It can be difficult to think about our parents aging. We often imagine them being strong and independent, but eventually, everyone has to face the fact that our parents will get older. And with age, they might start to struggle with complex financial tasks like managing their investments and paying bills.
If you’re starting to notice that your parents are having difficulty managing their finances, it’s important to be proactive and help them out.
Here are eight ways you can do that.
1. Get Someone To Look After Their Affairs
If your parents are getting to the point where they can’t look out for themselves (or their finances), it’s important to get someone to help them. This could be a family member, close friend, or a professional service.
The important thing is to make sure that their affairs are being managed by someone trustworthy who will have their best interests at heart.
2. Make Sure They’ve Named A Power Of Attorney
One of the most important things you can do as your parents age is to make sure they’ve named you a power of attorney. This legal document will give you the authority to make financial decisions on their behalf if they’re no longer able to do so.
Without a power of attorney, you’ll have to go through the courts to get permission to manage your parents’ finances, which can be a lengthy and expensive process.
But make sure you don’t misuse your authority. If they’re still able to manage their finances, respect their wishes and let them do it. Only step in if they specifically ask for your help or if you’re concerned about their ability to make financial decisions.
3. Gather Important Financial Information
The next step is to gather all of your parents’ important financial information. This includes things like bank account numbers, investment accounts, insurance policies, income sources, and pension information.
Keep this information in a safe place, like a fireproof safe or a safety deposit box. That way, you’ll have it if something happens to your parents and you need to access their accounts.
If your parents are reluctant to give you this information, try explaining that you just want to be prepared in case something happens to them. Most likely, they’ll understand and be willing to provide the information.
4. Help Them Create A Budget
Once you have all of their financial information, sit down with your parents and help them create a budget. This will give you a good idea of their income and expenses, and it can be helpful in identifying any areas where they’re overspending.
If your parents are on a fixed income, like Social Security or a pension, their budget might be pretty straightforward. But if they have other sources of income, like rental property or investments, it can be more complex. It might also be a good idea to consider aged care fees (check out this Banfields aged care overview for more info) and other later-in-life expenses.
Either way, creating a budget is a good way to get a handle on your parents’ finances and make sure they’re able to meet their financial obligations.
5. Cut Down The Expenses
After you’ve created a budget, take a look at their expenses and see if there are any areas where you can cut down. For example, maybe they’re paying for an expensive cable TV package that they don’t really use. Or maybe they have a gym membership that they never go to.
If your parents are struggling to make ends meet, it might be necessary to make some more significant cuts. This could include things like downsizing their home or getting rid of a second car.
Of course, these decisions should be made with your parents’ input. They may be reluctant to make changes, but if it’s necessary to improve their financial situation, it’s important to have that conversation.
6. Raise Money For Your Parents (If They Need It)
In some cases, your parents might need help raising money to cover their expenses. If they own a home, they could consider taking out a reverse mortgage. This would allow them to tap into the equity in their home and receive monthly payments that can be used to cover expenses.
Or, if they have life insurance, they could consider selling their policy. This is known as a life settlement, and it can provide them with a lump sum of cash that can be used for anything they need.
Of course, these are just two examples. There are many other ways to raise money if your parents need it. The important thing is to explore all of the options and find the best solution for their particular situation.
7. Sign Up For Entitlements They’re Eligible For
As your parents get older, they might be eligible for certain entitlements or benefits. For example, if they’re on a fixed income, they might qualify for food stamps or housing assistance.
Or, if they own their home, they might be able to get a property tax exemption. There are many different types of entitlements and benefits, so it’s important to do your research and see if your parents are eligible for anything.
You can start by contacting your state or local government offices. They should be able to provide you with information about the entitlements and benefits that are available in your area.
8. Set Up Automated Payments
Lastly, you should set up automated payments. This way, their bills will be paid automatically each month, and they won’t have to worry about forgetting or falling behind.
You can usually set up automated payments through your parents’ bank or the companies that they owe money to. This can be a big help in making sure their bills are paid on time and they don’t incur any late fees.
Of course, you’ll need to make sure that your parents have enough money in their account to cover the automated payments. Otherwise, they could end up with overdraft fees or other problems.
These are just a few of the ways that you can help your aging parents with their finances. If you take the time to understand their financial situation and explore all of the options, you’ll be able to find the best solution for them. And, most importantly, you’ll be able to give them the peace of mind that they need.
And hey! If you’re also worried about your parents’ home health care, check out these 5 ways to make sure they’re getting the best possible care.