The COVID-19 pandemic has wreaked havoc worldwide, and it has resulted in an overwhelming increase in the number of younger caregivers. Gen Z family caregivers face financial challenges and responsibilities, which are, in most cases, not something they were prepared for in any way. Lack of proper financial literacy can be blamed, among other factors.
Caring for a loved one can give you a sense of being rewarded, and certainly, for lack of a better term, it can be a fulfilling experience. However, caring for a loved one can be a herculean task mentally, physically, and financially. The costs of medical bills, home modifications, and equipment can quickly add up, and things can get further complicated as you find out that your working hours start getting affected due to the need to provide care for your loved one.
One of the first steps in financial preparation or money management for Gen Z family caregivers is to create a budget. This will help you to get a clear picture of your expenses and understand how much money you have available for caregiving. Ideally, you should start by listing your expenses, including your monthly bills, food, transportation costs, and any other recurring expenses. Then, compare that list to your income to see where you may be able to cut back or make changes to your spending habits.
Maria Harutyunyan, Co-Founder of Loopex Digital, says, “The best tip I can give to Gen Z family caregivers is to create a budget and stick to it.”
She further adds, “Think of it this way: a budget is like a GPS for your finances. It serves as a guide, mapping out where you want to go and the most efficient route to get there. It helps you identify where you can cut back and save, so you have the resources to handle unexpected costs that may arise. And it helps you make informed decisions about your spending.”
However, you should keep a vital point in mind: "But here's the thing: a budget is only effective if you stick to it. It's not a one-time exercise; it's an ongoing process. You need to review it regularly and make adjustments as needed. It's a commitment, but it's one that will pay off in the long run. The bottom line is, by creating a budget and sticking to it, Gen Z family caregivers can gain a better understanding of their financial situation and take steps to ensure that they're able to meet their own needs while also providing for their loved ones. It's a powerful tool, and I urge you to use it.”
It’s important to be realistic when creating your budget and to account for the unexpected. For example, you may need to make last-minute trips to the hospital or purchase new equipment, or any other kind of medical expenses may arise. Planning ahead ensures you have enough funds to cover these costs.
Government programs and benefits may be available to help cover the costs of caregiving responsibilities. For example, Medicaid provides financial assistance to those with low incomes. Additionally, the Family and Medical Leave Act, also known as FMLA, provides up to 12 weeks of unpaid leave for certain family and medical reasons. It’s vital to thoroughly research and find out what benefits or federal tax credits you may be eligible for. This can help reduce the financial burden of caregiving and allow you to focus on caring for your loved one to the best of your abilities.
If you are employed, it’s worth looking into what benefits your employer provides for caregivers. Some employers offer paid family leave, flexible work arrangements, and other benefits that can help ease the financial responsibility of caregiving. These benefits can be extremely helpful in allowing young adults like you take a leave from work to care for your loved one or aging parents without worrying about losing your income. It’s important to talk to your employer and find out what benefits are available to you.
Long-term care insurance can go a long way toward covering the cost of long-term care expenses like home health care and assisted living. If you are caring for an elderly family member, it’s important to consider this option as it can provide financial security for you and your loved one. Long-term care insurance can be a wise investment as it can help ensure that your loved one has access to the care they need without putting a strain on your finances.
In addition to covering immediate expenses, it’s important to save for the future, i.e., looking after your financial health. This includes putting money into a savings account and investing in a retirement account. The sooner you start putting aside money for the future, i.e., retirement savings, the more time your money has to grow, and the more secure your financial future will be. The importance of personal savings can hardly be exaggerated. It’s important to remember that caregiving can be a long-term commitment, so it’s crucial to plan for the future and make sure you have a solid foundation by looking after your personal finance.
Having an emergency fund in place is crucial in this regard. It can act as a cushion against any financial setbacks you may encounter. It is one of the pillars of financial independence. Logan Nguyen, Co-Founder of MIDSS, says, “Economic conditions in the United States and, by extension, the rest of the world, are getting harder daily. Inflation has hit record levels, interest rates are going up, and there is an energy crisis we all have to deal with.”
So how do you cope with it? Nguyen says, “Under such conditions, having an emergency fund set aside somewhere is essential just in case things blow up. Most people in the US often deal with emergencies through debt. But seeing that interest rates are rising at unprecedented levels, this is the worst time to be ramping up on loans.”
You can start small based on your financial situation. Nguyen says, “With a small rainy day fund, you can deal with any emergency without adding to your debt burden. It's also a good way to make sure you can address emergencies without dipping too much into your regular income.”
Many community resources are available to help family caregivers, including support groups, counseling services, and financial planning services. These resources can help you connect with others in similar situations, find financial support, and plan for the future. Joining a support group can provide you with a sense of community and help you find comfort and support from others who understand what you’re going through. Additionally, counseling services can help you manage the emotional stress of caregiving and find ways to cope with the challenges you may be facing.
Consider consulting a financial advisor or counselor for assistance if, as a caregiver, you are having trouble managing your finances. Financial advisors can offer you individualized counsel and direction to assist you in dealing with the financial difficulties of caregiving.
As a caregiver, managing your personal finance necessitates proactive preparation, study, and assistance as situations might demand. If you learn to manage money, you can protect your own financial security and give your loved one the utmost care possible.