Don’t Let Emotions Drive Bad Financial Decisions

I have always focused on saving money for our clients.

Cutting expenses, prioritizing spending, and putting extra money away drive many of my decisions. I have no qualms about spending money when necessary and even for the occasional splurge, but until the bills are paid and some cash has been put away, I don’t even think about spending it elsewhere.

Many of my clients think the same way. They have been savers for decades, watching every penny carefully. Their balance sheets show a life of hard work and frugal living. We share similar values about money and savings. So I get it when they struggle with major financial decisions or have a hard time coping with the financial changes that often accompany aging and disability. These issues bring up some serious emotional pain for my clients.

Anxiety: Spending More Than You Make

Long term care costs for home care, assisted living care, or nursing home care, can range from $20/hour to $10,000/month (or more)! For most aging and disabled adults, the cost of care exceeds their income. After decades of saving, it can be anxiety-provoking to start dipping into savings on a regular basis to pay for care.  I have had clients skimp on home care services, choose less than ideal housing options, or forgo necessary services because they are overcome with anxiety about spending more than they make. These clients may have enough assets to last them 20 or more years and have no need to be anxious about spending money, but spending their savings still causes them significant distress and anxiety.

Fear: Outliving Your Money

Along with the anxiety of spending their savings, clients can legitimately fear outliving their money. At $16,000/month in expenses and incomes of $5,700, a client fears that their final $580,000 in savings will not be enough, especially as their care needs increase. This is real fear with real possibilities. I remember a client who responded to this fear by firing her home care agency. She truly needed the care to stay safe and to meet her daily needs.  I was able to convince her to keep part-time care and to eventually ease her back into more care over time. We found a compromise that would ensure her safety while also making her feel more financially secure.

Love: Focusing on Leaving an Inheritance

I am constantly amazed by my clients that prioritize an inheritance for their children, grandchildren, or charitable organizations over their own needs. I have had clients express a desire to stop or delay care because they don’t want to spend any of their kids’ inheritance on those expenses.  Leaving a house, a car, a savings account, etc., to a loved one is so meaningful to them. They feel extremely tied to this act of love and generosity, and it has become a part of their identity over several decades. Convincing them that their money should first be spent on them is always difficult and causes great anxiety.

Denial: Not Recognizing Future Needs

I have a few clients that struggle to stick to a budget and to prioritize their needs versus their wants. They seem to lack any insight into what their future care needs are going to likely cost and that they should stick to a budget in order to not outlive their money. These clients are sometimes impulsive and require constant reminders of long-term goals. We work together with these clients to create plans that meet both their short term desires and long-term goals so that they have a life worth living today as well as a secure future. It is a constant battle balancing act.

As Daily Money Managers, Senior Partners works with each of our clients and families to determine what emotional triggers may be influencing financial decisions, creating barriers to getting appropriate care, endangering long-term well-being, and causing distress. We work collaboratively and transparently with our clients to create budgets and plans that our clients feel comfortable with.

Financial decisions are not just simple products of cost-benefit analyses and spreadsheet formulations. We approach our clients with this in mind; we assess their life history, goals, fears and strengths to find the best solutions to their financial situation.

To learn more about our services, please contact Senior Partners (678) 278-8410 or schedule your consultation here