The average cost of raising a child amounts to nearly $300,000 by the time that child turns 18, according to the USDA. Now, if you’re raising a child and caring for your elderly parents at the same time, the cost goes up exponentially. As such, it is utterly necessary to be smart with your money. Thankfully, there are ways that you may successfully manage the financial responsibility of child care and caring for elders in your family. So how may you do so?
Seeking Insurance For Your Parents
Around 75% of elderly care is often given for free by friends or family—as a consequence, these caregivers often lose income, security, and careers, according to Joanne Lynn of Altarum. Caring for elderly parents often comes with doctor’s appointments, medication, and possible hospitalizations. The costs can quickly mount if your parents have preexisting health conditions.
A good way to help shoulder those costs is by getting health insurance for your parents. Insurance can help cover various bills and help you plan for the future. To get a better understanding of what sort of insurance policy would fit your parents, you can simply load up your trusty search engine and type “life insurance for my parents”. From there, you can do additional research on the financial benefits of getting your parents insured for a rainy day.
Reviewing Tax Credit Regarding Your Children
There are a lot of costs that come with caring for a child like their education, medical needs, clothing, food, and other things. Depending on where you live, you may want to look into what sort of tax credit you can get. If you’re in the U.S. and you have a dependent child under the age of 17, you can obtain up to around $2,000 in tax credit each tax year, according to Lisa Greene-Lewis.
If you’re earning, you can also expect to get an income tax credit. These help you have more financial wiggle room as the income tax credit is applied for each payday and tax credit is annual. The certainty of their application gives you a better chance to plot your budget and address what your child may need financially.
Religiously Tracking Your Expenses
It can be easy to lose track of expenditures when you’re juggling caring for a child and elderly parents. This, however, can be the very reason why you may be having difficulty with managing your finances, according to Miriam Caldwell of The Balance. So tracking your finances is a great way to hold yourself accountable and stick to your budget. It also gives you a strong picture of how much you tend to allot for child care and caring for your parents.
This knowledge will empower you to make any changes and manage your finances better moving forward. Some of the best ways that you can track your expenses are by using budgeting software, creating a ledger, or using an app to keep track of receipts. What’s best is taking around 30 minutes or longer each day to organize your finances. Making a habit and a routine out of religiously tracking your expenses will make sure that you have a firm understanding of your financial state.
Building Separate Emergency Funds
Around 28% of American adults have no emergency funds to speak of while 25% have a bit, but not enough to cover three months’ worth of expenses, according to Bankrate. While it can be difficult to find room to build an emergency fund, the lack of one will open you up to being financially vulnerable should an unplanned expense come up. A common response would be to just build a general emergency fund, but that isn’t wise either.
It is best to slowly, yet surely, build emergency funds for yourself and your child, while building another one for your parents. The separation of funds ensures that you do not drain one for the benefit of the other. An amount as small as $250 in an emergency fund can significantly lessen the risk of not being able to buy medication for ailing elderly parents when something else suddenly comes up.
Addressing ALL Debt
Consumer debt in the U.S. hit $14.3 trillion in May, according to the New York Federal Reserve. Your personal debt is a steady outgoing expense that you are reasonably responsible for. The tune changes when you’re looking at taking on your child’s or your parent’s debt. Debt doesn’t enter your child’s life until much later—so if your child is still young, start teaching them about healthy and unhealthy debt to spare yourself trouble down the road. Now when you are caring for elderly parents with debt, you have the option to get a credit freeze so no one can open up any more cards under their name. You can also get the power of attorney if your elderly parents have cognitive issues so that you can address their debt and plug that financial leak so it doesn’t get any bigger.
Finances can be a tricky matter—especially if there are other people to consider. However, it can be fully managed when you’ve got a clear idea of what you can do to ease the financial responsibility that you bear. So take a deep breath and carefully consider your present course of action and determine which steps you can take today that helps unlock a positive financial environment for you and your family in the future.