How to cope financially with the sad decline of dementia: Sarah Coles

The overwhelming financial worry when someone is suffering from cognitive decline is how much care they’ll need, and how you’ll pay for it. But while you may need to face this further down the line, there are financial problems that will crop up far sooner that you need to get to grips with.

In the early stages of the disease, it can be difficult for sufferers to realise there’s a problem. In many cases, it can also be hard for them to accept something has changed and ask for help. In the meantime, if they’re not paid by direct debit, sufferers can forget to pay their bills, and so run up debts on things like utilities and rent. They can forget irregular payments too, and sorting things like home insurance. By contrast, they may repeatedly buy things or pay the same bill several times, because they forget they’ve already done it. Their decision-making can be impaired too, so they make purchases they don’t need and can’t afford. Booking the wrong taxi or train becomes common place or struggling with online booking systems.

Sadly, the condition also means they may struggle to understand their relationships, so they trust the wrong people. This may mean they can fall victim to scammers - or that someone who is close to the sufferer may be able to take advantage of them.

In some cases, it will become obvious something is going on, because they may not have the money they usually have for essentials. However, in other cases, it can be harder to spot. You can keep an eye out for their post, because they may not be opening bills or statements. You can also ask them about money-related issues, and check whether they are happy to talk about it. If they’re vague or defensive, it could indicate a wider problem.

Unfortunately, the key indication will sometimes come when they develop anxiety around money, get angry if you try to discuss things with them, or start to get paranoid you’re trying to steal from them. These issues can be incredibly difficult to deal with, both emotionally and practically. It’s worth talking to the experts at charities like Mind or Carers UK, who can suggest techniques that help reassure your loved one. It’s not easy, so don’t hesitate to get help.

If you suspect there are problems developing, there are some things you can do to protect them. It’s worth saying up front that this is far easier if they have drawn up a Lasting Power of Attorney. This allows them to name an individual they trust to step in to make decisions for them when they can’t do it anymore. There are two kinds: financial and health, and it’s worth them having both. It means that when they reach the stage of not being able to deal with their own finances, someone they trust is ready to step in and help.

They need to have clarity of thought to set this up, so if you wait until their dementia has progressed, and they’ve lost what’s known as ‘mental capacity’, it’s too late. You can still make decisions for your loved one, but you’ll need to apply for deputyship, which takes longer, costs more, and will limit how much you can do for them. It means we should all set an LPA up alongside our will, as early as possible.

It’s also worth thinking ahead, and ensuring that if we need to use our LPA, our finances aren’t horribly complicated for someone to get to grips with. It can mean closing any rarely used current accounts, and consolidating things like savings, ISAs and SIPPs, so they’re easier to manage. There are considerations – like making sure you don’t lose valuable pension benefits or guarantees, and ensuring you don’t bust the limit of £85,000 of savings with any single institution – under which all your savings are protected in case of bank failure. Bringing things together can actually make things easier for you to manage, long before you need help.

Once you have an LPA, you don’t have to enact it straight away. In the early stages they may not want to lose control of their finances, so you can put some things in place so you can work alongside them. You can help them sort out direct debits and automate payments for their bills. Make sure you leave a note reminding them that this has been done. You can also ask them to set up a third-party mandate, which means you can keep an eye on their accounts. Some businesses let you link accounts – which has a very similar effect.

Once the LPA is in place, it allows you to contact companies – including their bank - and make decisions on their behalf, so you can protect them before any problems arise. You can manage their cash balance, so they don’t have access to enough money to make any major mistakes. If they have trouble remembering their PIN, you can arrange for them to have a card that enables them to spend with a signature. You can also cancel their debt facility, so they can’t run up any debts. And you can check everything coming in or out of their account.

You can make it harder for scammers to reach them, with a call blocker for their phone, and by signing up to the telephone preference service and the mailing preference service, to cut down junk mail and nuisance calls. But you won’t be able to keep everyone out, so if you have an LPA, keep an eye on their account, and consider restricting access to larger sums to limit the damage any scammer can do.

It's important to try to do this with sensitivity. This change in life is difficult for everyone, but if you can talk to one another, and agree a way forward, it will help them understand this is being done to improve their life rather than control it. It’s not always easy, and the process is weighty both in terms of admin and emotion, which is a killer combination. However, you don’t have to be perfect to be a good person trying to do the right thing, so getting to grips with the situation and making a plan is always better than trying to pretend it isn’t happening.

Where inflation hits hardest

This week the Office for National Statistics revealed data that breaks down the levels of inflation facing different groups. Overall, in June it said this measure of inflation was 2.5%, but it varied dramatically.

Those with mortgages were hardest hit, with overall inflation of 3.7%, compared to outright owners at 1.3%. This is the result of the fact so many are having to remortgage at a higher rate. Meanwhile runaway rents mean private renters saw overall price rises of 3.2% too. Soaring rents stretched renters horribly – and because they tend to be on lower incomes, those rents absorb a disproportionally large portion of their income, so the impact is felt even more keenly.

At the other end of the spectrum, pensioners have a lower rate of inflation, at 1.2 %. This comes down to how retirees typically spend their income. They’re more likely to own their home outright. At the same time, they spend a disproportionate amount of their income on bills, so they benefited from the cut in the energy price cap in April. Of course, this is the calm before the storm this winter, when rising fuel bills and the cuts to the winter fuel payment will mean bills dominate pensioner spending to an even more alarming degree.