Older adults who demonstrate poor money-making decisions require intervention, especially in their retirement years when they live on limited financial means. Adult children should be proactive in helping their parents manage their finances. The following are eight strategies to improve financial management.
What are signs of financial irresponsibility?
Certain signs point to financial irresponsibility. Elderly parents may leave important bills unpaid, such as utility or credit card. In such cases, letters may be left unopened, including mail containing bills. Missed payments suggest the senior needs help managing their finances.
Another warning sign of mismanaging finances is impulsive spending. Seniors who make substantial purchases on a whim without considering the consequences drain their savings fast. A $1,000 backyard grill may be out of budget for an aging parent who relies on Social Security.
Impaired financial judgment can cause the elderly to make rash financial decisions. They may spontaneously donate large sums to various charities or make strange purchases. Older adults who experience cognitive decline might also become confused about basic financial concepts.
Occasional loans are not concerning. However, aging seniors who constantly borrow money from friends or family may hide a more serious issue, such as having trouble making ends meet or depleted savings. The parents may request secrecy to conceal these financial struggles.
How do families help their financially irresponsible parents?
Fortunately, there’s a lot that adult children can do to support their elderly parents and ensure they have enough funds to live comfortably. Stepping in sooner rather than later is advised so that the seniors do not run out of their savings. It’s important to start the process with honest conversations.
1. Discuss the Financial Situation
Sit down with parents and siblings and discuss how the former’s financial decisions are problematic. Be willing to help as they reveal their preferences and concerns or admit their poor money-management skills. Consider inviting a financial advisor to the conversation to provide an objective viewpoint.
2. Organize Bill Paying
Parents who leave their bills unopened may be overwhelmed or simply forget about payment due dates. Adult children might utilize a bill management service offered by financial institutions to automatically manage bills or set up a digital or physical calendar listing payment deadlines.
3. Monitor Credit Card Activity
Lavish spending or unnecessary home projects can drain funds quickly. Request the parents’ permission to monitor their credit card transactions and review erratic spending habits. Ask about large purchases to determine if underlying reasons are responsible for their extravagant spending.
4. Consolidate Financial Information
A decline in cognitive skills can make basic financial terms confusing. Adult children can simplify their parents’ finances by consolidating accounts in one place or reducing the number of accounts they must manage. Offer to help balance their checkbook once a month, too.
5. Hire a Financial Advisor
Dementia can make it difficult for seniors to calculate basic expenses, such as tips while dining at restaurants, or balance a checkbook. Introduce apps to help them calculate the numbers correctly. If their cognitive decline is severe, consult a financial advisor.
Vet the financial advisor first and ensure they are fiduciary which is a professional who is legally obligated to act in the senior’s best interests (they don’t try to sell them inappropriate products or services). A financial expert with experience working with seniors who lack sufficient funds is ideal.
6. Set up a Financial Power of Attorney
Aging may require greater assistance with financial matters. Work with a lawyer to arrange a financial power of attorney; the senior can set it up so their adult children take over their finances. A POA allows the designated individual to legally make financial decisions on the parents’ behalf.
7. Help with Taxes
Seniors may forget to file their taxes, which is often confusing and overwhelming. Filing taxes incorrectly results in penalties or losing out on tax refunds. Assist the parents during tax time by hiring a tax professional or utilizing programs, like AARPs Tax-Aide, where IRS-certified volunteers offer free help.
8. Create a Budget
Parents who regularly borrow money are likely to do better with a financial budget. Outline a budget with the parents so that their expenses do not exceed their income. While confidentiality about money is expected, encourage the seniors to be transparent with family members about borrowing.
Financial planning is imperative to an elderly parent’s financial health. The right plan for seniors should consider retirement income, healthcare expenses, and estate planning. A budget should also be included so that spending, whether daily, monthly, or yearly, is accounted for.
The consequences of irresponsible financial management can be severe. Some seniors are candid about their financial difficulties while others resist intervention, asserting they are able to competently manage their affairs. But when adult children notice challenges, it’s necessary to investigate.
While stepping in to help with financial management, adult children may also notice their parents need help at home. Assisting Hands Home Care can be an invaluable resource and complement the family’s ongoing support. We offer a range of non-medical care services to help the elderly age in place.
Our elder home care services include assistance with the activities of daily living, such as light household chores, healthy meal preparation, and grocery shopping. Our professional caregivers give timely medication reminders and remove fall hazards, like clutter, to prevent accidents and injuries.
Transportation and escort to local areas, like a medical clinic or pharmacy, are included. We’re also pleasant companions who engage seniors with light conversations, stimulating games, enjoyable outings, and leisurely recreational activities. Regular socialization prevents feelings of loneliness and isolation.
Care options are flexible and vary from short-term respite care to long-term live-in care. Each caregiver is licensed, bonded, and insured to give families and seniors maximum peace of mind. Our professionals are also trained in CPR and first-aid and know how to respond during emergencies.
When your aging loved one could benefit from compassionate hands-on care, Assisting Hands Home Care is prepared to fulfill their needs. We serve the aging population in Schaumburg, Illinois, and the surrounding suburbs. Schedule a free in-home consult today to learn about quality senior care.
