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Talking to your aging parents about their money challenges is no easy task. After all, these are the folks who budgeted for your braces in 7th grade or mapped out your college savings plan. Even if your parents managed their funds well for years, advancing age can cause financial skills to slip.
Whether it’s mounting debt, dwindling retirement savings, or falling victim to a scam, the elderly are particularly at-risk for running into money trouble. What's more, if your aging parents need help managing their finances, they might be too embarrassed to ask. It’s not a pleasant fact to face, but it’s important to be proactive—otherwise, you could be left with the financial fallout.
So how can you tell if your parents are having problems with money? There are some red flags to look for, including:
Lack of knowledge about finances
Take note if your parents begin to forget important financial details, like where their money and investments are held. They may also be unable to account for large withdrawals.
Calls or letters from debt collectors
Bills piling up on the kitchen table or multiple voicemails from creditors can all point to a lapse in payment. The fees and interest charges alone from these uncollected debts can be devastating to your parents’ finances.
Frequent shopping sprees
Older individuals can be susceptible to the hard-sell tactics of home shopping channels or online “deals.” Watch for excessive purchases, or multiple purchases of the same item.
Suspicious new “friends”
Lonely elders tend to be more willing to invite strangers into their lives. Be on the lookout for a new friend that your parent has suddenly placed a large amount of trust in. They may have befriended your parent for financial gain.
Most contractors do legitimate work, but some will take advantage of retirees by telling them that there’s serious damage to their home. Should your parent announce that their home needs a massive repair, confirm that the work is actually necessary.
Once you’ve spotted a problem, the next step is finding the best way to raise the issue. Easier said than done, right? Even if they have a great relationship with their parents, most adult children cringe at the prospect of confronting them over financial missteps.
“No one likes to be in the spotlight for something they’re doing wrong,” explains Lauren Livick, a personal financial expert at Umpqua Bank. “What’s more, pride can keep a parent from considering good advice because it may call attention to their mistakes.”
While you can’t control your parents’ reaction to the conversation, you can increase the chance that they’ll want to listen to what you have to say, says Lauren. To pave the way for a smoother dialogue, she offered these three tips:
Focus on your feelings
“Being vulnerable and sharing your feelings is a great way to disarm someone,” says Lauren. Instead of waving around past-due statements and demanding an explanation, try something like, “I’m feeling a little worried about your finances. I love you and I want to help—can we look at these statements together?”
We all run into financial hot water at one point or another, and it’s okay to let your parents know it. Be open to sharing your own money management mistakes, and what you’ve learned from them. “By empathizing with what a parent is going through, you open the door for them to confide in you,” Lauren explains.
Don’t play the blame game
Avoid words that imply blame such as you, never, and always. Statements like, “You never pay your water bill on time!” will only make a parent feel embarrassed and defensive. Instead, try I statements like, “I’m worried that your water might be shut off if you fall behind on your bill.”
It’s not about what they did wrong—it’s about how you can help.
You don’t want to monitor every transaction, and your parents definitely don’t want a financial babysitter. Luckily, there are less drastic—and more respectful—ways that you can help them get their finances back on track.
Set up online banking
Older generations tend to steer away from online banking because they’re not as tech savvy. However, tools like online bill pay can be an easy way to stay on top of payments, and online banking makes it easy to monitor your account activity each day.
Take a few minutes to set up online banking for your parents and show them how it works. Bookmark the Umpqua Bank website on their desktop browser so they can easily log in anytime. If they use a smart phone, install the Umpqua Bank mobile app on their device. You can also bring them into a local Umpqua store—we’ll be happy to help.
Consolidate key financial information
It’s a good idea to have your parents’ financial information in one place. If they’re open to it, help them create a simple paper document listing the names and numbers of various bank accounts, regular bills they pay, and any outstanding debts. Keep this document in a locked, fire-resistant box and make sure you know where the key is.
Because many older people have savings and investments scattered in different accounts or financial institutions, it’s also a good idea to do some streamlining. Fewer accounts are easier for elderly people to manage; it also makes things easier for the people helping them.
Help your parents make smart money choices
Retirement should be a time to kick back—not stress about money. For older folks who want to get more from their nest egg, CD’s and savings accounts are a great option for earning interest on their savings, without risk.
Helping your elderly parents with money problems can be a difficult, delicate task—but you’re not in it alone. Umpqua is here to provide support and financial expertise so you can focus on what’s really important—enjoying time with mom and dad.