Helping Seniors Prepare a Budget

Keeping track of bills, preparing taxes, and balancing checkbooks isn’t fun. But as one gets older, certain physical limitations make dealing with paperwork difficult. Poor eyesight doesn’t help. Arthritis can make it hard to hold pens, seal envelopes, and file forms.

Older people sometimes have mental limitations such as Alzheimer’s. They may become too confused to keep track of finances. Banking rules change, tax codes change, and insurance rules changes.

All these make it difficult for older people to budget.

If you want to an older person you care for plan a budget, here are important tips.

Some Tips for Budgeting

1. Budget for the present and for the future.

Every budget needs to account for emergencies, especially so for older people. Medical emergencies become more frequent, complicated, and expensive. The budget set today may expand in the future.

Consider the transition to retirement and retirement itself, depending on the older person’s age. Planning should begin by the time the person turns 55, when income sources often slow down. Balance enjoyment, managing for necessities and the liklihood of having limited funds.

2. Don’t make things too complicated.

Don’t confound the older person with spreadsheets or complex ways of keeping track of money. If you want to use these things yourself, that’s fine. But avoid overwhelming or giving too much information.

Don’t have them write checks every month. Use automatic payment options to pay for things that are mandatory. These can be things like housing, utilities, and other necessities. Allow extra for food. If there are funds left over, put them into an “extras” budget which can include fun items or gifts for loved ones.

3. Encourage their participation in the budgeting process.

Avoid telling them what he or she has to do. Even though you may be spending time on it, it is their finances, not yours. All you can do is inform them of the possible consequences of their actions. Unless they are mentally incapable, they should have significant input in the process.

4. Consider insurance for long-term care.

Long-term care insurance is advisable for potential long-term care expenses. This insurance can protect older people with higher income or assets. Policies offer many options for people who don’t want to risk cash or assets. For those with low income and few assets, this type of insurance may not be beneficial.

5. Consider Medicaid for long-term care.

If they are low income and has limited assets, consider Medicaid. Medicaid pays for nursing home care and often pays a limited amount of at-home care. Check to see eligibility in your state.

6. Help older people in your life avoid scams.

Scams are more and more common, and older people are a primary target. Kindhearted older people often donate to “charities” that may be no more than scams. Help them find a legitimate charity worthy of their generosity.

7. Consider creating a 50-30-20 budget.

The 50-30-20 budget plan can help them see what they can afford and what they can’t afford. Base the budget on after income tax income.

Allow 50 percent of income for required items. Housing, food, utilities, medical care, insurance, transportation, and loan payments fit this category. These are “must-have” items. Don’t include things such as cable, movies, jewelry, golf clubs, a gym membership or new clothing. If one can live without it for several months, it isn’t a must have.

Keep in mind that non-discretionary spending must be as low as possible. People over the age of 65 spend an average of 20% of their income for medical expenses. Make enough leeway for potential increases in expenses, especially medical care.

Allow 30 percent of their income for “wants.” This includes the cable bill, movies, jewelry, golf clubs, a gym membership or new clothing.

Set aside 20 percent for savings, retirement, paying down debts, or medical emergencies.

A percentage budget does not work well for people with low income. Medical expenses or insurance rates remain fixed amounts take up a larger amount. To decrease these is not an option.


Many older Americans balk at the idea of setting a budget. It’s not exactly fun. But when there is less stress, they will see the positive impact a budget can have. Review the budget together every few months, or as needed.