Aging is a rewarding process. It’s full of new opportunities to explore passions and hobbies, both new and old. However, when a loved one spends more than they should, it can quickly become stressful. So, how can you help an older parent avoid overspending?
To stop an elderly parent from spending money, be proactive. Start by identifying why they’re overspending, then apply different strategies to address this root cause. If your loved one’s spending habits are compromising their quality of life or others’ well-being, you may need to consider Power of Attorney (POA).
Stopping an Older Parent from Spending Too Much
If your loved one is spending more than they should, you’re not alone. Fortunately, there are ways you can help. Here are several practical strategies you can use to curb overspending while respecting their independence.
Have Honest Financial Conversations
First, start with an open discussion. Make it clear you’re there to support them, not control them. Explain your concerns about their spending and how it might affect their savings or future plans.
It can help to:
- Share specific examples of spending habits that worry you.
- Discuss their financial goals and priorities.
- Listen to their perspective without judgment.
- Offer to help them create a budget or track their expenses.
Transparency can make all the difference. Remember—you’re trying to minimize the risk that your loved one’s spending habits will compromise their quality of life.
Set Up a Budget Together
Then, work alongside your parent to create a realistic monthly budget. You’ll want to consider a range of factors, including:
- Fixed expenses, such as rent, utilities, and insurance.
- Variable expenses, like groceries, entertainment, and transportation.
- Savings goals, including emergency funds or retirement accounts.
- Outstanding debts that require regular payments.
A visual breakdown can make overspending more straightforward for them.
Use Joint Accounts or Monitoring Tools
If needed, consider setting up a joint or monitoring bank account. This allows you to keep an eye on unusual transactions. Some tools even provide alerts for large purchases, giving you a better way to track spending.
Limit Access to Credit Cards
If your loved one compulsively overspends, be sure to check their credit card usage. It helps to switch a compulsive loved one over to debit cards or prepaid credit cards with a spending limit. This can be a straightforward way to curb overspending.
Encourage Hobbies & Alternatives
Some older adults may spend excessively out of boredom. It can be helpful to encourage hobbies and activities that align with their interests. These can provide a healthier focus while reducing the risk of unnecessary purchases.
How to Tell When a Loved One’s Spending Is a Problem
Sometimes, overspending can signal bigger concerns beyond social habits or impulse buys. Here are some warning signs to watch for that may indicate your parent’s spending is connected to other issues:
- Frequent purchases of unnecessary or duplicate items, such as collections of similar household products.
- Getting frequent calls from creditors or mentions of missed bill payments.
- Difficulty recalling purchases or repeatedly being surprised by dwindling funds.
- Oversharing financial passwords, PINs, or access with individuals outside of close family or trusted friends.
You should also watch for signs of memory-related conditions, such as frequent forgetfulness or changes in communication. These can sometimes lead to confusion when navigating finances.
Navigating Power of Attorney to Support a Parent’s Finances
If your parent’s financial challenges are more serious and ongoing, don’t ignore them. Instead, it helps to consider something called “Power of Attorney” to act on their behalf.
What Is Power of Attorney?
Power of Attorney (POA) is a legal document. This is used when a person wants to give someone else the legal authority to make decisions on their behalf. This document is particularly helpful when it comes to assisting an older loved one in managing their finances.
The basics of POA are simple. A person (the designated Agent) can act on behalf of someone else (the Principal). The document clearly outlines what the Agent can do on the Principal’s behalf. In New York State, there is a specific POA document designed for financial matters.
It’s important to note that POA rules vary from state to state, and sometimes even by specific regions. If you’re considering POA for a loved one, make sure to visit an experienced elder law attorney. They can help you navigate the process and make sure the document is properly handled and applied for.
Discussing Power of Attorney with a Parent
Start the conversation with empathy. You need to be careful—the framing of this conversation matters. You’re not taking control of their finances, but acting as a safeguard.
Make sure that this document is designed to protect their independence, not limit it. If they have any questions, consulting an experienced attorney can be helpful. They can help explain the basics of this document and the benefits it provides to your parent.
How to Set Up Power of Attorney
To set up Power of Attorney, you’ll need to visit an experienced elder law attorney. They’ll help you follow New York’s legal requirements, which may include:
- Determining the type of Power of Attorney needed.
- Completing the appropriate legal forms with accurate and detailed information.
- Ensuring your parent understands the document and voluntarily agrees to it.
- Signing the document in the presence of a notary public and, if required, witnesses.
- Filing the document with the appropriate institutions.
Remember, the rules for POA can vary from state to state, so professional advice is crucial.
When to Seek Professional Care
Supporting an older parent’s financial well-being can be a sensitive balancing act. If their spending habits are putting them at risk or indicating underlying issues, it’s time to take action.
Our team here at Peregrine Senior Living at Shaker can also help. Our community is here to give your family the support you need, so schedule a visit with our team today!
