How to Effectively Handle Your Finances While Caring for Aging Loved Ones

Summary: Caring for aging loved ones with compassion while protecting your own well-being and financial stability is a delicate balancing act. But with smart planning and thought, you can handle this journey with confidence and peace of mind.

Being a family caregiver is a responsibility that many take on willingly. For a lot of us, it’s instinctive to want to give back to the people who have enriched our lives with their love and support.

However, caring for aging parents can take a toll on you, whether its physical, financial or emotional.

As caregivers, it’s important to ensure that your aging parents or relatives receive the best possible care without unduly jeopardizing your own finances and mental and physical well-being.

In this comprehensive guide, we’ll explore strategies to help you juggle the complexities of caregiving and much-needed financial stability.

Understanding the financial implications of caregiving

Whether the role of family caregiver falls on your shoulders unexpectedly or you’ve been anticipating it, organizing your finances beforehand is crucial.

According to a report by AARP, family caregivers spend an average of $7,000 annually on out-of-pocket caregiving expenses. This amounts to a staggering $600 billion (in economic value) of unpaid care provided by these caregivers.

And to complicate things, caregivers often face a reduction in income due to reduced work hours. They may even have to leave the workforce altogether to provide the care their loved ones need.

Going by current data, it’s easy to see why you need to first understand and manage your own financial stability as a family caregiver, as you take care of your elderly loved ones.

How to handle your finances while caring for elderly loved ones

Being responsible for both caregiving and personal financial planning is a tall order. Here are some strategies you can use to ensure that your financial plan stays strong while allowing you to care for others.

1. Create a financial plan

The first step in effectively handling your finances as a family caregiver is to create a comprehensive financial plan if you don’t have one in place already.

For some people, this may mean assessing the current financial situation of your aging parent or relative first. Understand their income, expenses, savings, investments and any outstanding debts before you begin the financial planning process.

Afterwards, determine how the expenses related to caregiving, such as medical costs, home modifications and long-term care services will be funded. This will help you avoid dipping into your own funds for expenses that your parents’ retirement savings could have met. Or, if additional funds are needed, you can take that into consideration in your financial plan.

Consulting with a financial professional can be really helpful in this process. A financial advisor can assist you in assessing both your and your relative’s financial situation, helping to craft a plan that ensures all needs are met. They can provide insights into managing expenses, maximizing savings, and potentially finding resources or benefits that you may not be aware of.

2. Communicate openly with other members of your family

Caregiving often involves leaning on a strong support network of family and friends. But each person in this network may have their own ideas and opinions about how to manage finances and care for elderly loved ones.

Open and honest communication is the key to avoiding conflicts and ensuring everyone is on the same page. Seeding a conversation early, ideally before your loved ones need active care, may help in finding out the exact state of their financial preparedness and preferences. It also helps in defining the roles each family member will play in the caregiving process.

Discuss each person’s responsibilities, expectations and financial contributions to help distribute the caregiving burden evenly among family members. Putting too much financial responsibility on any one party can lead to financial burnout and feelings of discontent in the long run.

It’s helpful when everyone in the family contributes towards the care of your dependent family members in a capacity they are comfortable with. This way, you can have more breathing room to build your savings and your emergency fund, and take care of your other financial obligations, like your children’s education.

To start this conversation, you might say, “I’ve been thinking about how we can best support mom and dad as they get older. Can we all sit down and discuss their care needs, our roles, and how we can share the responsibilities?” This approach invites everyone to participate in a collaborative and supportive manner.

3. Utilize every available resource

As a family caregiver, there may be many moments of loneliness where the task of caregiving seems overwhelming. But remember, you’re not on this journey alone. There are various resources available to ease the financial burden on you and access necessary assistance.

You could start by reviewing your loved one’s health insurance coverage to understand what is included. Look into government programs such as Medicaid, Medicare, or Social Security benefits that your loved one may be eligible for. For instance, Medicaid offers long-term coverage for low-income seniors. And for Americans over 60 who don’t qualify for Medicaid, financial help is at hand through the Older Americans Act of 1965 or OAA.

You may also want to consider joining support groups or seek guidance from local caregiver organizations for valuable insights and assistance.

Do your research on aid programs in your local community and utilize them. This way, you can minimize out-of-pocket expenses that could eat into your own savings.

4. Explore legal and financial tools

Consulting with legal and financial professionals can provide valuable guidance in navigating complex matters such as estate planning, wills and trusts.

Plus, a time may come when you will be the one to make emergency or family decisions. For this reason, it’s recommended to establish power of attorney and health care proxies so you (or whomever your loved one denotes) are empowered to make financial and medical decisions on behalf of them if they become incapacitated.

It is also prudent to set up a living will or advance directive that outlines their wishes regarding medical treatment and end-of-life care. Doing so will save you from stressful, contentious discussions down the line.

5. Manage day-to-day expenses prudently

To effectively manage day-to-day expenses while serving as a family caregiver, consider creating a separate budget specifically for caregiving-related costs.

Track your expenses meticulously, including medication, medical supplies, transportation and home modifications. Stretch your dollar with cost-saving options such as generic medications, discounted services for seniors and government assistance programs.

The short-term and long-term impact of health care costs can be considerable. So, look into enrolling your loved one in programs such as Medicare Part D for prescription drug coverage or other Medicare options that may be right for your loved one.

This way, you can save your money and have enough to invest for your own future.

6. Maximizing income and benefits

Explore options for maximizing your income while balancing caregiving responsibilities. Consider flexible work arrangements, remote job opportunities, or freelance work that can provide the flexibility you need.

Take advantage of employer-sponsored benefits, such as flexible spending accounts (FSAs) or caregiver assistance programs, to help cover caregiving-related expenses. These benefits can ease the financial burden and provide additional support.

For example, the Dependent Care Flexible Spending Account (DCFSA) allows you to set aside pre-tax money to pay for eligible caregiving expenses, reducing your taxable income and helping you manage costs more effectively.

Investing in these strategies can help ensure that your financial needs are met while you continue to provide care for your loved ones.

7. Seek emotional and social support

Caring for elderly loved ones is not always a smooth road. And being responsible for another adult can take a toll on your emotional well-being, which can, in turn, impact your financial decisions.

As they say, it takes a village. So seek emotional support from close friends, family, or support groups to help alleviate stress and prevent burnout. Don’t be afraid to ask for help when you need it, whether it’s for a sympathetic ear, practical assistance, or advice on caregiving strategies. It’s alright to be vulnerable with the people we trust who have our best interests at heart.

Make time for self-care activities, such as exercise and your hobbies. Prioritizing self-care is crucial because maintaining your own health and well-being ensures you can continue to provide the best care for your loved ones. Consider joining a caregiver support group online or within your community to connect with others who are facing similar challenges.

Finally, take advantage of paid care services to give yourself a much-needed break from caregiving responsibilities. The National Family Caregiver Support Program (NFCSP) gives family caregivers temporary relief, by providing access to volunteers or trained professionals who can assist with care, allowing you to recharge and take care of your own needs.

Manage your finances as a caregiver

Caring for elderly loved ones can be a complex undertaking with significant financial implications. To navigate it smoothly, take the time to build a strong financial plan that accounts for your loved ones’ and your own finances, communicate openly and practice smart savings and investment practices.

As a family caregiver, you are a source of comfort and strength to your loved ones. But you don’t have to be an island. At Mutual of Omaha, we are with you at every step of this journey and remain committed to providing resources that can help you secure your financial future.

Frequently asked questions 

Q1: How can I balance caregiving responsibilities with my own financial obligations?

Create a detailed financial plan that includes both caregiving expenses and personal finances to help you prioritize and allocate resources effectively. Don’t know where to start? Consider working with a financial professional to help you develop a plan.

Q2: How can I ensure my elderly loved one receives quality care without overspending?

By budgeting, tracking expenses and exploring health care coverage options such as Medicare and Medicaid, you can manage caregiving costs while ensuring your loved one receives the best care possible.

Q3: What legal documents do I need to make important financial decisions on behalf of my loved one?

There are multiple legal documents that will grant you the ability the make financial decisions on behalf of a loved one. Consult with a qualified legal advisor to ensure you have the necessary documents in place, such as power of attorney and guardianship papers, to navigate financial and healthcare decisions effectively.


Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.