Many seniors find it more difficult to manage their money when they get older. Managing finances can become even more challenging if an elderly person develops a health condition such as dementia. In many cases, someone will need to step in and take control of an elderly person’s finances to ensure that their money is being managed well. Fortunately, there are lots of ways that you can help elderly parents with their money and finances. Here are a few ideas:
Have an open conversation about finances
The first step to helping your elderly parents is to have an open conversation about finances. Money is a sensitive topic, and you should bring it up carefully while showing respect for your parent’s decisions. Make your intentions clear when you first bring up the topic and try not to make the conversation all about money. For instance, explain to your parents that you want to talk about their financial situation so that you can help them plan for their future and protect their health.
You must also choose the right time and location to have a conversation about finances. According to advice on kiplinger.com, “you should brooch the conversation at a time when everyone is relaxed, and emotions aren’t running high.” Avoid bringing up the topic of finances at large family gatherings when alcohol and little children are involved. If your parents have always been open about money matters that you should find it fairly easy to have a conversation about their financial situation. However, this may be more difficult if your parents like to keep their finances private. If money is a taboo subject in your family, then ease into the conversation by asking your parents what they hope to do in their retirement, for example.
Show your parents how to use a budgeting app
Budgeting is important at any age, but it can become particularly crucial for seniors who have less money coming in. A budgeting app can help your elderly parents monitor their incomings and outgoings each month and manage their money better. The best budgeting apps include Mint, PocketGuard, and Goodbudget. These apps are quick to download, user-friendly, and many are free to use. Explain to your parents the benefits of using a budgeting app and show them how to use the various features. Using a budgeting app is much easier and more efficient than writing down expenses or keeping a record of all receipts.
At the same time, it is a good idea to go through your parent’s budget and make sure that their expenses are less than their incomings each month. You might be able to help your parents lower their outgoings e.g., by canceling unused memberships and subscriptions. You may also notice that your parents are paying too much for services such as internet or energy bills. Switching to a cheaper provider could save your parents money and free up more of their budget each month.
Locate important financial documents
You must know where important financial documents are so that you can locate them quickly in an emergency. Important financial documents typically include bank statements, insurance policies, pension records, wills, and social security payments. Having access to these documents will ensure that you can protect your parent’s assets if they are unable to manage their finances. Reassure your parents that you will only use this information if you have to, for example if they become incapacitated.
Looking after your parent’s finances will be a lot easier if they sign a durable power of attorney. This document will give you legal powers such as making payments, selling assets, and accessing accounts. If your parents become incapacitated and you don’t have a durable power of attorney, then you will need to make an application to the court before you can act on their behalf. This process can take months and lead to significant delays and costs.
Improve Your Aesthetics
Most seniors reach an age when they require care to continue living a safe, comfortable, and healthy lifestyle. Paying for professional care is expensive, and assisted living can cost thousands of dollars each month. Elderly people must consider how they will afford senior care if they require it in the future. You should have an open conversation with your parents about how they intend to pay for their future care needs. Find out if they have personal savings or have taken out a health insurance policy to cover senior care, for example. Some elderly people are also eligible for assisted living tax deductions to cover part or all of their assisted living costs. You should explore financial aid and check whether your elderly part would qualify for assisted living tax deductions.
Make them aware of common scams
Elderly people are often targeted by criminals, and a recent report found that seniors lose almost $3 billion a year due to scams and fraud. You should make your elderly parents aware of common scams to protect them from becoming the victims of financial exploitation. Telemarketing scams are extremely common and often target seniors. Remind your parents that they should never provide personal details or card information over the phone. The same applies if they receive emails requesting personal information. Other common scams affecting the elderly include fake medical insurance policies, business opportunity scams, and real estate scams. Make your parents aware of these risks and tell them to act if they suspect fraud.
Poor financial management can have serious consequences and lead to debt and other money issues. Many seniors find it more difficult to manage their money, particularly if they develop a health condition that affects their memory. If you notice that an elderly parent is struggling to manage their finances, then you should offer financial support. This may involve assisting with monthly bills and payments or taking full control of their finances. Remember to discuss the topic of finances sensitively and always take your parent’s needs and wants into consideration.