The first step in covering care costs is to get an overall picture of your income and expenses as a family caregiver. Start by creating a monthly budget using these three steps:
- Calculate your income – List then add all your sources of income.
- Calculate your expenses – List then add all your expenses.
- Subtract expenses from income.
If your total income is more than your total expenses, great! You have money left to save or spend. If your total income is less than your total expenses, look for ways to reduce your monthly expenses (see tips for reducing expenses below).
Types of income to include in a monthly
By knowing exactly how much cash you have coming in, you can take control of your money and direct it to where you most need it.
- Employment income (monthly average after taxes and deductions)
- Social security
- Disability benefits
- SNAP (food) benefits (SNAP for Texans)
- Other income (rental income, interest income)
Expenses to consider when creating a monthly budget
- Housing: rent, mortgage, property taxes, maintenance, repairs; or residential care services such as a nursing home or assisted living
- Utilities: electricity, gas, water/sewer, cell or home phone, internet, home security, garbage removal
- Groceries: food, pet food, toiletries, other essential items
- Transportation: car payments, bus/taxi/rideshare fares, licensing, gas/fuel, auto repairs and maintenance
- Medical expenses: payments/co-payments to medical providers, prescription drugs, medical bills, durable medical equipment, medical supplies
- Insurance: home, health, life, auto, other
- Taxes: property taxes, state/local taxes, federal taxes (Annual estimate divided by 12 months)
- Debt: medical debt, personal debt, student loan debt, credit card debt
- Personal care: Hair/nails, clothing, laundry service, gym membership
- Entertainment: Dining out, Cable/streaming TV services, movies, events, games, subscriptions
- Savings: emergency fund, retirement, savings for large purchases
The Bureau of Labor Statistics has found that the average household’s expenses (in 2021) are:
- Housing: 33.8%
- Transportation: 16.4%
- Food: 12.4%
- Insurance: 11.8%
- Healthcare: 8.1%
- Entertainment: 5.4%
- Other: 12.2%
You can use these numbers as a rough guide for your own budget. For example, if you find that you are spending 20 percent of your income on restaurants, this might be a good category to start cutting down.
The following tips may be helpful in reducing monthly expenses and saving for care costs now and in the future.
Note any tip that seems doable for you or the person for whom you provide care. Know that it can take time to change spending habits, and you don’t need to do all of these things at once — even small amounts will start to add up.
- Shope discount grocery or warehouse stores
- Buy gently used clothes or items instead of new
- Take advantage of coupons and rebates
- Watch prices before buying – look for sales
- Compare prices before making a purchase; consider generic brands
- Plan meals to limit trips to the grocery store. Make a list and stick to it.
- Borrow books and movies from the library.
- Wait until movies are available to watch at home, or go to a matinee.
- Bring your own drinks and snacks when out for entertainment.
- Discontinue, downgrade, or negotiate lower rates for cable, internet, and cellphone service.
- Downsize vacations or travel during the off-season.
- Carpool or use public transportation.
- Join rewards programs that offer discounts on gasoline, or check online to find the cheapest gas.
- Raise auto insurance deductible or reduce coverage on older cars.
- Buy used vehicles instead of new.
- Sell vehicles that are no longer needed.
- Stay on top of home maintenance to avoid costly repairs in the future.
- Challenge property tax assessments.
- Look into property tax breaks for seniors or homeowner exemptions.
- Refinance mortgage to a lower interest rate.
- Consider downsizing your home or moving to a less expensive area.
- Keep only one credit card and pay it off every month.
- Shop for lower auto and homeowners insurance rates or ask about a bundling discount.
- Sell things that aren’t needed or donate them for a tax write-off
- Compare banks and credit unions to find accounts with incentives or lower fees. If you don’t need a physical bank, many online banks don’t charge a monthly service fee.
- Set up a budget and stick to it.
- Choose in-network medical and dental care providers.
- Call the phone number on medical billing statements to negotiate a lower balance.
- Save on prescriptions by considering mail-order or a 90-day supply. Ask your doctor about generic medications.
- Find a Pharmaceutical Assistance Program that may help pay for medications.
- Take advantage of health care savings and flexible spending accounts available through some employers.
- Switch to energy efficient bulbs or appliances.
- Make your own coffee or meals at home instead of going to coffee shops or getting fast food.
- Review medical and dental insurance policies for opportunities to reduce premiums.
- Treat dining out as a luxury, not a habit.
- Only charge what you can repay, in full, each month.
Set aside time at the end of every month to create a budget for the following month and to review your actual income and expenses for the current month. Include columns for planned and actual income and expenses.
You might also consider using a budget calendar to visually track your cash flow. You can use a desk or wall calendar you already have or find a free budget calendar template you can print or use online. (You can even draw one out on paper). Add all your sources of income and circle them. Next add your expenses.
Once you have a handle on your monthly cash flow, set short, medium, and long-term goals. For example, short-term goals include ensuring that your expenses don’t exceed your income or beginning a systematic savings plan. Medium goals could include eliminating credit card debt or having enough saved to make a larger purchase or take a vacation. Long-term goals might include future housing or retirement goals.
Having a budget won’t change your money situation overnight. But it will be a powerful tool for helping you move toward greater financial stability. Using a budget takes practice; know that you may hit some obstacles along the way and resolve to keep trying.
Sources: The National Council on Aging; The Bureau of Labor Statistics; The Alzheimer’s Association – supported in part by grant number 90PPFL0001-01-00 from the U.S. Administration for Community Living, Department of Health and Human Services, Washington, D.C. 20201. This content contains only general information on legal, financial, care and medical issues and is not meant to take the place of professional advice. Laws vary by state and are constantly changing. As a result, we make no warranty or guarantee of the accuracy or reliability of the information contained herein. You should consult a legal, financial and/or medical professional before acting on any information contained herein for advice specific to your situation.
We hope this information is helpful to you in the important work you do as a family caregiver.
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