Growing up, you may have sought financial guidance from your parents. Now, it may feel awkward to step into a position when you need to help manage their finances.
You can support their fiscal management in a variety of ways. It can include basic guidance suggestions for how they manage a monthly budget, taking ownership of remitting their payments for bills, or total management of all their financial matters. And, just as they change over the years, the level of support you need to provide for them may vary, increasing or decreasing as they also work through various changes in their life.
How do you know when your parents need help?
Recognizing that your parents may need support is the first step. Are you comfortable having an open conversation with them? This discussion may include understanding what bills they pay each month, as well as other expenditures and even wish list items (i.e., a vacation, lunch out, or gifts for grandchildren).
If you are not able to have a conversation, your first step may simply be to pay closer attention to your parents’ spending habits. Specifically, take notice of any significant lifestyle changes. Are they making any unusual purchases? Are they spending excess amounts of money? Or, to the other extreme, not purchasing basic household or personal care supplies?
The buying of items that do not fit with their lifestyle or needs, entering sweepstakes or contests or lottery may also be a sign that they need additional support in managing their finances.
Where to start: getting involved with financial oversight.
As you begin a conversation, it is important to be respectful, loving and kind. Additionally, discussions regarding money must be honest, calm, and direct.
Start the discussion with open-ended questions such as how they are doing and how they feel about their finances. What are their concerns? Are they facing any challenges?
Work to understand what they are spending on basic needs such as groceries, gas, housing, and utilities each month. Additionally, discuss wish list items and estimated costs (i.e., eating out weekly, going to see a show, etc.).
The goal of this conversation is to gain insight into their spending patterns and overall monthly budget.
Next, begin to work in collaboration with them on creating a plan. A written plan that you both contribute to creating is desirable. The plan should provide clear directions for fiscal management. It can be a monthly budget or even an annual budget. The plan should include their income and expenses, needs, and wants and short term and long-term goals.
It should also include timing of expenses. Do not forget to include annual or bi-annual expenses such as insurance. Also build in emergency expenses such as car or home repair.
Finally, work with them on developing a system of support to manage the financial plan. For example, would assisting in bill pay twice a month be desirable? Can you assist them in using tools such as online bill pay? Electronic payments can be set up to provide support and transparency in financial transactions for all involved. It may take a trip to the bank and a power of attorney for access to some data and ability to manage funds (such as withdrawal or transfer).
Remember, the guidance you provide may change gradually over time or even from month to month. From simple conversations and check in, to bill paying, to complete financial oversight. For additional assistance or complicated financial matters, contact a financial planner or expert for guidance.