Budgeting for Older Adults: Path to Positive Conversations with Loved Ones

We’ve all heard the phrase that money can’t buy happiness. Although that’s true, financial security does play a vital role in determining a person’s quality of life. Think about the mental, physical and emotional strain of falling behind on your bills, or not being able to afford groceries or proper care for yourself or a loved one. As people age, it becomes more important than ever to avoid situations that elevate stress levels, which can lead to a range of chronic health problems. It’s also necessary to ensure proper management of money so funds are available for ongoing health care management and medical emergencies.

At the end of 2021, older adults received an average monthly social security check of $1,658 — well below the basic cost of living in many states. Considering that, as well as the fact that more than 65% of American adults are financially illiterate, chances are high that if you’re caring for an older adult, they need help managing their money.

It may sound terrifying, but it’s a conversation that needs to take place. Here, we offer some tips on how to approach the subject and set your loved one up for a future filled with safety, security and happiness.

Keys to Compassionate Conversations

Baby boomers and Gen Xers are not nearly as comfortable as millennials or Gen Zers when it comes to discussing money. In addition, when talking to older adults — whether it’s about finances, living situation or health issues — it’s important to consider their independence and ability to control their own lives and care for themselves.

Imagine living for 65+ years and all of a sudden someone half your age with much less life experience is trying to tell you how to manage your finances. Needless to say, the subject needs to be approached with sensitivity and compassion. You don’t want to sound judgmental, meddlesome, manipulative or disrespectful. For starters, conversations about money should occur over a series of small discussions and prior to a serious emergency or disaster for which your help would then be required.

Ways to break the ice about money could include asking their advice about finances or opening up about your own situation and struggles. Build a foundation of care and trust about the subject before broaching some of the more sensitive and personal topics. When conversations lean toward money management, make sure your loved one understands that you seek to help make their life easier, not take it over. Ultimately, your goal is to ensure that they are able to live life on their terms as long as possible and that their wishes and desires, both now and down the road, are able to be carried out.

Creating a Monthly Budget

One of the most stressful aspects of retirement is the thought of being on a fixed income. By helping your loved one create a budget, you’re not only helping set them up for financial success, but also allowing them to more easily enjoy stress-free golden years. The first step is filling out an expense worksheet, which can be done on paper or virtually. Whichever way you choose, make sure your loved one is involved in the process and able to view the document, ask questions and provide input. This worksheet should include the person’s monthly income (earnings, pension and social security) and list of recurring expenses (utility, phone, credit card and medical bills, food and transportation costs, insurance premiums, etc.).

Then, spend several weeks observing your loved one’s routines and expenditures to get a better idea of their true expenses. Account for clothing and entertainment purchases, as well as gifts, pet care, travel and any other expenses that are more flexible. Also make sure to include a category that sets a certain amount of funds aside each month for savings or in case of emergency. At this point, you’ll be able to see whether or not your loved one is operating at a deficit. If they are, it’s time to look at how to reduce their monthly expenditures.

When it comes to considering how to spend less, make sure to consider your loved one’s opinions and desires. If a bi-monthly trip to the hair salon or weekly dinner at a restaurant is important to them, try figuring out how to work it into the budget before removing it. The key is to avoid telling them what to do or how to manage their lives. Help them see their options and decide the best course of action.

Reassure your loved one that you want to make their financial situation work for them for as long as possible. If there are expenses that your loved one is not willing to remove, consider suggesting ways to help make up for it in other ways, such as:

  • Bundling together some of the services they pay for individually, such as cable, internet and cell phone.
  • Choosing a cheaper cell phone plan
  • Replacing cable channels with cheaper streaming services, such as Netflix, Hulu, Paramount+, Discovery+ or Disney+
  • Shopping at discount stores, including Aldi, Trader Joe’s, Costco, Marc’s and Walmart
  • Buying groceries on sale and with coupons or promotional offers
  • Opting for a budget billing program, where you pay a set amount for utilities such as electricity and gas each month
  • Reevaluating your health insurance premiums and prescription drug coverage, as well as life insurance and long-term care policies to make sure they are getting the best rates and consider potential alternatives
  • Finding out if your state offers a senior property tax exemption
  • Discovering other potential money-saving programs and benefits using resources such as benefits.gov or benefitscheckup.org

What You Need to Know

Even if you approach the situation as delicately as possible, your loved one may still not be ready or willing to discuss their finances with you. At this point, make sure you respond as understanding as possible so that, in the future, they may feel more comfortable coming to you to discuss managing their money or creating a monthly budget. For the time being, find out if they are willing to tell you where they keep important information, such as:

  • Living and last wills
  • Social security cards
  • Insurance policies
  • Retirement plans
  • Bank account numbers
  • Tax returns
  • Safety deposit boxes and keys
  • Contact information for attorneys, doctors and insurance agents

Experience Hassle-Free Financial Planning for Your Aging Loved One with Upside

Helping an older adult plan for their financial future can be one of the most difficult you ever experience. At Upside, we understand the difficulties you’ll be facing and are dedicated to helping to remove the barriers that prevent your loved one from living life on their terms. Speak to an Upside Manager today discover our expertise in helping older adults plan for retirement, manage money and ensure a low-stress, maintenance-free independent lifestyle. 

Upside Corporate Headquarters

6365 NW 6TH Way, Suite 200

Fort Lauderdale, FL 33309