About the author: Jeff Rose is a Certified Financial Planner™ and co-founder of Alliance Investment Planning Group. He is a veteran of Operation Iraqi Freedom, having served in the National Guard. His blog, Good Financial Cents, covers financial planning and investment related topics.
As a kid, there’s no greater comfort in having your parents there to pick you up when you fall. But what happens when the role reverses, and now you become the care taker of your elderly parents. Most parents will never admit to you that they need help keeping track of their finances. Admitting help is a sign of giving in and succumbing to their elder age and for many seniors is a hard pill to swallow. Down the road it may be a necessity to assist them in their finances, but it’s not too early to start the money discussions today.
Usually it will take some sort of medical emergency before both parent and child realize that they both need to be on the same page with the financial situation. I’ve seen client instances where suddenly deceased parents left their children to sort through the financial mess that’s left behind. It’s the equivalent of setting out on a long hiking trip without compass and map, having no clue where to begin or where you are going. If you think a parent is in need of help, start looking for signs. If they start complaining about misplaced bills, bouncing checks and unpaid electricity bills, it might just be time to step in.
Get the picture
You need to sit down with your parents to find out their whole situation. They should have in place several essential documents, including a will, living will and separate durable power of attorney for health care and financial decision making. If they have setup a trust, you should know where the trust documents are and who has been appointed trustee. If they have a safe or safety deposit box, you need to know where and what’s located in there. I’ve seen instances where clients parents had Cd’s and other investments spread over dozens of different banks and brokerage firms. Getting on the same page will save countless hours of frustration once your parents are gone.
Find out what the monthly income and expenditures are and make sure a usable budget is in place. By knowing what they spend their money on each month, you’ll be able to better assist them going forward.
Make things simple
If your parent has a plethora of plastic in their wallet, it’s time to start cutting the cards up and consolidating. Find the one with the lowest interest rate, and transfer all the cards to them. If they have department store cards, do your best to pay them off if the funds are available.
It might also be time to introduce some technology in their life with online banking. If you’re comfortable with this option, you’ll be able to streamline this so you can set up direct deposits, automatic bill pay and even have outside investment pay their dividends and interest into their checking/or savings accounts. I once had a elderly senior client who didn’t need his social security checks, so he just let them accumulate. Last time I checked he had almost 9 months of accumulated checks still not cashed. I could only imagine if something had happened to him and how hard it would be for his family to sort through his finances.
If your parents are computer savvy, develop a bill paying calendar and remind your parents to write checks. If it’s pass that point, you might have to write the checks yourself.
Find a money manager
Choosing the right person to manage the money might be tough. Handling your own finances is tough enough, by taking on somebody else’s can be overwhelming. Somebody that lives close might be the logical answer, but you also want to make sure that person has a handle on their own finances first. If you are the only child, it maybe your burden to bare, but don’t forget about close family friends or even a friendly close neighbor that might be there for support. There are even money management services that will take on the task of paying the bills on time. Before hiring one, be sure to thoroughly inspect the actually costs and fees of their program.
If a bill payer is required, check out the American Association of Daily Money Managers. Depending on your parents’ situation, you may also need to hire an elder care attorney to help with estate planning and to help assist them. The National Academy of Elder Law Attorneys can point you to qualified experts to help out. I’ve worked with elder care attorney that was able to greatly assist some clients whose father was in assisted living. When all else fails, there are even Certified Financial Planners that will assist in these sort of situations.
Have you had to help an elderly parent with their finances? If so, share your story on what you did to help out.
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Published or updated April 12, 2009.
{ 4 comments… read them below or add one }
This is great. I have no idea how to talk to my mom about money. I know she’s in a lot of debt that grew exponentially during a bad marriage and nasty divorce. She just came to visit and admitted that she’s paid off a lot of credit cards but still has four with balances and two mortgages. Her combined mortgage in rural Ohio is more than my rent in sunny Southern California for the same number of bedrooms. (though she has a large finished basement that one-ups us) I don’t know how to help her get out of this mess, but at least I can see that she’s trying. I have my own problems since the bf just got laid off and my hours were reduced. But we have almost no CC debt, a small car loan, and low-interest or deferred interest student loans.
This was a great read! My biggest issue is that my parents are still relatively young, but struggle immensely with finances. I want to reach out to them, but it is very difficult to do so without coming across in the wrong way.
I definitely enjoyed the article and it has given me some good ideas for trying to initiate the conversation!
Great article. My parents are retired and getting on in years now but are still active. They actually handle their finances pretty well it seems, though they have a soft spot for a grandchild that’s been in and out of trouble. This gets them into some financial trouble at times. This article gives some good ideas about how to approach parents on what can be a sensitive issue. I definitely enjoyed it. Thanks!
This is exactly the thing I struggle with month to month, and have for several years. It’s a process getting into a routine with a parent that’s not financially savvy. My father is on disability and is constantly getting overdraft charges and opening new credit accounts. I think I’ve curved the opening of new accounts for the most part, but the overdraft charges keep happening. $500 in November, $500 in February, both of which come out of my pocket.
I try to be open with my father about it, but he’s a very proud man. Last time I attempted to talk to him about maybe letting me hold onto his debit card until his next payment comes through since he was already low in the account, he snapped at me.
Last year I started handling his finances without his permission. Mainly I decided the $5k loan he had been paying on and making no progress on in the last several years was not going anywhere, so I took it over by putting it on my 4% credit card. Since January I’ve gotten the balance down from $5300 to $2000. We’ll have this paid off in July or August (he gives me the payment towards it now, and I add money to that). Then I’ll be taking off his last interest accruing debt which is at 29.99% APR (besides our house) and he’ll be debt free besides medical bills.
Once he is debt free I’ve already ordered a duplicate card to my credit card in his name to use rather than opening up all these new accounts. That way I can keep track of it easily and he’ll feel less inclined to spend money on it since it’s my account.
I personally am debt free of interest accruing debt besides my house.