Your parents might need help with their finances as they age. All adults will experience some level of decline in their financial decision-making ability in their later years, according to National Endowment for Financial Education. It’s just part of the aging process.
However, health conditions such as dementia can accelerate that decline. If that happens to your parents, they could more easily become victims of financial fraud or jeopardize their well-being by mishandling their finances.
The problem is, your parents likely won’t reach out to you for help as their financial skills start to slip. They might not recognize that they’re having problems, or they might be too embarrassed to admit that they’re making mistakes with their money. That’s why it’s so important for you to pay attention to the early warning signs that your parents need help with their finances.
Often, the signs can be easy to miss. You might write off lapses in memory or a change in a parent’s behavior as a natural part of the aging process. But if you see any of these red flags, you need to start taking steps to help protect your parents and their finances.
1. They’ve gone from organized to disorganized
Pay attention when visiting your parents to whether drawers and closets that once were organized are now overflowing with stuff. Is their once-tidy home now filled with piles of dirty dishes in the kitchen, unwashed clothes strewn about the bedroom and stacks of bills and documents on the dining room table?
Difficulty completing familiar tasks such as cleaning is an early sign of dementia. If your parents can’t manage to stay organized or keep their house tidy anymore, they probably are having problems staying on top of their finances, too.
2. They have reminder notes everywhere
No need to be alarmed if your parents have a calendar prominently displayed with appointments written on it or important dates circled. But pay attention if you see notes your parents have written for themselves scattered throughout the house reminding them of things that might seem obvious – such as steps to take to access their cable TV service or how to access their bank account online.
Seeing these sorts of reminders should be a red flag that memory loss is becoming a problem. It’s a problem you can’t ignore.
3. They’re getting lots of donation requests
When visiting with your parents, pay attention to their mail. Is it full of donation requests, sweepstakes entry forms and other solicitations? Do you see numerous “thank you” gifts from organizations around their house – calendars, notepads, pens, stickers, mailing address labels?
If so, there’s a good chance your parents are getting those solicitations and gifts because they’ve already entered sweepstakes and have made contributions. They might be writing numerous checks to organizations because they have forgotten they’ve already made donations. Or your parents might be handing over their money without much thought because their financial decision-making ability is in decline.
4. They have piles of unpaid bills or collection notices
If your parents have the financial means to pay their bills, it should set off alarm bells if you see bills piling up at their house – or, worse, collection notices. One of the early signs of Alzheimer’s disease is the inability to keep track of monthly bills, according to the Alzheimer’s Association.
Also, don’t write off complaints from your parents that they’re getting bills for accounts they didn’t open or for amounts they don’t owe. This could be a sign that their identities have been stolen and accounts are being opened in their names.
5. They’re having trouble writing checks or with simple math
You might be thinking, “Who even still pays with checks?” Your parents might. If they do, pay attention when they’re writing one to pay their bills or make purchases. Do they struggle to remember the date or fill out the check correctly? Trouble completing checks is an early warning sign of decline in financial decision-making ability, according to the National Endowment for Financial Education.
It’s also a warning sign if your parents are having trouble with simple math skills, such as calculating a tip or making correct change for a purchase.
6. They’re making risky investments
Even savvy investors can fall prey to investment fraud. But watch out for signs that your parents are having trouble identifying risks in investment opportunities. If they talk about investments that seem too good to be true, ask them for details. They might not understand what they’re getting into if they’re experiencing declines in their financial skills.
How to help
If you haven’t already had conversations with your parents about their finances, you need to start talking if they are showing any of these signs. Even in the early stages of Alzheimer’s or dementia, your parents’ ability to manage their money can be impacted and can lead to serious financial troubles. It’s important for you to assess their financial situation and find out whether they’ve taken any steps that would allow you to legally step in.
Here’s what you need to find out and what you can do to start helping your parents.
Find out whether your parents have a power of attorney.
If your parents are having trouble making financial decisions on their own, you can’t legally start making decisions or transactions for them unless they’ve appointed you their power of attorney. It’s best for your parents to work with an estate planning attorney or elder law attorney to draft this legal document to name you or someone they trust to make financial decisions for them if they become mentally incompetent or incapacitated.
However, your parents must be mentally competent to sign a power of attorney document. That’s why it’s important not to wait until they’re having serious memory problems to get them to name you or someone they trust as their POA. Otherwise, you’ll have to go to court to have them declared incompetent and to become their conservator to access their accounts or make financial decisions for them.
Offer assistance with financial tasks.
If your parents are having trouble with financial tasks, don’t demand that you take over. Instead, ask if they want help. When you do this, though, don’t embarrass them by pointing out their shortcomings. Instead, highlight the benefits you’re providing. For example, you could ask if they want you to set up automatic bill payment for them to take a time-consuming task off their to-do list so they’ll have more time to do things they enjoy.
Monitor their accounts.
Help your parents check their credit report to see if there are accounts or lines of credit they don’t recognize – which could be a sign that they are victims of identity theft. They can get a free copy of their credit report from AnnualCreditReport.com. And if they haven’t set up online access for their financial accounts, offer to do this for them. Then you can monitor those accounts for suspicious activity.
Warn your parents about scams.
Simply telling your parents to hang up on suspicious phone calls or to throw away solicitations that come in the mail won’t work. Instead, alert them to the red flags of scams – such as requests to wire money to collect winnings or to pay a fee they supposedly owe, unsolicited calls from agencies asking for personal information, limited-time offers and high-pressure sales tactics. Visit BBB.org/scamtips to get more information about common scams that you can share with your parents.
And to prevent them from writing checks to every organization that asks for a donation, talk to your parents about their giving. Help them come up with a list of a few organizations they truly care about and want to support. Then encourage them to say “No, thank you” to any organization that isn’t on their list.
Get help from professionals.
Your parents might be reluctant to accept help from you. But they might be willing to get assistance from a third party. You could suggest that they hire a daily money manager – or hire one for them – to handle bill payments and other daily money tasks. You can find one through the American Association of Daily Money Managers.
If you need help as you step into the role of financial caregiver for a parent, an aging life care professional can help you with planning and problem solving and point you to resources in your community. You can find an aging life care expert through the Aging Life Care Association.
Although it can feel uncomfortable to talk to parents about their finances, it’s better to be proactive than reactive. You’ll be in a better position to help them and you can limit the damage from their decline in their financial decision-making ability.