5 Signs of Financial Impairment

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In a videotaped experiment testing her financial cognition, an elderly woman must prepare three utility bills for mailing. She’s seated at a table holding the bills, along with three filled-out checks, and three envelopes – each with one utility’s name on it.  After considerable effort and confusion – checks paired with the wrong bills; bills placed into the wrong envelopes and taken back out – she finally finishes her task.

New difficulty carrying out simple financial tasks or understanding financial concepts that were once familiar can be warning signs of cognitive impairment due to aging, early stage Alzheimer’s or other causes, said Daniel Marson, a neurology professor and director of the Alzheimer’s Disease Center at the University of Alabama, Birmingham.

Financial skills are “the canary in the coal mine from a functional standpoint,” he said. “When you are seeing new problems in the checkbook or arithmetic errors, those are signs of an emerging disability.”

Driving, for example, may not be affected as much early on, because it relies more heavily on motor memory. “You don’t have to think about making a right turn or signaling,” he said.

The chances of having Alzheimer’s disease are slim for most older Americans; only one in nine do. Forgetting to pay a bill is more often just a sign of a bad day, and the inability to balance a checkbook or understand investments is not a warning sign if the person was never able to do so. To gauge whether the cognitive ability of a loved one or client may be in decline, the benchmark should be what he or she was able to do financially in the past – and whether that’s changed over time.

At a recent symposium, “Financial Planning in the Shadows of Dementia,” Marson provided five financial warning signs, developed from his clinical work and research as a neuropsychologist. The warning signs are:

Memory lapses.

  • Forgetting to pay bills or annual taxes, or paying bills twice.  “Someone’s been very good about paying the taxes and then one year they just forget about it,” he says.

Poor organization of information flow.

  • A once-neat desk is now consumed by a sea papers or documents neatly arranged in binder clips have been replaced by a brown bag full of disorganized papers.
  • Disarray and confusion about what transpired when.
  • Mail that remains unopened for several months.

Math mistakes in everyday life.

  • Once-proficient math skills aren’t what they used to be.  It’s suddenly a struggle to figure out the tip in a restaurant.
  • Increased difficulty working through the arithmetic details of an investment.
  • The person may need more help with the steps in a calculation.


  • An erosion in the ability to comprehend financial concepts.
  • Failure to understand a term such as “reverse mortgage” that was understood a few years earlier.

Impaired judgment:

  • A new interest in get-rich-quick schemes.  A classic sign is that the person would not have considered the scheme five years ago and is now listening and interested.
  • Thinking they have less money than they do.  Developing an unrealistic anxiety about one’s finances, even if they’re in good standing.