Is Dementia Impacting Your Finances? Early Signs You Shouldn’t Ignore

• Financial changes, such as missed payments, poor decision-making, and unusual spending, can be early signs of dementia.
• Families can address these concerns by starting conversations early, seeking professional guidance, and simplifying finances with tools like automatic payments.
• Early planning, including establishing power of attorney and automating bill payments, helps reduce stress as dementia advances.

Dementia, a progressive disorder affecting cognitive functions, often begins with subtle signs that go unnoticed. Beyond memory loss, early changes in financial behaviour can signal its onset, appearing years before more obvious symptoms. Identifying these red flags early enables timely intervention, reducing risks and safeguarding future well-being.

The Relationship Between Dementia and Financial Decline

As dementia progresses, it impairs essential cognitive abilities such as judgement, decision-making, and problem-solving—skills critical for managing personal finances. 

Individuals with dementia may face challenges such as:

• Timely payments: Missing or delaying payments, leading to penalties and damaged credit scores.
• Account management: Struggling with tasks like balancing chequebooks or tracking expenses.
• Understanding financial documents: Difficulty grasping complex financial statements or contracts.
• Sound financial decisions: Increased impulsivity, resulting in poor investments or reckless spending.

Common Financial Red Flags to Watch For

Recognising changes in financial habits can help identify the early stages of dementia, allowing family members to intervene effectively. Here are key financial red flags to monitor:

Uncharacteristic Spending Habits

• Sudden, unexpected purchases: Excessive or unnecessary spending, such as buying luxury items or goods they previously avoided.
• Impulse buying: Making unplanned purchases without considering their necessity or consequences.
• Hoarding cash or valuables: Accumulating money or items driven by fear or mistrust, with no clear purpose.

Difficulty Handling Bills

• Missed or late payments: Overdue payments that lead to penalties and added financial stress.
• Unopened or piled-up bills: A collection of unpaid notices or unopened mail may indicate neglect or confusion.
• Confusion about bills: Struggling to comprehend or manage regular bill payments, often feeling overwhelmed.

Problems in Banking

• Unusual withdrawals or deposits: Unexpected large transactions, which could signal fraud or financial disorientation.
• Forgetting account details: Difficulty recalling passwords, PINs, or account balances.
• Vulnerability to scams: Increased susceptibility to phishing attempts or fraudulent schemes targeting their assets.

Changes in Decision-Making

• Poor judgement: Engaging in unaffordable purchases or risky financial decisions.
• Difficulty prioritising expenses: Struggling to distinguish between essential and non-essential spending, leading to mismanagement.
• Resistance to help: Refusing financial assistance even when it’s clearly needed.

How to Address Financial Concerns

If you or a loved one shows signs of financial difficulty that could be linked to dementia, taking proactive steps is essential. Here’s how to approach the situation:

1. Open a Dialogue

• Approach with care: Initiate the conversation with empathy and patience. Ensure the individual feels supported, not judged.
• Listen actively: Understand their concerns and offer help without undermining their sense of independence.
• Frame it collaboratively: Present the discussion as a way to work together toward solutions.

2. Seek Professional Help

• Medical consultation: Visit a doctor to determine if financial challenges are linked to dementia or another health condition.
• Financial advice: Engage a financial advisor to develop a plan for managing finances, ensuring clarity and stability.
• Legal guidance: Consult an attorney to establish legal frameworks like powers of attorney or guardianship, safeguarding financial matters as the condition progresses.

3. Take Practical Steps

• Simplify financial management: Set up automatic bill payments and consolidate accounts for easier oversight.
• Limit access to funds: Use joint accounts, set spending limits, or restrict credit card use to prevent mismanagement.
• Monitor transactions: Regularly review bank and credit statements to catch unusual activity or unauthorised use.
• Guard against scams: Stay vigilant against phishing emails, suspicious calls, and fraudulent transactions to protect your finances.

Taking proactive measures can safeguard financial well-being and reduce stress. Early intervention helps manage the effects of dementia more effectively, preserving independence and comfort for as long as possible.

Real-World Examples of Financial Decline Linked to Dementia

Financial struggles often emerge as one of the earliest indicators of cognitive decline, even before an official dementia diagnosis. Research highlights patterns and behaviours that provide early warning signs:

Key Findings on Financial Changes

• Declining credit scores: Studies indicate that significant drops in credit scores frequently occur within five years before a dementia diagnosis.
• Missed or late payments: A noticeable increase in delinquencies may signal early cognitive deterioration.
• Unusual account activity: Changes such as opening new accounts, accumulating unexpected debt, or making uncharacteristic financial transactions are red flags.

Shifts in Familiar Patterns

Family members often observe unusual financial decisions in individuals who were previously meticulous about money management. Examples include:

• Large cash withdrawals: Individuals may suddenly withdraw substantial amounts of money without a clear purpose.
• Risky or atypical spending: Financing unnecessary items or making impulsive purchases can indicate a shift in judgement.

Proactive Planning to Prevent Financial Issues

Planning ahead is a key step in managing the financial challenges associated with dementia. Early preparation not only eases the financial burden but also ensures smoother transitions for both individuals with dementia and their carers.

Key Strategies for Early Financial Preparation

Automate and Simplify: Setting up automatic bill payments and consolidating accounts can streamline financial management as cognitive challenges increase.

Establish Legal Protections: Creating or updating a will and assigning power of attorney ensures that someone trusted can oversee financial matters when necessary.

Prepare for Account Access: Ensuring access to online accounts or banking details ahead of time allows family members to step in quickly if issues arise.

A carer shared how early planning helped their family navigate financial challenges. They preemptively set up online account access and automated payments for their mother. When dementia began to affect her ability to manage finances, the family was already equipped to take over seamlessly without disrupting her routine.

Using Available Tools

While dementia-specific financial tools are limited, creative solutions can help:

Specialised Debit Cards:

Some cards allow carers to set spending limits, monitor transactions, and provide oversight without completely removing financial independence.

Early Intervention: Protecting Dignity and Security

Dementia’s early signs are subtle but critical to address. Acting swiftly to recognise shifts in financial behaviour helps safeguard assets, prevent complications, and ease carer stress. Early action preserves not only financial security but also the individual’s dignity and independence.

Simple measures, such as limited-access accounts and professional guidance, create a balance between protection and respect. These proactive steps provide peace of mind and ensure the individual’s well-being as the condition progresses.