There’s something about a new year that can really motivate you to be more efficient. This time last year on the blog we looked at ways caregivers can get organized and stay on top of their loved one’s paperwork. Today we’re going to be looking at a similar topic- how to manage finances for you and your loved one.
Basic personal finance tips for you, the caregiver
- Make a list of financial goals
- Make sure to include both short term (e.g., within the next year) and long-term goals (e.g., for the next 5-10 years)
- Some examples include creating an emergency fund, saving for retirement, or setting up a college fund.
- This CNBC article offers tips broken down by age range!
- Create and stick to a budget
- Consider downloading and using a budgeting app to make this step easier (Forbes has a list of the best budgeting apps for December 2021).
- Do you have credit card debt? If so, meet with your bank to create a plan to pay off what you owe.
- Make sure your own finances are in good order before taking on your loved one’s finances.
Getting started with managing a loved one’s finances
- The first step is to set aside some time to talk with your aging relative about who will handle their finances when they get older. Starting this conversation early and discussing it often will make it easier in the long run.
- Once a decision has been made, make sure to get it in writing. This will make things easier when you talk with financial professionals.
- Take inventory and create a list of bills and a payment schedule so you know when to expect each bill. This is also a good time to look at each bill critically and see if any can be reduced or cut entirely (e.g., does your loved one still really watch cable?)
- Don’t try to change too much at once! Sudden changes can be overwhelming. Instead, start small. Can you set aside time each month to write checks together?
- Gather all of your loved one’s legal documents in one place (Bank of America has a great article on how long you need to keep certain documents).
- Make sure you and your loved one are communicating with each other so that there are no surprises. This also allows both of you to manage your expectations.
- Consider if it makes sense to assign yourself or another trusted relative as power of attorney for your loved one (AARP has an article about legal issues surrounding managing a loved one’s finances).
Important tips for caregivers
- Make sure to keep your own money separate from your loved one’s account. It can be tempting to have all of your money in one account, but you may end up selling yourself short in the long run (according to a report by Forbes, 63% of family caregivers have withdrawn money from their own savings or cashed in or sold assets to provide care).
- Don’t be afraid to reach out if you’re feeling overwhelmed! There are plenty of resources to help you on this financial journey:
- Talk with your local bank or credit union
- The National Institute on Aging offers articles on a variety of topics related to financial and legal planning for caregivers.
- Alzheimer’s Association Financial and Legal Planning for Caregivers
- Greenpath Financial Wellness is a nonprofit that offers free, individualized counseling, guidance, information and tools to help individuals meet their goals and improve their overall financial health.
Be on the lookout for signs of scams!
- Know your loved one’s spending habits and look for unusual purchases (e.g., if they tend to be frugal and you notice a sudden large ticket purchase such as a TV).
- If your loved one mentions having a new “friend” that needs a lot of financial help, they may be being taken advantage of.
- If you see a large charge for gift cards or money transfer companies like Western Union, it could mean that your loved one has been scammed.
Visit the Ahead of the Curve Online Senior Resource Directory for information about legal aid services in your area.
