Staying on top of your finances can be hard enough. It can be even more of a challenge if you have to manage money matters for your parents because they’re having trouble handling their finances on their own.
However, there are steps you can take to make it easier to stay on top of your parents’ finances if you are their financial caregiver. These 10 tried-and-true tips will help you gather the information you need, get organized and create a system that will save you time and prevent things from slipping through the cracks.
1. Have a list of your parents’ personal information
Think about how often you’re asked for your Social Security number or other personally identifying information when you call your financial institutions. Now, imagine having to provide that same information about your parents every time you need to talk with one of the financial institutions they use. If you don’t have it at your fingertips, you won’t get very far on that call. That’s why it’s so helpful to have a list of this information.
Create a document on your computer with your parents’ birthdates, Social Security numbers, Medicare or Medicaid numbers, driver’s license numbers and military IDs. Whenever you need that information, you’ll know where it is and can quickly pull it up on your computer.
2. Create a list of financial accounts
You should have a list of all of your parents’ bank accounts, retirement accounts, investment accounts, credit card accounts, loans, insurance policies and any other financial accounts they have. For each account, you should have the following information:
- Name and phone number of the financial institution where the account is
- Web address of the financial institution
- Account number
- Account username and password
Your parents might be able to provide this information to you. However, you might need to go through the monthly statements they get from their financial institutions and any files they might have to get the details you need.
Having this information in one place will make it easier when you need to access those accounts or reach out directly to those financial institutions. Be careful, though. If you write down this list, store the document in a safe place that can only be accessed by you and others who are authorized to see it. You don’t want this sensitive information falling into the wrong hands. For storing passwords in particular, you may want to start using a secure password manager like LastPass or 1Password.
[ Read: How to Piece Together Your Parent’s Financial Picture ]
3. Consolidate accounts
If your parents have several bank accounts, it will be easier to stay on top of them by consolidating them into one account. Ideally, you should transfer funds to the account with the lowest or no monthly maintenance fees. However, review all of the accounts before closing any to see if automatic deposits or withdrawals are being made from these accounts and need to be switched to the primary account.
If possible, consolidate credit card debt onto one card by taking advantage of a balance-transfer offer. Better yet, look for a low-interest rate personal loan to pay off your parents’ credit card balances. The rate should be fixed for the life of the loan versus a credit card balance transfer, which typically offers a low rate for only a year to 18 months. By consolidating their credit card debt, you’ll only have one monthly payment to worry about.
Also, if your parents have retirement or investment accounts with more than one brokerage firm, consider consolidating those accounts. Typically, you’ll need to fill out a Transfer Initiation Form with the brokerage to which you want to transfer your parents’ assets. Call the firm’s customer service to find out what other steps you’ll need to take.
4. Automate bill payments
Automate payments for as many of your parents’ monthly bills as possible. If any of their service providers don’t offer this service, see if you can set up automatic payments for those bills through your parents’ checking account.
As you set up automatic payments, opt to have monthly statements emailed or mailed to you. This will make it easier for you to monitor those accounts. And it will prevent your parents from thinking they need to mail in a check (on top of the automatic payment) because statements won’t be arriving in the mail each month.
That said, you might not want to set up automatic payments for your parents’ credit cards, if they still use them. You should be watching the balances and paying them off in full, or at least paying more than the minimum each month.
[ Read: How to Put Your Parents’ Finances on Autopilot ]
5. Create account alerts
Log onto your parents’ online bank and credit card accounts to set up alerts to be notified by email or a text message of activity on your parents’ accounts.
For example, you should set up alerts to be notified whenever transactions are made, including ATM cash withdrawals, transfers and wire transfers. Notifications for the latter are especially important because scammers often request wire transfers. You want to catch those quickly to notify the bank to cancel the transaction and to prevent your parents from making more.
You can also use tools like Carefull — a new app-based service for financial caregivers — to take care of this step for you and proactively send you alerts about spending issues or mistakes.
6. Check your parents’ credit report
Take advantage of the free credit report consumers can get once a year at AnnualCreditReport.com. You can get copies of your parents’ reports from all three of the credit bureaus – Experian, Equifax and Trans Union.
There are two benefits to checking your parents’ reports. First, you’ll be able to see all of the lines of credit they have – in case you’ve been having trouble tracking down accounts. And you can check for suspicious activity, such as new credit accounts opened recently that you weren’t aware of. This could be a sign that your parents’ identity has been stolen to open lines of credit in their names.
You also could sign your parents up for a free credit monitoring service such as Credit Karma or Credit Sesame. These services will monitor your parents’ credit reports and email notifications when there are changes to the reports – such as a new account that’s been opened.
[ Read: How to Protect Your Aging Parents Against Scams and Fraud ]
7. Limit spending
If your parents’ free-spending ways are jeopardizing their finances or yours (if you’re supporting them), you might need to set up a system to limit their spending. You could give your parents a cash allowance. But it would be easier to track – and limit – their spending by giving them a prepaid credit card to use that will limit the amount they can spend.
Or you could simply set up a checking account that’s only for your parents’ spending and transfer a certain dollar amount to the account each month. Whether you use this or the other approaches, you’ll need to take your parents’ other debit and credit cards away.
To avoid resentment and pushback, let your parents know that it will be easier for all of you to stay on top of their finances if they use just one card. You also could tell your parents that carrying and using fewer cards reduces their risk of having the cards or card numbers stolen.
8. Keep detailed records of statements
Hang onto all of your parents’ financial statements that you get and create a filing system to store them. You can create a spreadsheet or use Quicken to track your parents’ income and expenses. This will help at tax time if you have to file a tax return for your parents and will help if you have to file an annual report with the Social Security Administration.
Having records of the transactions you’re making for your parents also is important if you have siblings who want to be assured that you’re handling their finances well. After all, as your parents’ financial caregiver, it’s your job to manage their money responsibly.
9. Notify financial institutions about your Power of Attorney status
Even if your parents have given you permission to access their accounts, they should name you their power of attorney so there’s no question about your legal right to conduct financial transactions for them. They can do this by having an attorney draft a power of attorney document that authorizes you to make financial decisions for them.
Then go through the list of your parents’ financial accounts and reach out to all of the companies to notify them of your power of attorney status. You will need to provide them with a copy of the POA document (do not send in the original). Financial institutions might also have their own forms they will ask you to fill out so they can have your information on file.
You can ask the financial institutions to send your parents’ statements to you. And if your parents already set up online accounts with those institutions but can’t remember their passwords, let the institutions know that you need help resetting those passwords.
[ Read: The Ultimate Guide to Financial Power of Attorney ]
10. Notify government agencies of your POA status
To stay on top of your parents’ government benefits such as Social Security and Medicare, your power of attorney status isn’t enough to get access to these accounts. You must apply with the Social Security Administration to become your parent’s representative payee to manage benefits for your parent. As a representative payee, you will have to fill out an annual report detailing how your parent’s benefits are used.
Medicare has a form to appoint an authorized representative. You can fill it out if your parent is unable to and you are your parent’s power of attorney. If your parent receives veterans benefits, the VA requires medical documentation or a court ruling that your parent is unable to manage his or her financial affairs. The VA will then appoint a fiduciary to oversee management of benefits. The fiduciary usually is someone chosen by the beneficiary, so your parent can choose you.
And if you have to file a tax return for a parent and sign it, you’ll need to notify the IRS of your POA status by filling out Form 2848 and sending in a copy of the POA document.
Carefull is a new company building digital services for financial caregivers — the millions of us who help a loved one manage their finances. To learn more about Carefull, click here.