Tips for Helping Senior Parents Handle Their Finances Wisely

As our parents age, it becomes increasingly important to ensure they maintain financial stability and security. We want our older relatives to enjoy their retirement, but being retired also means that their only streams of income are either pensions, social programs like Social Security, or investment dividends, making it vital to help them stretch that income further. 

This blog post will cover key finance strategies for seniors to help your elderly relatives enjoy their golden years.

1. Start with Open, Honest Communication

Do you remember the last time you decided the best way to solve a problem was to ignore it and hope it went away on its own? It probably didn’t work out like you’d hoped, right?

The first step in assisting your aging parents with senior finance matters is establishing open and honest communication. It can be a blow to the ego for an older individual to accept help in something they spent decades doing just fine on their own. Discuss the importance of managing finances and express your willingness to help.

Approach the conversation with respect and love, understanding that financial matters (or anything that feels threatening to their independence) can be a sensitive topic for many seniors.

Emphasize that your goal is to support your parents and ensure their financial well-being as they live long, happy lives in retirement. If they feel they don’t need help with senior finance issues and there aren’t urgent concerns, perhaps revisit the conversation later.

2. Create a Budget Together

Once you have your parents’ buy-in, it’s time to create a budget. Having a budget is arguably the most fundamental step in managing finances effectively at any age, and it’s no less vital here.

First, list all sources of income, including pensions, investments, and Social Security. Then, identify and categorize all expenses, including fixed costs (e.g., rent, utilities) and variable costs (e.g., groceries, eating out, entertainment). Be sure to allocate funds for savings and emergency expenses.

If their financial status changes (e.g., moving to a smaller home, a relative passing and leaving them some money, or an illness diagnosis means more must be allocated to medical expenses), update the budget as needed.

Don’t forget: unless finances are incredibly tight, leave room in the budget for fun and treats. You could set “rules” like going out to eat twice a month or once if it’s a very fancy place. Or, if you have money left over at the end of the month, you can put it in a savings fund and go on a cruise once a year.

3. Organize Important Documents

Organizing the financial documents your senior parents have accumulated over their lifetime is critical for managing senior finances. Spend time helping your parents gather and organize important documents, like bank statements, insurance policies, wills, and investment records.

Use a filing system with clearly labeled folders for different categories. Consider creating digital backups of key documents and storing them securely online or in a password-protected device. The file should include account numbers, passwords, and contact information for their banking or investment accounts. Finally, ensure that legal documents like wills or power of attorney are current.

4. Use Modern Financial Tools and Services

The good news about aging nowadays is that plenty of software solutions are designed to help manage finances, especially senior financial matters. Consider helping your parents learn to use tools and services that can help them stay on top of their finances.

Online banking apps for their bank of choice, like Chase or Bank of America, can let them easily monitor accounts and pay bills. Budgeting apps like Mint or You Need a Budget can help track spending and manage budgets.

There are also apps for financial planning and automated bill payments. Look into what your parents need, and there will probably be an app for that – the AARP has a great list of tools to manage personal finances. Or, look into resources that your parents could use, like the National Council on Aging’s “Money for Older Adults” resource page.

5. Avoid Common Senior Finance Pitfalls

Two of the most common risks for financial stability in one’s golden years are overspending and fraud.

By helping your parents plan a budget they can stick to without feeling overly restricted, you can hopefully ensure that they can enjoy the things that bring their lives meaning and joy while remaining within their budget.

Just as dangerous as overspending – if not more so – is fraud. Seniors are often targeted by fraudsters and scammers, who are banking on things like new technology being confusing or overwhelming, making it more likely that they’ll fall for an otherwise obvious trick.

Protecting your parents from fraudsters is a critical aspect of senior finance management. Educate your parents about common scams and implement measures to safeguard their finances:

• Encourage skepticism of unsolicited calls, emails, or letters requesting personal information or money.
• If someone contacts them pretending to be a relative and requesting money, hang up or open a new email message and contact the relative in question using the contact information they have on file to verify that it’s really them.
• Be aware of new technological developments that can spoof someone else’s voice or information with scary precision. Get them to err on the side of not sending anyone money if there’s the slightest doubt.

Assisting senior parents with their finances is a responsibility that requires sensitivity, patience, and diligence. Your parents have worked hard to earn their nest egg, and you want to ensure that they can enjoy it – and that you can enjoy your time with them. By following the senior finance tips in this blog, we hope you’ll be able to ensure your parents’ financial stability and peace of mind for a very long time.

One way to help them financially is to move into a senior living community that provides all the necessities of life with one stable and predictable monthly fee without breaking the bank. If you’re looking for a senior living community like that, consider the Mission at Agua Fria. Book a tour with us today and check out our amazing homes!