Creating healthy spending boundaries for a loved one with dementia is essential to protect their financial well-being while respecting their dignity and autonomy. Dementia often affects judgment and decision-making, which can lead to unintentional overspending or vulnerability to financial exploitation. Establishing clear, compassionate boundaries helps manage finances responsibly and reduces stress for both the person with dementia and their caregivers.
Start by having an open and honest conversation with your loved one about their finances while they are still able to participate. Explain the importance of managing money carefully to ensure their needs are met over time. Together, review their income, savings, bills, and regular expenses to get a clear picture of their financial situation. This step lays the groundwork for setting realistic spending limits and priorities.
Next, organize all financial documents in one accessible place. This includes bank statements, bills, insurance policies, and legal papers such as powers of attorney and wills. Having everything organized simplifies monitoring and decision-making. It is advisable to establish a durable power of attorney for finances, allowing a trusted person to manage money on their behalf when they can no longer do so themselves. This legal step is crucial to prevent unauthorized spending and financial abuse.
To protect against financial exploitation, consider these practical measures: set up alerts for large transactions on bank accounts, remove your loved one’s name from pre-approved credit card offers, and register their phone number on “Do Not Call” lists to reduce scam calls. Simplifying finances by consolidating accounts and using direct deposit for income can also make it easier to track spending and detect unusual activity.
Create a monthly budget that covers essential expenses such as housing, food, medical care, and personal needs. Limit discretionary spending by setting clear limits on non-essential purchases. If your loved one uses cash, keep only a small amount available to avoid large cash withdrawals that can be difficult to track. Using joint accounts or accounts with limited access can help caregivers oversee spending without completely removing financial independence.
Regularly review financial statements and credit reports to catch any irregularities early. If possible, involve other family members or a professional fiduciary to provide oversight and support. This shared responsibility can reduce the risk of mistakes or exploitation.
Finally, explore financial resources and benefits that may help cover care costs, such as long-term care insurance, veterans benefits, or government programs. Planning ahead for these expenses can ease financial pressure and allow for better care options.
Sources
https://www.elderlifefinancial.com/resources/how-to-pay-for-memory-care/
