4 Tips For Taking Over An Aging Parent’s Finances

Dana Brewer, CFP®
Jun 29, 2023 11:00:00 AM

As our clients age, we often see them struggle with paying their bills for a number of reasons. 

It may be too difficult for them to manage the paperwork, or the technology required is beyond their desire or capacity to learn it. Either way, people tend to face challenges when managing their finances as they age, especially without a support system to help keep them on track.

That said, it is not always easy for family or friends to step in, but there are steps you can take to help make the transition easier. By taking the time to understand their financial situation, creating a system, and assigning responsibility to a family member or professional, you can provide them with the emotional support and reassurance they need to ensure their financial well-being.

Understand Their Situation

The first step is to understand their situation. What bills do they pay, when do they pay them, and how have they been paid? Remember to explore those non-monthly bills such as insurance, taxes, etc. Assessing the situation may also include deeper communication with the aging family member to see if they want any involvement in the ongoing bill payments. Once you get everything figured out and automate more of the bill paying, they may be able to manage everything going forward. Communication and involvement of other key family members may be essential since you may get a partial story from the aging family member.

Create a System 

Designating a responsible family member/caregiver or finding professional assistance is often difficult. Having the time and aptitude to take on bill paying for someone else can be a challenge. Many of us organize our bill-paying systems differently, and it may be helpful to set up a centralized system for bill organization that makes sense and is convenient for whoever takes on that role.

Possibly, set up a place in their home to store all their bills, encourage them to go through the daily mail and sort out the bills. If they are giving up all involvement, have the bills sent electronically to the person who will pay those bills going forward. Consider putting what you can on an automatic payment plan, either directly to a checking account or a credit card. Set up access to their bank account to pay bills directly should you not have access to auto pay.

Establish a Budget and Track Expenses

Knowing the amount and timing of the income and expenses will help to anticipate the cash flow. Develop a schedule for bill payments and reminders. Knowing the schedule can also help to avoid security and fraud concerns–it will raise a red flag for further investigation when unexpected transactions occur. Some of our aging clients have been taken advantage of by ruthless scams. Greenlight.com, a debit card system designed for families to manage their children’s spending activity, has also proven to be a helpful tool for managing spending for seniors.

Another thing you’ll want to cover is estate planning with the seniors in your life. It’s not an easy conversation, but it’s a necessary one to avoid future conflicts and pitfalls. It is imperative to ensure that all the appropriate estate documents are in place well before you need them. While the family member is alive, documents such as Powers of Attorney and Health Care Directives appoint agents to make financial and health decisions. After death, documents such as wills and trusts will give appointed representatives the power to administer their estates.

Emotional Support and Communication 

None of this is easy for the aging family member or the person taking on this new responsibility. Acknowledging the emotional toll that giving up control over aspects of their lives they used to manage easily is hard. Encourage open and respectful communication and provide support and reassurance as you go through this transition.

Watch for the signs of struggle with bill paying for your aging family members. Are they frustrated when paying bills? Are bills not getting paid on time or at all? Are they over drafting their bank accounts? Maybe it is time to step in and have that conversation about what is working and not working for them.  Maybe they want to give up the activity of bill paying, or maybe they just need a little help. Proactive planning and involvement can avoid potential financial pitfalls in the future and ensure financial well-being and peace of mind for aging family members. 

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