The role of financial literacy when informal caregivers make complex financial decisions

Henry Cutler, Anam Bilgrami, Megan Gu, Yuanyuan Gu and Mona Aghdaee

Applied Economics, 2025, vol. 57, issue 13, 1453-1474

Abstract: Informal caregivers are accepting more responsibility for making financial decisions for older people with cognitive impairment. Paying for nursing home accommodation is a complex financial decision in Australia. Residents can make a lump sum payment, daily payment, or a combination of both. Due to government means-testing, the choice can impact the resident’s income, assets, bequest values, and how much they pay for their aged care services. We examined the relationship between the financial literacy of informal caregivers and the accommodation payment decision. We collected data using an Australia-wide survey of informal caregivers that either made or substantially influenced the accommodation payment decision. Using the ‘Big Three’ questions and self-assessed financial literacy, we found that less than half of respondents were financially literate. Greater financial literacy was significantly associated with reduced decision complexity and greater decision certainty, but this relationship was moderated by nursing home behaviour and perceived time available for decision-making. Whether a nursing home suggested consulting a financial adviser, expressed a payment type preference or informed caregivers about their decision-making time period, predicted financial adviser use and the perceived complexity and certainty of decision-making.

Date: 2025
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DOI: 10.1080/00036846.2024.2312959

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