It's been decades since your parents taught you about spending and saving, and now their behavior makes you wonder if they've forgotten everything they taught you. And yet they might see your questioning as an intrusion. What's a perplexed adult child to do?
Financial planner Keith Klein, of Turning Pointe Financial Management in Phoenix, says he's seen it before, and most changes in spending can be traced to one of two things. The happier one is a "bout of euphoria."
That often happens in early retirement, when parents have the time to re-engage, or engage at a deeper level, in an old passion. Examples would be working out more often and hiring a personal trainer, spending more on photography equipment or taking classes and buying equipment related to those. He saw his own father go through such a change in spending. Klein's mother died when she was 48; when his dad began to date, he spent a good deal more on dinner and entertainment. So a positive uptick, Klein said, is generally a result of something good, like retirement, or a negative turned into a positive, such as recovering from divorce or death of a spouse.
Other times, people who've spent their lives being frugal feel like the "someday" they've saved and sacrificed for has finally arrived. Some may be right, Klein said, but others may need to talk with a financial planner about "longevity risk." A splurge isn't a bad thing if the parent has the resources. However, adult children frequently do not have a realistic idea about their parents' finances, Klein said. It's easy to see their resources as unlimited (or to at least hope there's enough) and to want to see them enjoy life or check off one more thing on a bucket list. In truth, some older people are spending more than they can afford and are taking on debt.
When It's Cause for Concern
A change in spending isn't always celebratory; it can also indicate that something is amiss. It can signal depression, a gambling habit, drinking too much, or it can tip you off that a parent is being scammed (here are some signs). It could also be a sign of dementia. Klein said in the latter case, there is frequently denial on both sides.
"I had one client who thought her husband was beginning to have issues with dementia ... she thought it had been going on for about six months. She asked friends if they had noticed a change, and they said, yeah, things had seemed different for about the past 12 to 18 months."
So when spending patterns change, Klein recommends asking their friends and neighbors, "Is there something I'm missing?" He said that what adult children want to watch for is something that seems out of character or a big change from the person's usual decision-making process. An example might be a homebody who loves to garden deciding to take a trip around the world.
Trudy Schuett, who chairs the Regional Council on Aging for Western Arizona, said it's important for adult children to find out what's driving a sudden change. If Dad buys a new car when there's no need, or Mom decides to give away a vacation cottage, that may be a sign the adult child needs to visit and spend some time figuring out what's going on. "You may feel you can't tell a parent what to do... but a child does have a responsibility to get the help (the parents) need," and to do that you may have to do a bit of detective work, Schuett said. "This is no time for concern over hurt feelings or worry on the child's part that maybe they're sticking their nose in where they don't belong," she added. "The Area Agency on Aging in the state where the parents or children reside is a good place to start for information on early symptoms of Alzheimer's or several other conditions that can cause radical changes in behavior."
Still, if a parent prefers not to discuss personal finances with you, there's not a lot you can do about it. Klein said his own father would occasionally run an investment idea past his financial-planner son, but that he did not share details of his own financial situation until he was aware that he was near the end of life. Klein said that's not at all uncommon for members of the Greatest Generation. (At the risk of painting with a really broad brush: "The Depression-era people never talked about money. The Greatest Generation were great savers but didn't talk about money. The baby boomers spent it all. And Generation Xers are more open to a dialogue," Klein said.)
Protecting Your Children
Schuett said one thing middle-aged adult children can do is to keep their own children from facing the same situation. "In your 50s, have a conversation with your children . . . and make sure your wishes are on paper, and that all your children understand."
Decide how comfortable you are sharing personal information with them. Is it OK for your doctors to share information? Would you want to have them to be able to monitor your bank accounts? How about checking your credit scores and credit reports with you? Someone should have power of attorney to make decisions if you are unable to do so. That sort of direction makes a tough situation easier on adult children, Schuett said. "That way, they know what you expect of them."
You can check your parents' credit scores with them for free by setting up accounts at Credit.com; that will give your parents two scores every month. A big change in the numbers could indicate something is amiss and should be checked further. You can also go over their credit reports with them (here's how to get their credit reports for free), to be sure the information in accurate. These steps can help detect identity theft as well as alert you to changes in spending patterns.
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