The amount of time and work required to manage your parents' finances can add up quickly. Save yourself some hassle with these tips and tricks.
Staying on top of your own finances can be tough. That’s why it’s especially hard to manage money matters for a parent in addition to your own. Paying bills, monitoring accounts and juggling other daily tasks can be overwhelming.
But you don’t need to be told this if you’re a financial caregiver. You know it already. The question, then, is how to simplify things so you’re not giving up hours of your day overseeing your parents’ finances.
To ditch the lengthy process of sorting through your parents’ mail, writing checks and checking account balances daily, follow these steps to put your parents’ finances on autopilot – mostly on autopilot, that is. You’ll still need to handle a few tasks manually, but you can lighten your load.
To be clear, if you’re helping your parents with money matters or handling their finances entirely, you should be their power of attorney. This will allow you to legally make financial decisions and transactions for them. Learn more about why it’s necessary to be named your parents’ power of attorney.
Step 1: Make a list of bills that need to be paid
Ask your parents to collect their bills then go through them with your parents each week in person or over the phone. Make a list of each bill that is received, the account number and the contact information for the company that sent the bill. By the end of the month, you should have a good idea of the bills that they receive regularly. You can also use Carefull to automatically flag recurring bills and subscriptions from your parents’ accounts.
If your parents are cooperative and still mentally competent, ask about bills that they pay annually, semi-annually or quarterly – such as insurance payments. If they can’t help with this, you may need to review their bank statements and check for any irregular payments that they make.
Step 2: Consolidate accounts and ditch unused subscriptions
As you go through your parents bills with them, look for subscription services they signed up for but aren’t using regularly. For example, they might be paying for newspaper delivery but don’t bother to read the paper or have paid memberships to organizations but don’t attend the meetings or use their services.
Encourage your parents to ditch those unused subscriptions to save money. You could even offer to help them call to cancel.
Also, take note of how many bank accounts and credit cards they have. If they have several, it will be easier for you to manage their finances if you help your parents consolidate accounts. Do this before setting up automatic bill payments so you don’t end up closing any bank accounts from which bills are being paid.
Step 3: Choose which bills to put on autopay
Automatic bill payment will make managing your parents’ finances easier. However, you shouldn’t set and forget all of their bills. Here’s what to consider when deciding which bills to put on autopay.
Bills you should put on autopay: It makes sense to set up automatic payments for monthly bills with payment amounts that don’t fluctuate. That’s because you know what these expenses will be and can budget for them. These bills include the mortgage or rent, car loans, cable TV, phone service and monthly insurance premiums.
Bills you should not put on autopay: Avoid setting up automatic payments for credit cards. Ideally, the balance – which can vary – should be paid off each month to avoid interest charges. However, you could authorize that the minimum payment due be paid automatically to ensure a payment isn’t missed, then log onto the account to pay more than the minimum.
Be wary of setting up automatic payments for infrequent bills such as annual insurance premiums or subscriptions. If you’re not setting aside money to cover a large annual payment, that automatic payment might come as a shock if there’s not enough in your parents’ bank account to cover it. And annual subscriptions should be reviewed rather than automatically paid to see if your parents still are getting value from those subscriptions.
It’s a toss-up whether to automate utility payments. You don’t want to risk paying late or forgetting to pay altogether because services could be turned off. But monthly charges will vary, making it harder to budget. If your parents have limited income, you might want to review utility charges and pay those bills manually to ensure there’s enough cash in their account to cover those bills. Alternatively, set up automatic payments and recurring calendar reminders to log onto your parents’ utility accounts online each month before the bills are due to see how much is owed.
Step 4: Set up payments
Once you’ve settled on which bills to pay automatically, sit down with your parents to log onto their accounts or help them create online accounts. Keep a list of the usernames and passwords for the accounts or use a password manager such as Dashlane or 1Password. If a service provider doesn’t offer automated bill payment, you might be able to set up online payments to that provider through your parents’ bank.
As you’re setting up payments, consider having your parents’ statements emailed or mailed to you. If they continue to receive bills, they might get confused and send in checks – in addition to automated payments. Just let them know that the bills are coming to you so they have one less thing to worry about.
Also, be aware that Social Security benefit payments must be received electronically. If your parents haven’t already signed up for direct deposit, help them create a my Social Security account online to manage payments. Also, make sure that any pension payments they receive are being deposited electronically. If your parents have a retirement account such as an IRA, check if withdrawals from the account can be automatically deposited into their bank account.
Step 5: Set up account alerts to making monitoring easy
You can easily monitor your parents’ bank account activity by setting up account alerts. For example, you might be able to get notifications by email or text message when transactions are made and when the account balance drops below a certain level. That way, you’ll know if a bill is paid and the account balance has dropped too low.
Log onto your parents’ bank account, click on the “alerts” tab (which might be in “settings” or “profile”) and select the alerts you want to receive. You also could set up calendar alerts on your mobile phone to be notified when bills that must be paid manually are due as a reminder to pay them. Additionally, tools like Carefull can automatically let you know if anything is slipping through the cracks. Taking advantage of technology will make it easier to stay on top of your parents’ finances.