3 Money Mistakes To Avoid When Preparing To Take Care of an Older Loved One
Written by
Cindy Lamothe
Edited by
Jenna Klaverweiden
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Preparing to take care of an older loved one is a stage of life where you want to avoid making any mistakes. Namely, financial ones. For most people, the lack of experience and knowledge in this area can lead to costly blunders that could impact their finances.
That’s why experts recommend equipping yourself with the right information before embarking on this new role.
Below are the top money mistakes one expert says to avoid.
Also see five things you should know before you take on elder care.
Ignoring the Realities of Who Can and Can’t Provide Care
“We often focus solely on the dollars — but you also need to consider who in your family can realistically step into a caregiver role,” said Lily Vittayarukskul, founder and CEO of Waterlily and an expert in empowering individuals and families to navigate life’s most challenging moments with confidence and clarity.
If you don’t talk about that upfront, she said it can tear families apart in ways that money alone won’t fix.
“It’s not enough to say, ‘Well, my sister will handle it.’ What if she’s the primary breadwinner for her household and can’t afford the time off?” Vittayarukskul said. “What if lifting your parent is more physically demanding than you realized? Or maybe a family member has a chronic condition of their own.”
Choosing a caregiver means considering the caregiver’s availability, physical capacity, emotional bandwidth, and even the ability to manage complicated tasks like navigating the medical system and handling personal finances.
“Get crystal clear on these realities early, or risk painful conflict and exhaustion down the road that can tear families apart and risk insufficient care for the care recipient,” she said.
Underestimating Actual Costs by Relying on ‘Averages’
According toVittayarukskul, it’s also a mistake to guess what costs will be based on vague national averages.
“Every family’s situation is unique. Cost differences can swing by hundreds of thousands or even millions of dollars, depending on whether your loved one needs just a few months of part-time help or years of specialized care,” she said.
Location matters too. Local rates in an urban area can be dramatically higher than elsewhere. Plus, healthcare costs are growing faster than many realize.
“The CMS ran a study in 2023 projecting future healthcare inflation to be 5.4% per year through 2031, which makes a big difference in costs when compounded over time,” she said.
She explained that plugging in generic averages and ignoring this inflation often leads people to vastly underfund their loved one’s potential care. The solution? Incorporate highly personalized data. Consider specific health conditions, local caregiving rates and how long each stage of care might last — and be sure to keep inflation front and center.
“And remember, being healthy isn’t an excuse to skip planning, as good health can help put off when you may need long-term care, but it may also help you reach a ripe old age when you’re more likely to develop dementia while being otherwise physically healthy, which could lead to a very long and expensive specialty caregiving event,” she said.
Waiting Until It’s Too Late To Build a Proper Plan
Not effectively planning for long-term care can cause many problems.
“I speak from painful experience. My family escaped the Cambodian genocide and was so tightly bonded that we thought nothing could break us,” she said. “But when a loved one needed long-term care, tensions rose over who would contribute time, effort and money. Without a clear plan, disagreements spiraled into permanent rifts that sadly ended our once unshakable unity.”
A major factor is timing. If you plan to self-fund, she said you need to start setting aside or investing money early so returns have time to compound. That’s why having a plan is important.
“If you’re looking at insurance options, applying while you’re still healthy could save thousands of dollars in premiums and provide much broader coverage,” she said. “Don’t forget: LTC can strike sooner than you expect, it’s not just for people in their 80s or 90s. A well-structured plan, set up years in advance, will keep sudden care needs from turning into financial chaos or deep family fractures.”
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