Talking about finances can be a sensitive subject at the best of times, but it can be especially difficult to discuss financial matters with your aging parents. Many older adults don’t want to think about the possibility that they might one day not be able to stay on track of their finances. And, along with that thought, many people don’t want to think about the end of their life and the logistics that go along with that. 

Those feelings are completely understandable. Not only for parents, but for their children as well. You’ve likely always looked to your parents as sources of comfort and support, and the thought of that dynamic switching and them suddenly needing to rely on you can be challenging to wrap your head around. However, while the initial conversation might feel awkward, talking about finances can help put everyones’ minds at ease so that you can focus on what’s really important: spending quality time with your parents. So, with that goal in mind, let’s talk about the five financial moves you should make to help plan for your parents’ care.

1. Talk Often and Openly About Finances

One of the best financial moves you can make is to regularly engage in conversations about your financial situation. There’s an old idea that it’s not polite to discuss money, but who does that help? Certainly not you or your parents when it comes to making realistic plans about the future. And, even if you are close with someone you can’t ever fully know their financial situation unless you ask. Your parents might spend lavishly but be deeply in debt, or, they might scrimp and save, giving you the idea that they might be barely scraping by when the reality is that because of that behavior they actually have a healthy sum stored away in the bank. 

The American Psychological Association put out an excellent podcast episode on how important it is to discuss finances to help eliminate some of the shame that can be associated with poor spending habits. It’s easy for a problem to persist if you don’t address it. So, sit down with your parents and get an idea of what their financial situation is and what that means for their desired care plan as they age. 

Many older adults might wish to remain in their homes, or to only receive in-home care should they ever require assistance, but their financial situation might not allow for this to happen, and, if that’s the case, then it’s better to know sooner rather than later so an alternative plan can be put in place. Here are a few of the items you might want to discuss during financial meetings:

• What is your parents’ financial situation? Are they in debt? Do they have investments? What kind of retirement savings or other benefits are they receiving each month?
• What would your parents like their future to look like? Do they intend to downsize? Do they have a support plan in place?
• Are your parents dealing with any medical conditions that could worsen? What will happen if their circumstances change?
• Do they have a financial advisor? 
• Are there any additional benefits that they are eligible for?

Even though you might cover a lot of ground during this conversation, it’s important to remember that this kind of communication needs to be ongoing. Initial plans are important to make, but circumstances can change in an instant, so it’s important to have regular check-ins to address any evolving needs as they happen. The more you talk about it, the less awkward it will feel, until eventually it’s just a small part of your relationship. 

2. Educate Your Parent on Scams

Unfortunately, many older adults in the United States fall victims to financial scams each year, with some schemes resulting in an older adult losing the entirety of their retirement savings. An elder fraud report for 2022 discovered that more than 88 thousand older adults had been targeted, with an astonishing 3.1 billion in total losses. 

Many scammers intentionally prey on members of older generations because it is more likely that they might not be aware of common types of scams, and due to confusion or cognitive decline might not be able to immediately identify the warning signs that something is false. 

Scams are also intentionally designed to scare someone by making them believe that they are in deep financial trouble, or that someone they love is in need of immediate help. Scammers then count on the goodhearted desire in most people to do the right thing, which can result in an older person handing over thousands of dollars without telling anyone what’s happening. 

Unfortunately, many people are so ashamed at the thought of falling for a scam that they might not reach out for help, or convince themselves that they would never be caught up in one, and so continue to hand over money even if they have some nagging doubts in the back of their minds. 

Scams have become such a serious issue facing older adults that it’s very important that they be made aware of the kind of scams that they might be faced with. Yes, some senior centers and banks do try to raise awareness, but the more this issue is talked about, the better the chance is that fewer people will fall for a scam, so it’s a great way for adult children to help their parents protect their finances. While there are constantly new scams being cooked up, here are some of the most commonly used financial scams, as outlined by the National Council on Aging, that you can tell your parents to be on the lookout for:

1. Government scams. These scams generally involve a text or a call that claims someone owes the government money. Severe fines or jail time is often threatened if the person doesn’t pay right away. 
2. Sweepstakes. In this scam a person will be told that they won some kind of prize or sometimes the lottery. It is usually a large amount of money that they are told they have won, but in order to claim it they must first pay a fee in order to be able to access their money. 
3. Grandparent scams. This scam involves someone calling an older adult and claiming to be one of their grandchildren. They will then say that they are in deep trouble and need help. Other versions of this scam might even involve someone posing as a kidnapper or a police officer and saying that if the older adult doesn’t pay up then their grandchild will be hurt or arrested. 

Check out the article above for further information on these scams and other possible scenarios. 

When talking to your parents about scams, here are a few important things that you should tell them. 

1. If they are told they owe money to the government or some sort of agency, then they should go speak to someone at the bank. Scammers are able to manipulate calls to look like they’re coming from legitimate numbers, and might send out what look like official documents, but anything official is never going to be so urgent, or ask you to keep the details private or pay through something like an e-transfer, cryptocurrency or gift cards. Instead, your parents should go to the bank if they ever have any questions. 
2. If they get a call from someone they believe to be in trouble, tell them to alert the authorities, and then to contact the grandchild or other family members. Again, scammers can pretend to be other people, and are sometimes even able to make calls look like they’re coming from a number you recognize! Although this might look scary, it’s always important to confirm a situation is true before acting out of panic. 

Something else you can do is help your parents speak to their bank to see what protections are in place to help protect them against scams. You might be able to put an alert system in place that only allows a certain amount of money out at a time, which can help protect against these kinds of scams.

3. Discuss Power of Attorney

While hearing the words power of attorney can sometimes make people anxious, it’s something that should definitely be discussed when talking through your parents’ finances. But first off all, let’s dig into what the term means:

Having power of attorney basically means that you are in charge of handling the finances of someone else. Power of attorney might be given to a loved one or a legal professional, and it might happen due to something like cognitive decline or temporary illness. 

Because illness can happen very suddenly, it’s important that everyone has a legal document in place that lays out who they would like to act as their power of attorney, along with their desires for how they would like their finances to be managed. Someone can appoint different people to be in charge of different areas of their finances. 

Having your parents sign these documents can help them feel relaxed, knowing that their finances will be taken care of by someone they trust should there ever be a need for it. Investopedia lays out some great advice for what to think about when selecting an appropriate power of attorney.

4. Update Documents

You might be surprised at how many people, even those who are advancing in years, don’t have a will or any idea of how they want to organize their affairs as they age. While no one wants to think about falling ill or dying, the truth is that we never know how much time we have left, and it’s important that we make sure that we are not leaving behind a confusing mess of paperwork for our loved ones when we pass, or if a situation occurs where we are unable to make our own legal decisions. 

This is why it’s so important that you encourage your parents to update their wills and any directives they wish to have in place as early as possible. Of course, nothing needs to be set in stone, and they can certainly make addendums if anything comes that they would like to change at a later date. 

Something else to consider when it comes to documentation is what is known as a living will. A living will is similar to a regular will, except it’s activated in the event that someone becomes incapacitated, but is still alive. A living will allows someone to lay out what kind of medical intervention they would like performed, whether or not they prefer to remain on life support, and whether or not they prefer to donate their organs. Having a living ensures someone’s wishes are respected and can take the burden off of loved ones having to make some of those difficult decisions. An older adult might opt to appoint a healthcare proxy instead of having a living will. This is someone who will make their medical decisions for them in the event that they are not able to make those decisions for themselves. 

5. What is Your Involvement

While many of us want to provide our parents with the most comfortable retirement we can, there is always going to be some kind of limit to your involvement, and it’s important that you have a clear boundary when it comes to how much you are going to commit, both timing-wise, emotionally and financially. Planning for old age can be difficult because no one knows exactly how long they are going to live, even if you are in a situation where your parent has been given a serious diagnosis. So while you might be OK with giving a certain amount of time or money for a few months, that same kind of commitment might not be possible six months or six years down the road. 

This is something you should be open about right from the very beginning, when you first sit down to discuss finances. And ideally it’s a good idea to decide what you are able to commit to before you have that first talk. You might not be in a place where you are able to, or willing to provide financial support to your parents. And you are not under any obligation to do so. However, even if you can’t help them out financially, there are still many other ways for you to offer support with your time or organizational skills, so it’s a good idea to know what role you are willing to play as your parents age. Of course, nothing is ever set in stone, so if you suddenly find yourself a millionaire then perhaps you might be willing to offer some more support, but it’s important to plan for what your reality is right now so that you don’t have to have an uncomfortable conversation if your parent falls ill. 

Even if you want to help, it’s important to know your own limits. Don’t offer more time or money than what you are willing and able to part with. If you push your own boundaries then you are just opening up the gates to resentment. 

With a little bit of planning and conversation you can help your parents age with financial ease, so pick up the phone and get that communication going! Remember, it’s all about giving you more quality time together, so why waste another minute?

Caregiving for a loved one introduces many changes into you and your family’s life. The addition of a dependent, whether it’s the first one or you have many others, puts a strain on all areas of your life. Your social life stalls, your career can feel impossible, time for yourself is minimized, if existent, and, perhaps more all consuming than anything else, caring for someone else can put a lot of stress on your finances. 

Most of the time family members step in as a caregiver because the option to arrange live-in care is not available. Live-in caregivers are expensive, as outlined by A Place for Mom, and so quite often the natural step is to appoint yourself as the person responsible for your loved one’s every need. 

If you are already overwhelmed by the added financial pressure of caring for someone else then you are in the right place. Even better if you are not yet in this position but see it becoming a not too distant reality. The sooner you make changes to your financial lifestyle, the better off you’ll be in the long term. However, the second best time is now, so if you feel a little behind, try not to get discouraged. It’s never too late to turn things around. 

First off, let’s talk about exactly what a budget is and why it’s important. A budget is taking a look at your expected revenue for each month or the year. If you have a consistent job then you can write down the amount your paychecks are each month. If you freelance or have a variable income, then do the best, and lowest, predictions you can. If you make $1200-$3000 each month then plan for the lowest amount. It’s easy to figure out what to do with extra money, but it’s a lot harder to navigate around money that doesn’t exist. 

Once you’ve determined your income, from there you should input and plan your expenses. There are a few different kinds of expenses to think about here:

• Fixed. This type of expense is the same each time, and is usually going to happen on a recurring basis. Fixed expenses might include your rent, internet bill, lease payments. 
• Variable. Variable expenses can change with use, need or time. For example, you might know that you will need to buy gas for your car, but the exact amount might vary each month. 

A good way to get started on a budget, especially if you’ve never tried making one before, is to write down as much as you can about your finances. Start with your known income and any fixed, recurring expenses. Then add in anything that might be variable, but are still expenses you know you are going to have each month. These types of expenses might include groceries, toiletries, and entertainment, such as takeout or a movie night. Use receipts, your bank statement, credit card and other bills to help you paint a picture of what your general expenses look like. Once you have collected as much of your spending habits as possible it’s time to get down to business. Try not to let judgement get in the way of this process. You might feel ashamed about some of the items you spend money on, but look at you taking this important step to better your habits and develop a healthier relationship with money! This step is just to help you better analyze your habits so that you can figure out how to save money for what is truly important. 

Prioritize

Once you have laid out your expenses, it’s time to start prioritizing what you can and can not live without. Of course basic needs such as rent or a mortgage, utilities and your phone bill are essentials, as are groceries. 

Now that you have also taken on the role of caregiver, some bills will likely increase, such as grocery and utility bills. There might also be healthcare costs associated with your loved one’s care that also have to be added into your budget plan. Of course, the hope is that your loved one is able to contribute in some way to their care, but in some situations that support might be minimal or non-existent. 

It may take a little bit of time to discover all the extra expenses that come with the loved one you’re caring for, so keep track of everything you can. Some common expenses that come up when caring for older adults include:

• Health expenses. Your loved one might require meditation, mobility devices, renovations to the home, etc…
• Transportation costs. You’ll want to calculate the cost of gas, bus tickets or taxis that are needed to get your loved one to appointments. This will obviously be variable, but some appointments might happen at regular intervals so the associated costs can be reasonably predicted.
• Additional care. While you might be the primary caregiver, you might be in a situation where additional care, like a physical therapist, comes in to do exercises with your loved one. Or you might have someone come to assist with medication or bathing. These expenses should also be calculated into your budget.

Now that you have made a list of all the expenses you need, it’s time to tend to the more enjoyable items, and write down all of your wants. These are expenses that you technically could live without, but that you feel like you want to keep due to their positive impacts on your quality of life. This might look like a subscription to a streaming service, or grabbing a coffee every morning. 

It’s helpful to see everything laid out before, because not only does it make you look at what you spend your money on, but it can also help you realize what’s truly important to you in life. For some people going out to dinner once a week is something very important, but you might prefer to skip dinner and instead enjoy a coffee and a donut a couple of times a week. Once you actually take the time to sit down and look at what you need and want and compare it against the money that is actually available to you, you might discover that some things don’t matter quite as much as you thought they did. 

Trim Where You Can

Before you despair at the thought of never being able to afford to go out with your friends ever again, take a look at your expenses and see if there is anywhere that you can trim your expenses while still getting to enjoy the same type of life you were previously. 

Call your cell phone provider and see if there’s any way to adjust your plan. Maybe you never use up your data or the amount of texts allocated to you. You might also look at changing over to a family plan or even switching to a different provider with a better offer. 

If you have debt you might look into whether or not you can lower your interest rate, or can consolidate if you have several amounts owing. 

Maybe ask other family members if they want to split a streaming service, or take turns hosting weekly dinners instead of going out to eat. And sometimes it’s the small things that really add out. Maybe you still go out to eat but only get a main, and skip the drink and appetizer. 

People can sometimes be resistant to anything that changes their lifestyle, but managing your finances today can help you better grow your wealth so that you can be comfortable in the future. 

Set Reasonable Goals

The best goals to set are the ones we are going to be able to achieve. Sure, you might want to put a thousand dollars into savings each month and only spend $100 on groceries, but that probably isn’t realistic for most people (and if it is, please tell us where you live and what grocery store you shop at!). Instead, once you’re looked through your expenses and categorized them into needs and wants, write down realistic parameters for how you are going to budget. 

A popular method is what is known as the 50-30-20 budget, laid out in detail on Investopedia. This is a budget that suggests you separate your after tax income into 50% needs, 30% wants and 20% goes into savings. While this budget isn’t going to be the right fit for everyone, it gives you a good guideline of how you might want to manage your finances. If you’re spending 60% of your money on things you want, and aren’t putting any money into savings, then you could easily run into trouble down the road. 

A reasonable goal is something that is not only realistic, but also something that can still allow you to live a comfortable life. Let’s go back to coffee. Maybe you absolutely love fancy coffees, but you realized that your budget simply doesn’t allow it, so you start making coffee at home. Well, just because getting daily fancy coffees is unaffordable, doesn’t mean that investing in a few fancy syrups or creamers is! Getting a hazelnut creamer and some chocolate sauce will yes, be a little bit more money at the grocery store, but will allow you to have enjoyable coffees for several weeks, or even months, at a much lower cost. 

Or maybe you love going to the gym, but the monthly gym rate has gotten out of hand. Instead, maybe you can find a better deal at the community recreation center. They often have very affordable memberships that include a range of classes and access to a swimming pool! You might even find that you can build community at local events that are often advertised on the message boards there. 

Don’t just get rid of everything you love and expect yourself to be able to stick with it, because that’s just not realistic. Instead, if something is really important to you, find a way to either cut down on other costs, or adjust the cost you love to make it a little bit more manageable for you. It’s hard to be a good caregiver if you’re not able to engage with the things you love, so make sure you’re budgeting with that in mind. NerdWallet has some other great tips on budgeting, with a focus on the 50-30-20 approach. 

Seek Out Community Supports

Sometimes we don’t get help unless we ask for it, and fortunately, there are often a lot of people out there who are willing to give it. A great first step is reaching out to a seniors’ center to ask if there are any community resources that are available to you or your loved one. This might look like a shuttle service that can help cut down on transportation costs, or fitness classes for older adults that are offered for little or no cost.

You might also look into any discounts or coupons that are available to local stores to help with grocery costs, or even discounts to entertainment such as half priced tickets to movies on Tuesdays, or a local diner that has 5 dollar appies on weekdays. If there’s a place you frequently patronize it might even be worth just giving them a call to ask if they offer any support to caregivers and the older adults they care for. Worst case you’ll get a no and move on. 

The saying “it takes a village” has a lot of value, so don’t feel like you have to go through this alone. By reaching out to your community you can better stay on top of your finances as a caregiver, and find others who are going through the same challenges that you are. 

Finally, it’s important to also do your research on what government support might be available to your loved one. If they are dealing with any kind of cognitive impairment, or if they are struggling with an illness that developed suddenly, then they might not have had enough time to research what kind of assistance they qualify for, and you don’t want to be missing out on extra financial support just because you didn’t know about it! Senior Services of America lays out some benefits and savings that may be available to the older adult you care for, but they emphasize the importance of also checking within your specific state, as they may be additional benefits that are only available to residents of certain locations. 

It can be a challenge to adjust to a brand new budget, so have patience for yourself. It can be helpful to keep track of your expenses with an app on your phone, or by collecting your receipts and going through them each week. Don’t be too disappointed if you make mistakes in the beginning, but don’t shy away from them. It’s easy for people who are struggling with their finances to try to ignore them. However, burying your head in the sand has never led to a positive outcome. Engage with your finances regularly, and soon you will find yourself calmer and in more control. Who knows, before long you might be back to buying those fancy hazelnut coffees in person.