maintain control over our financial and personal well-being, we can provide better care for our loved ones and ourselves.

3 Ways Family Caregivers Can Gain Control of Finances

A key first step in managing the cost of caregiving is to make lifestyle adjustments that accommodate caregiving expenses. Family caregivers can begin by taking actions that will help us save money, keep finances organized, and even begin planning for the future. 

1. Find Simple Ways to Cut Costs 

In the same way that small costs can add up quickly, small savings—when practiced consistently—can quickly take a bite out of the financial burden that family caregivers bear. Below are some great cost saving strategies. The more of them we use, and the more often we use them, the bigger the impact they have on our finances.

Prescription savings

‍Most of us know to opt for a generic version of prescription drugs whenever possible. But even some generics can cost tens or *gulp* hundreds of dollars, depending on our loved one’s insurance plan. This is where prescription savings cards and programs can come in handy. GoodRx, SingleCare, and Marc Cuban Cost Plus Drugs offer prescriptions at discounted prices.

Senior discounts‍

Many companies offer senior discounts. We can tap into these when purchasing things for family members we care for. It’s worth it to ask local grocery stores, pharmacies, restaurants, transportation agencies, etc. if they offer a senior discount and how to take advantage of it when caring for an older adult.

Bulk shopping

Everyday necessities like personal hygiene products, cleaning products, paper products, and more are often less expensive at wholesale club stores. While these stores charge a membership fee at sign-up, the savings will cancel out that cost quickly if we shop there regularly. 

Gasoline savings

‍Some wholesale stores have gas stations that offer gasoline for significantly less than roadside gas stations. This is another great way to save money and make our wholesale club membership pay off.

Military Post Exchange

If the older adult we care for served in the military, they have access to the commissary and post exchange store (PX) at any military base. These prices are often as low as or lower than wholesale club stores. It’s worth a call to the nearest military base to find out how you can gain access to shopping for your veteran’s groceries and supplies.

Meal Planning

‍Planning and shopping for a week of meals all at once can help keep our grocery expenses in check. It eliminates the need to make additional trips to the store during the week, where we can be tempted to buy a few extras we don’t really need. It also saves on gas and allows us to eat at home more often.

Comparison Shop

‍We may be able to find better deals for insurance, internet, phone, and other services. A few calls could save us money every month.

Medicare Advantage Supplemental Benefits

‍If our loved one has a Medicare Advantage plan, they may have valuable supplemental benefits that can save us hundreds or even thousands of dollars every year. But it can be hard to wade through all of the plan information to find them. RubyWell is developing a free Medicare Advantage Benefits Navigator that family caregivers can use to discover and access these valuable benefits. Join our waiting list to be among the first to give it a try.

2. Make a Financial Plan

Finances have a tendency to get out of hand when we don’t keep track of the money we earn and spend. When we know exactly how much is coming in and going out each month, we can be more prepared for unexpected expenses and even start making a financial plan for the future. Here are several steps we can take to put a plan in motion.

Create a Budget

‍Based on current income, we need to determine how to cover monthly bills and still have a little something left over for unexpected expenses. I created a simple Google spreadsheet years ago that shows my income and bills for each pay period, so I know exactly which bills, and roughly how much, will be paid from each paycheck. Once I had all of my monthly bills entered, I had a better idea of where I could cut costs. As an example, I ditched my cable subscription and switched to Roku and a few streaming services. That alone saved me about $50/month. 

Free and inexpensive budget apps also exist. Forbes selected these as their top budget apps for 2024:

• ‍YNAB (You Need A Budget): Best for Setting Goals‍
• Empower Personal Dashboard: Best for Tracking Net Worth‍
• Goodbudget: Best for Envelope Budgeting‍
• Oportun (formerly Digit): Best for Passive Saving‍
• PocketGuard: Best for Tracking Spending‍
• Stash: Best for Automated Investing‍
• Honeydue: Best for Couples
  
  

Balance Caregiving and Work

‍About 60% of family caregivers also have full time or part time jobs. Those of us who fall into this category need to determine how to balance caregiving responsibilities with work demands in order to continue earning income. This could mean asking family and friends to help with caregiving or discussing alternative working arrangements with an employer. Remote work and flexible schedules can make it possible for family caregivers to maintain output and income while providing care. Also, 11 states plus Washington DC have paid family leave laws, that allow some employees to continue to earn a portion of their pay while taking time off to care for a family member with a serious health condition. You can find out about your state's family leave laws on our Family Leave resource.

Respite care can be a great resource for short-term emergencies. It can be available at no cost through the VA’s Aid and Attendance program and through the Volunteer Caregiving Network. Some adult daycare facilities offer services on a sliding scale. 

Nearly 40% of family caregivers aren’t employed. Some have had to leave jobs in order to provide care. Others are already past retirement age and may be living on a fixed income that could include Social Security, retirement savings, and/or a pension. Family caregivers who don’t have a source of income can look into ways to be compensated for providing care. Four key sources of compensation are government programs (Medicaid, VA), some long-term care insurance policies, paid family leave, and a Personal Care Agreement. To learn more about these payment options, read RubyWell’s article, Four Ways to Get Paid as a Family Caregiver.

Unfortunately, these four payment sources only serve a small subset of family caregivers—specifically those whose older family member has substantial resources and those with hardly any resources. This is exactly why RubyWell is developing a platform that will help all family caregivers, including those in “the missing middle,” earn money for caring for an older family member. If you haven’t already, be sure to sign up for our waiting list so you can be among the first to know when this platform is up and running.

Start Saving

‍It can be hard to think about saving money amidst all these added caregiving expenses. But it’s smart to start contributing any extra income to an emergency savings fund. Ideally, this should total at least three months of living expenses. Six months would be even better.

Once we’ve established our emergency savings, we can create a strategy for getting our finances back on track. A good place to start is to redirect the amount we were tucking away for our emergency savings to pay off debts. Focus first on the debts that have the highest interest rate, like loans and credit card bills.

Create a Retirement Savings Plan

‍Once those high-interest debts are paid off, we can focus on our own retirement savings. A MetLife study found that women who leave the workforce early to care for a loved one miss out on more than just income. We also lose, on average, $131,351 in Social Security benefits. In addition to that, there is a pause in 401(k) contributions and employer matching, and the toll on our retirement savings is significant. The sooner we can start making monthly contributions to an IRA, the better.

3. Get Help with Taxes 

Okay, let’s say we’ve got our monthly budget working for us. We have a plan in place for our own savings. Then, bam! Tax time hits. There are ways we can prepare for taxes throughout the year that will minimize our financial stress and maximize our deductions come April.

Ways to reduce tax stress

1. Carefully document all receipts and records of our caregiving-related expenses. These expenses can include:some text
   • mileage driven for doctor appointments
   • prescriptions
   • groceries
   • caregiving supplies
   • durable medical equipment
   • home modifications
   • other medical expenses
2. Consult a tax professional. They’re knowledgeable about all of the deductions and tax credits that are available to you. Tax laws are always changing. As of 2023, several tax breaks are available to family caregivers.

Child and Dependent Care Credit

We may be able to claim up to $3,000 if we paid for care for one person, and up to $6,000 if we paid for care for two people who we can claim as a dependent. This care can be provided by a care facility, a home care professional, or members of the family or community. I’ll explain how to claim a family member as a dependent in a bit.

Credit for Other Dependents

In addition to the Child and Dependent Care Credit, we may be able to claim up to $500 with the Credit for Other Dependents. This credit can be claimed for:

• Dependents of any age
• Dependents who have Social Security numbers or Individual Taxpayer Identification numbers
• Dependent parents or other qualifying relatives supported by the taxpayer
• Dependents living with the taxpayer who aren't related to the taxpayer

We may claim an unrelated person as a dependent if they meet the above requirements, and they have also lived with us for at least half of the year. To do this, it’s crucial to keep detailed records, including a log that can prove their residency in our home.

Head of Household

If we’re single and caring for an older family member who we can claim as a dependent, we can file as “Head of Household.” This increases our standard deduction from $13,850 to $20,800.

Medical Expenses

If we cover our family member’s medical costs, and their costs and ours total more than 7.5% of our adjusted gross income, we may be able to claim that amount as a deduction. Again, we’d have to be able to claim the care recipient as our dependent.

How To Claim a Loved One as a Dependent

The IRS has an online tool that can help family caregivers understand who we can claim as a dependent. But generally speaking, we may be able to claim an older family member as a dependent if we meet the following tests:

The caregiver:

• is not a dependent of another taxpayer
• paid more than half of the care recipient’s support for the calendar year

The care recipient:

• if married, doesn't file a joint return
• is a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico
• has a gross income for the calendar year that’s less than $4,700
• isn't a qualifying child of another taxpayer

Again, taxes are complicated. Consulting a tax professional can help us be sure we’re working with the most current information that will deliver the best outcome at tax time. 

With a focus on cutting costs, sticking to a budget, and making the most of tax laws, family caregivers can start to take control of our financial health, which in turn can support our physical and mental health. 

But until all family caregivers are paid caregivers, millions of Americans are going to continue to struggle with the cost of caring for our aging population. This is why RubyWell is building tools that will help all family caregivers save, find, and earn money throughout the caregiving journey. Our Family Leave Finder provides state-by-sate info on family leave laws. Soon, family caregivers will be able to make the most of a loved one’s health insurance benefits with our Medicare Advantage Benefits Navigator. And ultimately, we're developing compensation solutions so that every family caregiver can be a paid caregiver. If you’d like to be among the first to hear about future products, join our waiting list.

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