The report is based on the views of more than 4,000 foster carers and highlights the impact of that the current double-digit rate of inflation is having on their household finances.
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To offset the impact of rising bills, HMRC is being urged to overhaul how carers are being taxed.
Fostering services also need to ramp up the allowances they are offering carers, recommends the report.
It calls for foster care allowances to be increased from their current rate of between £137 and £240 a week.
The report, which has been published by fostering advice service FosterTalk, says these rates are currently inadequate to support carers, with nearly half saying they have had to take on additional work or hours to pay their bills.
Two thirds say they have already cut their energy use and three per cent are relying on food banks. Most (93 per cent) says they have cut back on spending on activities and hobbies for children.
More than half (56 per cent) of carers have not received an uplift in their allowances in the last six to 12 months, despite inflation rising to a 40-year high over that time.
Of those that have received an increase, nine out of 10 said it was not enough to cover rising costs.
An increase of between £21 to £50 a week per child is being recommended by three quarters of carers.
Carers should also be entitled to a mileage allowance set at the national recommended rate of 45p a mile.
Currently, mileage rates offered to carers by fostering services varies, warns the report. One carer told Foster Talk that “we often don’t get petrol allowances but when we do its only 25p a mile”.
In addition, HMRC’s tax exemption level of £10,000 needs to be overhauled for carers, says FosterTalk.
We recently asked foster carers across the UK to complete our survey on the cost-of-living crisis. Over 4,000 of you responded, with eye opening and honest feedback.
— Foster Talk (@FosterTalk) August 25, 2022
The full report is now accessible at https://t.co/UdGCR9klRx#FosterCare #Fostering #CostOfLiving #LivingCrisis pic.twitter.com/tzmUSdlm8C
The survey also found that 90 per cent of carers feel financially worse off over the last year and one in five are in debt due to rising cost of fuel and household bills. One in three expect to be in debt within six months.
Over the last six months, three in 10 foster carers have relied on credit card borrowing and 15 per cent have borrowed from friends and family
“The number of carers is already declining owing to other factors and pressures, such as retirement and existing fostering allowances [being] insufficient to enable carers to provide adequate support,” said FosterTalk director of operations Rachel Cole.
“The cost-of-living crisis is only worsening the situation to a point where, as our research shows, carers are at breaking point.”
She added: “One of the biggest areas of financial pressure on any household is the cost of fuel at the pumps.
“For foster carers, most fostering services pay additional mileage costs to cover aspects such as getting the child to school and their activities/hobbies, and to appointments with doctors and birth family contacts."
A separate survey, published earlier this month by FosterWiki, found that more than half of foster carers had considered quitting due to rising living costs.
