As parents and relatives age, they may need more help managing their finances. This can be a daunting task, especially if you are not sure where to start. However, there are a few key things you can do to make the process easier.
Learn what they own and what they owe.
The first step is to get a sense of your parent's financial situation. This includes understanding their income, expenses, assets, and debts. You can do this by gathering copies of their recent tax returns, bank statements, credit card statements, and investment statements.
Once you have gathered this information, you can create a spreadsheet to track it all. This will help you to see where their money is coming from and going to and to identify any potential areas of concern.
Get access to accounts.
If you are going to be managing your parents' finances, it is important to have access to their accounts. This includes their bank accounts, investment accounts, and credit card accounts.
If your parents have a financial power of attorney, this will give you the legal authority to access their accounts. However, even if you have a financial power of attorney, you may need to sign additional paperwork with their banks and other financial institutions.
It is also a good idea to become a signer on your parents' accounts, rather than a joint owner. This is because being a joint owner can create legal and financial complications, especially if your parents need to apply for Medicaid or other needs-based programs. You may want to consult with a professional to get some guidance on this.
Automate bill paying and review expenses.
Once you have access to your parents' accounts, you can start to automate bill paying and review their expenses. This will help to ensure that their bills are paid on time and that their money is being spent wisely.
There are a few different ways to automate bill paying. You can set up automatic payments from your parent's bank account, or you can use a bill pay service.
When reviewing your parents' expenses, be sure to look for any areas where they may be overspending, or worse, being taken advantage of. You may also want to consider consolidating their debts or refinancing their mortgage to save money.
Don't be afraid to ask for help.
Managing your parents’ finances can be a lot of work, and it is important to ask for help when you need it. There are a number of different professionals who can help you, and you can contact your local Area Agency on Aging for assistance. They can provide you with information and resources on how to manage a loved one's finances.
Here’s some further food for thought:
- Be transparent with siblings and other family members. Keep them updated on your parent's financial situation so that they are aware of the choices you are making.
- Be respectful of your parents' wishes. It is important to remember that they are still adults, and they should have a say in how their money is spent.
- Be flexible. Your parents' financial needs may change over time. Be prepared to adapt your approach as needed.
Managing a loved one's finances can be a challenging task, but it is important to remember that you are not alone. There are several resources available to help you, and with a little planning, you can make the process easier for everyone involved.