Dealing with finances is difficult enough as it is when you're young, but it somehow manages to get worse when you get older. While everyone's circumstances are different, one thing is clear—creating a plan is a crucial step for protecting your finances. If you feel like you aren't well-prepared from a financial standpoint, it's not too late to make some important changes. To help you get started, we've come up with the best tips for managing and protecting finances for the elderly.
Watch your bills
Bills are an integral part of every adult's day-to-day responsibilities. As you get older, you might end up with more bills than when you started out. Between mortgages, power bills, and various expenses, it's important to save money wherever possible. In most cases, good management can help you reduce the amount of money you spend without sacrificing much.
Efficiency is key for house-related bills. Choose adequate lighting and water-saving measures to keep your expenses down. LED lights are especially effective at saving on power bills, as they use less electricity and last longer than their counterparts. Wherever you have water fixtures, make sure to invest in low-flow alternatives. They function the same, but they use fewer resources and help you save money in the long run. If possible, install solar panels on your home—they can lower energy bills dramatically as well.
Work on your investing
It's never too late to invest your money wisely. Plenty of young people fail to utilize investment opportunities when they can, but older folks tend to look out at the big picture. Choosing a few good investments can help you maintain a good income even after retirement.
Speaking of retirement, many pensions can be self-managed after a certain age. You can choose to invest your savings as you please, which can help you get the funds for a good investment. A savings account is the safest bet, but it might not keep up with inflation in the long run. Low-risk bonds and equity income funds are good choices if you want to boost your income through dividends. Keep in mind, the latter is a bit riskier, so you shouldn't hedge all your bets on it.
A good investment portfolio has one element—diversity. You want to choose multiple investments of varying risk so that no single one can take your finances down.
Have someone assist you
Thinking long term is all about making good decisions. But what happens when you're not sure if you'll make proper decisions on your own? Unfortunately, getting older comes with some uncomfortable implications for decision-making. It can sap an individual of their energy and mental prowess, making it difficult to have good reasoning when it comes to finances.
In these cases, it helps to have a contingency plan in place. If you aren't sure your financial decisions will be productive from a certain point, you should consider granting someone general power of attorney. Most elderly folks grant it to relatives and close friends that they can trust to take care of their finances. The recipient doesn't profit off of these decisions, so they only have an incentive to help you. They can manage real estate, shares, and plenty of other assets, as long as you allow them to.
The great thing about power of attorney is that you make the rules. You can specify actions that the individual can and can't take while they have this power, so you can still manage the things you want to if necessary. If your mental state deteriorates, you can choose to grant enduring power of attorney at that point.
Write a will
While it might be a touchy subject, writing a will is an absolute necessity, and not just for older folks. Every adult should have a will prepared for a worst-case scenario. This document can help your family avoid problems when dealing with your estate, as the rules can get complicated. If you die without a will in place, the state must distribute your assets according to the rules of intestacy.
The problem with this solution is that only certain, well-defined individuals can inherit. This includes spouses, civil partners, and specific relatives. If you intend to leave something for a friend or other non-relative, you'll need a proper will in place.
To create a will, you'll need some legal assistance. You should contact a solicitor that specializes in this field and start working on the will's specifications. A good rule of thumb is to include all of your assets, including savings, property, and various investments. Personal items should also be included, with specific individuals to inherit them.
When you make your decision, you must state how your estate will be divided clearly. This will help avoid legal issues if someone wants to challenge the will and its contents. Another good move is to have multiple executors for your estate, as it guarantees that your requests will be fulfilled exactly as instructed.
Conclusion
Whether we like it or not, there are many reasons to start protecting our finances as we get older. For many elderly folks, managing money can be tough on a limited pension, and there are decisions that have to be made before it's too late. When it comes to financial decisions, having a good plan is always the best course of action. When you have your finances and assets in check, there are fewer things to worry about.