October 3, 2024
Caregivers face many challenges, including large financial ones. We look at why caregivers are more at risk of debt issues and what they can do about it here.
Taking care of a loved one is becoming more common as the population ages, but it comes with its own set of challenges. As a caregiver, you may find yourself juggling numerous responsibilities, including your own financial issues. This delicate balance can put caregivers at a higher risk of accumulating debt, especially during a cost-of-living crisis.
Financial burdens can quickly push caregivers into a financial struggle they never anticipated, where they attempt to care for a loved one while navigating significant financial challenges of their own.
One in four Canadians is a caregiver, according to the Canadian Centre for Caregiving Excellence, and one in two will eventually become one, it says. Caring for a loved one can be extremely time-consuming and may require a significant commitment; sometimes it becomes its own full-time job.
Due to the demanding nature of caregiving, many individuals find themselves needing to reduce their work hours, take a leave of absence, or even quit their job entirely to provide proper care for their loved one.
Unfortunately, this can lead to a substantial loss of income, putting caregivers at risk of accumulating debt. This is by no means uncommon among caregivers.
One in five employed caregivers are low-income earners in Canada, and 20% of caregivers make less than $20,000 per year before taxes, a University of Alberta research team found.
They also often struggle to cover not only their own expenses, but also the additional financial burdens related to the care recipient, such as medication costs and medical bills.
Moreover, the emotional and physical exhaustion experienced by caregivers can further hinder their ability to effectively manage their own financial matters.
The government has a variety of assistance programs for caregivers and offers various benefits to assist them in managing the financial challenges they may face. Taking advantage of government assistance can help caregivers reduce their risk of debt issues arising.
One significant benefit available for caregivers is the Canada caregiver credit (CCC). The CCC provides tax relief to individuals who care for a dependent with a physical or mental impairment. Those eligible can claim $2,499 for their spouse, common-law partner, or an eligible dependent. Those who are eligible can also claim an additional amount up to $7,999, depending on a variety of factors, such as the age and income of their dependent. The full details of the benefit can be found here.
In Quebec, there is also a tax credit available to caregivers. To be eligible, the caregiver must have lived with a care receiver (other than their spouse) aged 70 or over. The credit offered in 2023 was $1,383.
The EI caregiver benefits offer financial support for those who take time off work to care for a critically ill, injured person, or someone in need of end-of-life care.
Eligible caregivers may receive 55% of their earnings, with a maximum weekly benefit of $668, to help offset the financial impact of their caregiving responsibilities. These benefits can be shared by eligible caregivers, either at the same time or one after another
You may claim these benefits anytime in the year after the date a person is certified as critically ill, injured or in need of end-of-life care by a medical doctor or nurse practitioner.
Caregivers have the flexibility to choose how they use the weeks of benefits. They can opt to take the money all at once or spread them out in separate periods, depending on their individual caregiving circumstances and needs.
Full details of how these benefits work can be found here.
This list is by no means exhaustive, you should consult with an accountant or tax professional to get a full picture of what government benefits you are eligible for as a caregiver.
Government assistance can help caregivers offset some of their costs, but caregivers themselves must be prepared to take on some responsibility for ensuring they are on top of their finances as well. There’s a variety of ways this can be done responsibly.
Creating a budget as a caregiver is essential for managing your financial responsibilities effectively. A budget can help you carefully monitor any income you do have and track where your money is going. It can also help you allocate money from your savings if you have little to no income.
This awareness helps identify areas of overspending and allows for adjustments to be made.
Regularly review and adjust your budget as needed to ensure it reflects your current financial circumstances. Creating a realistic budget empowers you to make informed financial decisions, reduce stress, and maintain financial stability while fulfilling your caregiving responsibilities.
There is no set way to budget, the right budget is the one that works for you. We collected a list of five budgets and their pros and cons here for anyone unsure what a good budget method might be for them. If you’re unsure where to begin when creating a budget, you can use our free budget planner to get started.
Communicating openly and honestly with your family about caregiving responsibilities and financial matters is crucial to avoiding debt and managing expenses effectively. Discussing caregiving needs and associated costs with other relatives involved in caregiving decisions can help them stay informed on your overall financial situation. If you are the primary caregiver, they may be willing to contribute money for your costs.
You can also encourage family members to contribute to caregiving responsibilities based on their abilities, resources and the amount of time they have available.
Be open to discussing budgeting strategies and financial planning together, such as creating a shared caregiving budget with anyone else who is involved in the caring role. Doing so will mean you won’t be solely responsible for budgeting issues and can have someone else also keep track of the finances.
Unexpected situations can arise at any time. Having an emergency fund allows you to address unexpected expenses without resorting to borrowing money or accumulating debt.
An emergency fund should help you cover costs and avoid debt should the unexpected happen. You can start by putting a small amount of money into it each week from any income you receive.
If you receive government assistance, it might be a good idea to put as much of it aside for later as possible and use it only when necessary.
Facing financial distress as a caregiver can be overwhelming, but meeting with a Licensed Insolvency Trustee (LIT) can offer significant relief. Our compassionate LITs understand the challenges you’re facing and will work closely with you to find the best debt relief solution tailored to your specific needs. Your financial well-being matters, and our team is here to support you every step of the way.
October 3, 2024
Caregivers face many challenges, including large financial ones. We look at why caregivers are more at risk of debt issues and what they can do about it here.
