Family Caregivers Need a FinHealth Lifeline

The role of care in our economy has entered the national spotlight, yet there’s still much we don’t know about the financial and economic consequences of caregiving.

Friday, November 12, 2021
 Family Caregivers Need a FinHealth Lifeline

The Challenges Caregivers Face

November marks National Family Caregivers Month, paying tribute to the massive – but frequently invisible – army of unpaid caregivers who play a critical role in our nation’s care economy and health infrastructure. The role of care in our economy has entered the national conversation with President Biden’s proposed social spending bill, yet there’s still much we don’t know about the financial and economic consequences of caregiving.

Family caregivers comprise one in five adults, according to the National Alliance for Caregiving and AARP. This group often carries hidden mental, emotional, physical, and financial burdens. How much are caregivers disproportionately affected, what financial challenges are they specifically facing, and what needs are unmet?

Our FinHealth Spend Report 2021 examined caregivers’ use of a range of financial services, including auto loans, credit cards, remittances, overdraft, and a host of alternative financial services. We found that family caregivers are less likely to be Financially Healthy than non-caregivers (33% vs. 37%), and substantially more likely to be Financially Vulnerable (19% vs. 12%). This research also found that family caregivers were far more likely to report using costly alternative financial services than non-caregivers, including: 

    • Twice as likely to pawn an item as non-caregivers (6.5% vs. 3.3%)
    • Twice as likely to use a payday loan (7.4% vs. 3.6%)
    • More than twice as likely to use a check cashing service (7.4% vs. 3.5%)
    • Nearly three times as likely to take out an auto title loan (3.7% vs. 1.4%)

AARP research also found that caregivers dig deep into their pockets to support their family members – spending more than $7,000 a year of their own money on average. The Caregiving in the U.S. 2020 report found that 3 in 10 have stopped saving (28%) and 1 in 4 have taken on more debt (23%) due to their caregiving responsibilities. Our research bolsters these findings, illuminating caregivers’ precarious financial cushions and insufficient options for affordable credit. 

Further, caregivers have limited options for income generation. The Caregiving in the U.S. study found 61% of respondents had to change their work situation to account for their caregiving responsibilities, including taking a leave of absence, changing jobs, or stopping work entirely. 

The Role of Financial Services in Supporting Caregivers

The massive force of caregivers nationwide needs financial services that better support their financial health – including affordable payday loan alternatives, low cost-checking accounts, and other solutions that help individuals across the financial spectrum deal with shocks and save for the future. Our recent research on paid leave has further demonstrated the need for workplace supports that enable families to care for themselves and one another in ways that do not damage long-term security. Paid leave is linked with greater financial health,  lower financial stress, and increased job satisfaction – indicating it could be a win-win for both employees and employers.  

To learn more, read the Financial Health Network’s brief on paid leave, developed in partnership with the National Partnership for Women & Families. The Financial Health Network will also produce a report in 2022 that will explore the financial health of women, with emphasis on the impacts of parenting and caregiving on financial stability.  The upcoming FinHealth Spend Report 2022, sponsored by Prudential Financial, will also produce new insights on how families in America spend on financial services. 

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