In many cases, age often comes with added wisdom. But, that’s not necessarily true when it comes to money management.
In 2016, 60 percent of senior households were in debt, and many older adults were found to lack the financial literacy needed to effectively deal with this debt. If you or someone you love is currently in this boat, keep reading.
Listed below are six of the most common money management mistakes that seniors tend to make, along with tips on how to fix them.
1. Not Sticking to a Budget
One of the most important things for seniors (and everyone, for that matter) to do is to keep track of their expenses and monthly income. When you don’t stick to a budget, it’s easy to lose sight of where your money’s going and end up spending more than you can afford.
Sit down and write out your monthly expenses and monthly income. Prioritize your expenses according to importance, then do your best to eliminate anything that is costing you extra. Make sure you’re also putting aside money each month into a separate savings account.
2. Falling for Fraud
Many scammers prey specifically on senior citizens.
It’s important to practice good media literacy and avoid sending money to people and businesses without first thoroughly vetting them.
Avoid responding to spam emails or communicating with strangers online, too, especially when those conversations devolve into discussions about money.
3. Misunderstanding Their Medicare Coverage
Some seniors make the mistake of thinking that, because they have Medicare, all of their health expenses are covered. This definitely isn’t always the case though. For example, Medicare does not cover the cost of nursing homes or assisted living facilities when they’re needed for long-term care.
Depending on the type of coverage you have, you may also be responsible for footing the bill for things like hospital visits and home-health care.
4. Not Taking Advantage of Senior Discounts
For everything from groceries to prescription drugs, there are tons of discounts available for senior citizens. It’s important to look for and take advantage of these offers, especially if you’re having a hard time sticking to your budget.
Look online for coupon codes and discounts before going out to eat or going shopping, or call ahead and ask businesses and pharmacies if they offer any kind of deals for older shoppers.
5. Giving in to Every Loan Request
It’s common to want to help out your children or grandchildren when they’re in a financial bind. But, if you’re barely making ends meet as is, giving in to every loan request — especially if it seems like a child or grandchild is taking advantage of your generosity — will only cause you financial problems later on.
Avoid extreme gifting or getting used as the family ATM. This may require you to sit down with your family and let them know that you’re struggling financially or are trying to get rid of unnecessary expenses. It can be hard to do this, but it’s necessary if you want to improve your financial health.
6. Not Thinking About the Future
Finally, make sure you’re thinking about the future when it comes to saving. It’s easy to assume that you’ve got enough in your retirement account to last you the remainder of your life. But, as you probably know, situations can change very quickly, and the amount you have saved may not end up being sufficient.
Make sure you’re putting money aside regularly and planning for events like medical emergencies or major home repairs. Hopefully, you won’t need to use this money. But, it’s still good to have it on hand, just in case.
When it comes to managing their money, most seniors can benefit from some assistance. Whether that’s hiring a financial advisor or implementing and sticking to a strict budget, it’s important for seniors to work on staying on top of their finances and avoiding these common money management mistakes.