5 Common Signs That You’re Spending Too Much Money

As the holiday season winds down and our credit cards get a break, many seniors are realizing that it’s time to re-evaluate their spending habits. People of all ages and economic backgrounds were recently affected by the uncertainty of the financial downturn caused by the coronavirus pandemic.

Pandemic-related shocks to the financial system have made it more difficult for people to realize that they may be in or headed toward deep financial trouble. It is especially true for our country’s senior citizens. But even before the pandemic, American seniors were accumulating more debt than ever before[2]. Houses led by people aged 65 and older with some form of debt increased from 38% in 1989 to 61% in 2016. Elderly households also increased from owing about $7,500 to more than $31,000.

Seniors should not have to worry about mounting bills each month. In many cases, you can take action early to review the state of your finances. A 2020 study by AARP found there are five signs to look out for to understand if you are overspending your money[3]. As you review your numbers, make sure to take all of your medical needs into account. You should not cut corners on your health and wellness.

Why Have Our Spending Habits Changed?

When the world shifted in March 2020, so did American spending habits. Our spending habits changed because we were living in lockdown. People were no longer eating at restaurants or going to movies. However, other individuals were spending additional funds on online shopping and Instacart grocery delivery services. As we re-enter a post-COVID vaccine era, our spending habits look different and may stay that way for several reasons[4].

• Remote Work – Some seniors retire at or before the age of 65. However, others still do full- or part-time work. The future of work will undeniably look different from how many of us experienced it before the pandemic. That change over the past year would have had notable implications on your finances. You may notice your water and power bills increasing as you spend more time at home. And you may still be making payments on a car that you do not use as often or for the same distances.
  

• Relocation – Many people considered relocating to single-family dwellings once it was safe since they were spending more time at home. However, relocating meant that people were spending more money on mortgages, home furnishings, and moving expenses. Individual payments for home utility services also increased compared to pre-pandemic levels.
  

• Making Up for Lost Time – Living financially independent during the pandemic meant that we could not do a lot of things that we have always perceived as normal. We could not eat at restaurants, go to the movies, or travel. As we come out of the worst of the pandemic, it can become easy to forget our previous budgetary limitations and go on a spending spree.
  

• New Health Concerns – People of all ages understandably feared for their health during the peak months of the pandemic. A certain degree of trauma or stress will probably remain as we move forward. American seniors may be inclined to spend additional money on food delivery services or media streaming services to reduce risk of covid exposure.

One way to positively alter your spending habits is to explore medical alert technology from Alert1. Alert1 will never lock members into a long-term contract if they don’t want to make the commitment. Member safety and well-being is the utmost concern. That means Alert1 members can adjust their plans to incorporate other features into their button alarms, like fall detection. These can include In-the-Home + Fall Detection and On-the-Go + Fall Detection products, which are wonderful options for most seniors.

Warning Signs You’re Overspending

Many people can have difficulty acknowledging or anticipating personal financial strain. If you or a loved one gets into any of the below circumstances, you should take action before it worsens.

You use credit cards to pay off other cards or only make minimum payments. You want to avoid paying off credit card debts with other cards, which will rack up additional debt. Contact the National Foundation for Credit Counseling or the Financial Counseling Association of America. These nonprofit organizations can help you learn how to budget better, negotiate debts, and consolidate loans.

Your rainy-day funds decreased, or your savings account balance dropped. It can be hard for seniors to adjust financially once they retire. They are no longer bringing in the same income that they once did. However, you do not need a full-time job to bring in extra spending money. If you are unfamiliar with online marketplaces, ask a loved one for help. You can sell unneeded or unused items like home appliances or even old sports equipment on websites like eBay or Craigslist.

You frequently receive past-due bill notices or collection calls. There is no shame in asking for assistance when you need it. Pick up the phone and call your internet provider, credit card companies, or even your gas company. Let them know you need help and see what pandemic relief services remain available for customers.

You continue putting off addressing home maintenance, healthcare, or car issues. Certain elements in your life, like your health, are too important for you to ignore. Take a look at your old bank statements and then at a more recent statement. If you see added non-necessity payments from when the country started to re-open, you should cut those expenses first. These can include eating out and traveling.

You avoid answering calls that may be from creditors. Ignoring these calls will only put you in a more difficult position. If you find yourself here, explore other social service options. In a number of states, you can dial 211 to connect with a community resource specialist[5]. These specialists can help you learn more about local organizations who provide people with essential services like housing assistance.

As you break down your monthly and yearly finances, you should take the future into account. There may come a time when you require more physical assistance, especially if your wish is to age in place. Alert1 personal emergency response systems help seniors age in place by protecting their independence while assuring help is always a button push away. Members are never charged for “false alarms” or multiple button-pushes. Some of these devices, like the On-the-Go Wrist Watch Medical Alert + GPS + Pedometer, also come with a GPS. The feature helps give members greater comfort that when they need help, help will locate them immediately.

Stabilizing Your Income

The first step in addressing excess spending is identifying the main sources of overspending. But you also need to consider the best ways to maintain your income once you stabilize it[6]. If you’re in the second step, you can consider the following options:

• Create a big cash cushion. Make sure that you have a full year of living expenses set aside in cash. You will also want to take into account potential one-time expenses. That can include a new car or a replacement home appliance. Having a larger emergency fund can benefit you if the economy takes a hit again.
  

• Do not ignore any debts. Start addressing your credit card debts once your emergency fund has three months-worth of funds. Student loans, car loans, and mortgages typically have lower interest rates. Incorporate these long-term debt payments into your budget.
  

• Plan ahead for retirement. Seniors who don’t take an early retirement may still work full or part time. Adults over the age of 50 can contribute a maximum of $7,000 to a Roth IRA. However, your contribution cannot exceed your earned income.
  

• Invest any of your remaining funds. Explore a low-cost target-date mutual fund if you have less than $100,000 to invest. These are diversified funds and will rebalance. That means that as you age, they will focus on more conservative investments.

When to Prioritize a Medical Alert System

As you prioritize your spending needs, you may want to place investing in a medical alert system at the top of your list. Button alarms can provide individuals with comfort and assistance during their most vulnerable moments.

Alert1 takes care to staff Command Centers with professionally trained agents. These agents hold a variety of certifications, unlike other companies. Once you contact a Command Center agent by pressing your emergency button, the emergency response team will stay on the line with you until help arrives. Alert1 also allows members to choose who these agents contact first, whether it be emergency personnel or a loved one. As you reallocate your money, take some time to consider which device works best for your lifestyle and budget. Alert1 offers members a variety of medical alert device types, including: In-the-Home, On-the-Go, and In-the-Home + On-the-Go + Fall Detection.

Any time we experience financial hardships, it can become tough to prioritize our health when we have other looming bills. That is why, especially as we age, we should consistently take a break to evaluate our finances. By doing so, we can be prepared should there be another global or financial crisis like we experienced in the pandemic.