Financial Literacy Makes Sense

money-brain-health

Try this today

Here are some things to try that can help boost your budget and maintain your brain’s focus on finances:

 

• When you sit down to pay bills, make a running list of regular monthly expenses you incur.
• Compare that list with your bank statements, credit card statements and receipts to get a clear picture of where your money is being spent.
• Make a monthly budget that includes some savings for larger purchases or future needs. As you plan your budget, try to build in some wiggle room for times when your expenses might be higher than you expect. You can also use budget apps to help you maximize your money and increase your savings. Identify a goal (pay off debt, beef up savings, save for a trip, etc.), and use your understanding of your spending patterns to make the necessary adjustments to reach that goal.
• Consider involving your adult children in your finances. Adult children can often play a useful role in helping you manage money as you age. It’s prudent to enlist their support before you experience a crisis or cognitive decline — that way they already know your account basics. Sharing your estate plans and wishes, and even writing out an overview of how you want to manage money as you age, can help make sure things don’t go off the rails.
• Older adults are at a greater risk for financial fraud but putting safeguards in place can reduce that risk. For example, you can set up banking alerts so that you are notified if your balance drops or a large credit card purchase is made. Debit cards can be programmed to only work in certain locations, and you can sign up for “do not call” registries to reduce the chance of phone scams.

Why

• Identify spending patterns. Do you spend freely or save every penny, and also when do you tend to spend?
• See the big picture. Keep a running tally of monthly expenses and compare against bank and credit card statements to know where every penny's going.
• Create a wiggly budget. Your monthly budget should include savings for big purchases or future needs.
• Involve the kids. Enlist your grown children's money-managing support before you experience a crisis of cognitive decline.

 

Having problems keeping up with finances in your 60s and 70s is one of the most common indicators of deteriorating brain health. It makes sense then to be on the alert for any red flags (such as an increase in overdue bills) that your financial acumen is off the mark. You can also help protect your hard-earned money by learning more about your income and expenses. Savvy budgeting requires being adept at understanding monthly cash flow, problem solving, impulse control and planning.

 

First, figure out what is your typical spending pattern. Here are some examples of several different kinds:

 

• Macro. Do you spend more during certain times of the year/month/week? Take stock of monthly expenses (food and groceries, prescription drugs, gas and utility bills) and periodic expenses (such as property taxes or home maintenance) that occur or can be tallied yearly. In general, is your approach to save every penny, or are you a free spender? If you’re a penny saver, maybe you’d like to adjust those patterns to include more discretionary treats in your life — vacations, classes, dinner with friends. If you overspend, saving toward a pleasurable goal can mean you'll have a better chance of being able to pay cash instead of acquiring debt.
• Micro. Do you spend a lot right after getting paid? Is there a certain time of the day that you’re freer with your credit card, such as late night online shopping? Once you recognize those patterns, pause next time you’re inclined to spend during your self-identified witching hours (periods where you have less self-control).
• Mood-related. Does your stress level affect your spending? Do you engage in retail therapy? Your personal money plan can include ways to deal with the underlying stress or bad feelings, such as replacing the urge to spend with exercise to reduce stress and help you relax.
• Invisible spending. Some patterns may be under the radar, like interest on credit cards, subscriptions you never canceled, etc.