With empathy and kindness in mind, caregivers can help a senior loved one create a budget and keep their finances safely on track.
If you’re helping to create a budget for your Mom or Dad, consider that they may perceive your efforts as a loss of their independence. So move forward with gentleness, compassion, and respect. Loved ones who are treated with dignity and diplomacy are more likely to work willingly with you as you help them with their finances.
Working with a Senior Loved One to Establish a Budget
Here’s how to create a budget for a senior loved one:
- List their net income. When you are just estimating income and expenses, it may be easy to understate or overstate them. So start by making a list of all their income sources. Include social security, investments, pension, and any earnings from hobbies or other sources. From each income source, subtract any taxes or necessary deductions. Tally their final take-home pay.
- List their expenses. Start with the basic fixed expenses: rent or mortgage, utilities, car payments, insurance, and so on.
Then include the expenses that change each month: groceries, gas, medications or entertainment, for example. Help them read their credit card statement and checking account statement to complete the list. Watch out for sneaky expenses. Those may be one-time treat items that become a habit and begin to appear regularly on bank statements.
- List their actual spending. Track daily spending when checks are written or credit cards are used. A slip of paper kept in the wallet will work, but helpful smart phone apps are available.
At the end of the week, schedule about 15 minutes to help them record the expenses on their master tracking list. At that time, compare the actual spending with the expenses.
- List saving sources. If necessary, work with your senior loved one to identify possible areas in which to make cutbacks. They may be entitled to a senior discount with a different cable company or get a better deal on cell service if they shop around. A little savings here and there will add up to bigger savings by the end of the year.
- List their goals. Whether it is for a vacation, wedding and birthday gifts, major repairs, or additional retirement funds—life happens. It is important to plan for these events and unexpected issues. Estimate the amount of savings required each month to meet their goals. And to also prepare for anticipated caregiving costs.
- List any obstacles. Let’s face it, for some people spending money fills a need. It can produce positive feelings or prevent negative ones. Some people shop for pleasure. The hunt for an item can be exciting, novel, or give a sense of empowerment and accomplishment. It can be a social activity that connects us with the community—that’s especially important for some retirees. At other times, shopping can help us avoid pain—maybe fear or loneliness. In any case, when over-spending occurs, there’s usually a negative outcome: stress, shame, or arguments.
To help a parent replace the power of a habit, brainstorm to find ways to fill the real need. Is it people and community? Then schedule activities to help satisfy that real need. Is it the novelty, adventure, or a sense of accomplishment? Help your loved one find creative hobbies or alternate activities to address those needs.
Finally, consider posting a note on the refrigerator to remind your Mom or Dad about their financial goals and the budget it will take to achieve them.
- Seek support. Consider making a list of friends, family members, or organizations that can help you when their budget just won’t add up. For example, Debtors Anonymous offers in-person group meetings and telephone support meetings nationwide to people of any age. Our blog also has a variety of articles to help adult children discuss difficult topics, including money.
At Five Star Senior Living communities in Indiana, our team can help you estimate costs for respite care and for assisted living. Call the community nearest you to schedule a private visit today!