Aging Parents and Their Finances

Consider hiring a trusted financial expert

Dealing with finances, either your own or those of others, can be a real headache. And money is something that can easily come between people, especially family members. However, when you have aging parents, their finances may need your attention at some point. This can be complicated, but there are ways to make it more manageable. Remember that the very nature of the discussion calls their independence into question, so be sensitive to that. But you still have to address this as soon as possible. The longer you wait, the more likely that problems will arise.

Before you dive too far into the finances, you may want to think about bringing in a financial expert—someone you trust. He or she can be someone you’ve worked with in the past or someone you learned about from a recommendation. This serves two purposes. First, this person will know what he (or she) is doing. This will cost you a little extra, but at least you’ll know that everything is being handled properly, and it takes some of the pressure off. Second, a good financial expert is an unbiased observer who won't bring any emotional history into his work, which will be beneficial for everyone, and make the whole process a little easier.

To understand finance on a basic level, you (or the expert) will have to determine how much money is coming in and how much is going out, i.e., income versus expenses. Income can come from a variety of sources, including pensions, current salaries (if any), bonds, dividends, CDs, annuities, rental properties, and Social Security, disability, and unemployment payments.

Calculating expenses can be tricky because you have to think of everything. Here are some areas: mortgage and/or rent, property taxes, equity loans, home maintenance fees, utilities (gas, electricity, water, phone, cable, Internet), food (groceries plus dining out), insurance (property, business, life, health), and car expenses (maintenance, payments, insurance, DMV fees, gas). Make sure to include expenses for clothing, shoes, prescriptions, any monthly membership fees, credit card debt, and pet food and care (if applicable). Don’t forget about miscellaneous expenses, such as entertainment (concerts, movies), travel, books, subscriptions (magazines, newspapers), and trips to the hairdresser or barber.

Another important step is to find out what assets exist. Assets include checking accounts, savings accounts, stocks, bonds, homeowner property, IRAs, 401(k)s, vehicles, items stored in safety deposit boxes, and hidden valuables. You might be wondering what “hidden valuables” are. You should know that some seniors hide cash and valuables and forget where they put them. It’s much better to discover these valuables now and include them as assets in order to make your parents’ lives more comfortable today.

Next, use all of this information to make a budget, and have your parents stick to it. First, think about what you can eliminate or which expenses are nonessential. You can also try cost-saving methods such as encouraging them to take vacations closer to home and to attend free concerts and movie screenings. Try shopping at garage sales and vintage stores instead of buying new clothes, shoes, and books.

In the future, you’ll want to make sure that all bills are paid on time. Do whatever works best for you—use a regular calendar or an online or phone calendar with digital reminders. And use file folders and a filing cabinet to organize important papers and receipts. Organization will make a world of difference!

By Dr. Marion
Elder Care Made Easier Blog

[A version of this blog originally appeared on Dr. Marion’s Web site.]