When your parents grow older, you may discover that they need not just physical and emotional support but also financial support. They may need help managing day-to-day affairs such as finances, household maintenance, or healthcare expenses. At such times, children are expected to step into the role of a caregiver.

While this applies to both genders, research shows that the burden is disproportionately skewed towards women. If a family member is ill or disabled, the typical attitude is that the primary caregiver should be a female. The entrenched stereotype in society is that men are breadwinners and women are homemakers and caregivers. But facts suggest otherwise.

According to a report published in 2020 by the Organization for Economic Cooperation and Development (OECD), women worldwide spend up to 10 times more on care work than men. With particular emphasis on Indian women, 84% are presumed to undertake this role on a partial or a full-time basis. Caregiving for elderly parents is a selfless role. And often, it is a role that must be managed in a heightened emotional state. In such scenarios, the last thing you may be concerned about is money. However, it is an important consideration to make.

How to Plan for Your Elders’ Expenses

1. Start with Budgeting

Budgeting is a process that is as much a psychological game as it is accountancy. The first step involves mental preparation and communication. Consider that ageing parent can directly affect your earning and savings potential. If you cut down on the number of hours you are working to take care of them, you need to consider the impact it will have on your finances. Budgeting when supporting your elderly parents comes down to evaluating needs versus wants. Have a thorough spending review. Consider the expenses you can reduce or eliminate while providing care. Also, plan for what-ifs. Focusing on your family's needs and planning your budget around them is a money strategy that can dissuade you from going over your budget.

2. Save for Short-Term and Long-Term Financial Goals

Don't put caregiving or any other what-if scenarios ahead of your cash reserves and retirement planning. Though it may be noble to put others before yourself, you may actually be pulling the next generation backward due to your lack of self-planning. Continue to put money aside in an emergency fund. Even if you must reduce the amount you save to fit new caregiving expenses into your budget, continue to contribute to your retirement account.

3. Discuss Your Parents’ Needs

Communicate with your parents about what they need in terms of financial care. It should all start with an open discussion before their retirement or any significant health or mental deterioration. The sooner you plan, the more options you will have. This discussion will ensure that your parents’ expectations are met without any lapse of judgement. Discuss their own savings plans and motives with their assets. This ensures your financial plans do not overlap.

4. Break Things Down into Buckets

After you figure out how much care for your parents may cost, start breaking things down into buckets – what do living expenses look like, what will healthcare look like, what expenses do you have to worry about when they pass away. Then discuss with your parents what they have planned and what is covered through their health plans, savings, and insurance policies.

5. Don’t Quit Your Job

Quitting your job means giving up on a regular source of income and benefits such as health insurance and paid time off. Though leaving may seem like the most suitable option, think of the impact it will have on your short-term and long-term budget. If you need to cut back on your hours, make sure you work long enough to receive benefits. Also, consider talking to your HR department to see if they help caregivers.

6. Take Professional Advice

Reach out to a financial advisor if you are overwhelmed with medical bills. A certified financial planner can go over what budget is best for you and anticipate future needs. In addition, they may know of government programs that can help.

7. Seek Out Support

Always try to see what support is out there, and remember, it's highly likely many others are going through similar situations. Build a support group and work through things together. It is not always about the financial, but your health's mental impact is also a priority.

Conclusion

Financial planning for your elderly parents can put a strain on your budget. This is not always an easy subject to talk about, but you need to be ready for it. Having a plan and open discussion with your parents can help you figure out how to do it without impacting your own finances.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully