Warning Signs That Your Parent's Finances Are Off Track - And What To Do About It

“I just can’t get this checkbook to balance this month.” Those words were my first inkling that mom might not be as sharp as she once was. I was taken by surprise. After all, she had managed her own finances with aplomb for many years and all I did was a little coaching. She remembered all her appointments, all her meds, and often reminded me of dates to remember. How did I miss this? Had I purposely been blind to subtle indicators?  The answer was “yes,” because I didn’t want her to change.

Why Things Go Awry

Even those who are “young” and “well” might have some trouble managing finances. Things don’t necessarily improve in later years and can go from good to bad or bad to worse. Why parents need help can vary greatly and the need can be insidious or abrupt, but odds are that they will require help some day for some time. 

Mom’s financial difficulties were partly due to her illness and the medications she was taking. Fiercely independent, she fought to maintain her mental fitness. She exercised her brain with crosswords, word games, solitaire and TV’s Jeopardy. But in her 80s, lupus took its toll on her money management skills. 

Statistics from The National Council on Aging show that 29 percent of homeowners over 62 have difficulty or need help with one or more ADLs or IADLs (instrumental activities of daily living) which includes money management, along with shopping, cooking, cleaning and using the telephone. Be observant. If you notice a problem in one area, there might be problems in another. Physical illness and/or response to medications, loss of a spouse, and depression are among the most common precipitating factors. 

Finances can also get off track because your parents don’t have as much money as they used to. They may be too proud or independent to let you know. A 2007 study by the Center for Retirement Research at Boston College revealed that 40% of retirees between 67 and 80 suffer a decline in income and assets, the greatest being due to the loss of a spouse. Inflation, poor spending habits, inappropriate investments, and failure to plan how to use assets are other reasons for a decline.

Signs of Trouble – Some Not So Evident

Since finances are a very personal issue, I did feel a warm glow because she had overcome her independent spirit and admitted the problem to me. I offered to help...offered, didn’t just take over! Armed with my calculator, I assured her it would just take a few minutes to straighten out. But things were so muddled, that I got bogged down in a bigger mess than I expected. 

Mom didn’t have the obvious signs of trouble: piled up mail, bouncing checks, forgetfulness, unpaid bills or calls from creditors. I made sure her taxes were on target and had automated payments for utilities. She didn’t have a computer so she couldn’t get in trouble on-line. Thank goodness she watched TV Land and the Game Show Network.  Whereas, one of my clients found 21 sets of sheets and comforters in her mother’s basement – all ordered from Home Shopping Network!

Yet, I discovered that she had mounting credit card debt due to mail order purchases and charging her medications and charitable donations. She admitted that she bought gifts for the family and she believed there was a better chance of winning the various sweepstakes and drawings advertised in the junk mail flyers if she bought something. She bought lottery tickets so she could leave us a legacy.

She gave cash gifts to her cleaning lady on top of her hourly charges, “because she is such a nice girl.” Fortunately she had not given her anything more valuable, although a piece of keepsake jewelry disappeared mysteriously during that time.

Luckily, mom had learned to hang up on telemarketers or tell them “She’s not home” when they asked for her by name! According to the Federal Trade Commission, 80 percent of the victims of telemarketing scams are over age 65, especially those who live alone and look forward to the phone ringing.