In honor of Breast Cancer Awareness Month, we at Creative Financial Planning wanted to kick off October with some insight on how to modify your finances when you receive a life-changing diagnosis. No matter what the diagnosis may be—cancer, diabetes, heart disease, etc.—it can cause physical, mental, emotional, and financial stress on you and your loved ones. However, there are steps you can take to be proactive and make your finances one less stress in life. Our financial advisors are here with three things to do after receiving a life-changing diagnosis, and if you have any other additional questions or concerns, please know that our team is always here for you.
Become Bosom Buddies with a Budget Creating a budget is always important, but it should be one of the first priorities after receiving a life-changing diagnosis. However, because there will be expenses that you’re not accustomed to thinking about, here’s a list of costs to keep in mind:
Medication costs
Doctor visits
Healthcare treatments
Items for comfort/pain-relief (clothing, medical devices, essential oils, CBD items, etc.)
Change in dietary needs (new/more expensive types of foods)
If you have a financial advisor, don’t be afraid to reach out to them and assist you with updating your budget—this is why it’s so important to choose a financial planning company that you can trust and will treat you like family. Plus, your advisor will also let you know if you have any credit card or mortgage payments that are eligible for postponement.
Give Your Plan a Lift Up by Utilizing Tax Strategies More often than not, medical expenses that are paid for out-of-pocket are eligible for some sort of tax deduction. These can often include:
Pharmacy visits
Medical costs
Doctor payments
Hospital fees
If you’re unsure of which expenses of yours are tax deductible, don’t hesitate to contact a financial advisor.
Give Your Income Support by Incorporating Diverse Sources Between doctor visits, medical treatments, and medications, medical expenses can disrupt a budget—no matter how good it is. However, it’s important to take the time to assess your current income sources and explore new ones. For instance, the following are examples of strategies to implement to help avoid getting into debt during your recovery:
Consider Applying for Income Protection Depending on your health condition, you may be eligible for collecting disability. However, there are a variety of factors that enable a person to qualify for this. To learn more, visit the Social Security Administration’s website by clicking here.
Don’t Be Afraid to Turn on Social Security If you’re 62 or older and have had social security through your job for 10 years or more, turning on your social security is certainly something to consider because it can serve as a source of income. However, this is an irrevocable decision.
Utilize Your Retirement Accounts Retirement accounts, such as 401(k)s, Roth IRAs, and Traditional IRAs, are all accounts that you can withdraw from. Just note that there may be a penalty to withdraw from it early, but there are health-related exemptions, so they may be waived depending on a variety of factors. You can learn more about the smartest way to go about doing this by contacting your retirement planning company.
Use Your Assets Letting a financial advisor grow your wealth by diversifying your portfolio and investing money into assets (IE bonds, stocks, ETFs, mutual funds, CDs, etc.) is always helpful, but when you’re fighting a new health diagnosis, it can be life-changing. While you may be hesitant to modify these assets, this is a good time to review your asset allocation and risk tolerance. Remember: financial advisors are there to grow your wealth, so they can help you do it again!
Explore Different Loan Options For example, taking out a home equity loan—which is secured by your home—could be a good way to help you get money that you may need to cover your healthcare expenses.
If you or a loved one has recently received a life-changing diagnosis or has been battling one for some time, please know that the team at Creative Financial Planning is always here for you in whatever way we can be. For any financial planning or wealth management questions you may have, please don’t hesitate to contact our Lead Advisor, Daniel Gwizdak, at daniel.gwizdak@creativeplanners.net.