Is your wallet hinting at dementia? The financial signs you shouldn't ignore!

In recent years, researchers and healthcare professionals have begun to recognise that financial difficulties could be an early indicator of dementia. A study by the US Federal Reserve Bank of New York found that individuals begin to show signs of financial mismanagement up to five years before a dementia diagnosis.

Analysing US credit score reports and Medicare data, researchers discovered that average credit card debts increased by more than 50 per cent and mortgage debt by 11 per cent one year prior to diagnosis. Economist Joanne Hsu noted, “Actually, the first skill that declines with Alzheimer’s disease is your ability to manage money.”

This aligns with a 2020 study by Johns Hopkins University, which found dementia patients could begin missing payments seven years before diagnosis.

These financial missteps are often dismissed as “senior moments” but can lead to severe consequences like eviction or bankruptcy if unnoticed.

Have there been any cases?

Karen Lemay, for instance, noticed that her father, a former finance executive who was always prudent with money, began accumulating significant debts, reported CNN.

“He owed $50,000 in charges, interest, and late payment fees on a Visa card,” she told the news outlet. He also financed a new car unnecessarily and failed to pay his 2021 taxes, accumulating roughly $20,000 in penalties. When Lemay confronted her father, he refused to believe he hadn’t paid his balances.

Despite the importance of financial decisions for older households and the importance of cognitive function to those decisions, older households are those most vulnerable to memory disorders such as Alzheimer’s disease and related disorders, says the study. Representational Image/Pixabay

Similarly, Jayne Sibley from the UK faced financial challenges with her parents, both diagnosed with dementia. Her mother, living at home with live-in care, began overspending on unnecessary items and fell victim to scams.

“The most challenging thing we faced was managing mum’s everyday money as her condition progressed,” Sibley told CNN. Her mother would frequently withdraw cash multiple times a day and give it away indiscriminately. To manage this, Sibley and her brother took away her cash card, but this only highlighted the need for better financial tools for those with dementia.

What have experts said?

Neurologist Mariel Deutsch stated the importance of recognising these early signs, told Fortune, “Many times, I’ve heard people describe that the bills weren’t paid, and it was only after some late fee or some phone call from the bank that the other unaffected spouse realised something was up.”

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Financial decision-making involves multiple cognitive skills that decline with dementia, making regular financial tasks like bill-paying a potential indicator of cognitive issues.

What preventive measures can you take?

Early planning can alleviate some stress associated with financial mismanagement due to dementia.

In 2008, Marcey Tidwell and her siblings took their mother to a lawyer to ensure she had a will, medical proxy, and power of attorney. As reported by CNN, this early planning made it easier for Tidwell to manage her mother’s finances when her condition worsened.

“The time to make plans is before you need to. It’s hard to overstate what a gift that trip to the lawyer in 2008 was to ‘future me,’” Tidwell said.

ADRD has a substantial and growing reach, affecting more than 11 percent of individuals age 65 and over in the US, and the size of the population affected is projected to more than double by 2050, says the study. Representational Image/Pixabay

To further assist those with dementia, Jayne Sibley and her husband founded Sibstar, a UK-based company offering a debit card that allows caregivers to monitor and control spending, reported CNN. This tool helps maintain financial autonomy while ensuring safety as the condition progresses.

The US National Institute on Aging recommends setting up automated bill payments and other financial safeguards early on to protect those with dementia. As dementia can progress unpredictably, having these measures in place can prevent significant financial problems.

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Regularly reviewing financial behaviours, setting up safeguards, and seeking early medical advice are essential steps in addressing the financial challenges associated with dementia. As Deutsch advises, “Getting a comprehensive valuation is key… that one inconvenient medical encounter was worth it.”

With inputs from agencies