As our loved ones age, it’s natural to begin considering their financial well-being and how you can best support them. If you’ve noticed subtle signs that your parents might need some assistance with managing their finances, you’re not alone.
Many families face this sensitive problem and navigate it successfully with care and careful preparation. A proactive approach is often the best solution. Starting the planning process early and ensuring your parents’ full participation is the best way to ensure the happiness and peace of mind for everyone involved.
In this article, we’ll provide you with practical insights and guidance on how to approach the topic of managing your elderly parents’ finances. From recognising the signs of financial problems to starting the conversation with your parents with empathy and clarity, we’ll help you navigate this sensitive subject with confidence.
What are financial affairs?
An individual’s financial affairs include all of their money matters, including income, savings, investments, properties, pensions, benefits and any other financial resources. As with all aspects of life, financial affairs have to be carefully managed to ensure financial stability and security, both now and in the future.
As we age, managing our finances without extra support can become difficult. Cognitive decline, physical disabilities or general forgetfulness can interfere with managing and keeping track of our finances. Signs of financial mismanagement can also signal the onset of conditions such as Alzheimer’s or dementia. Instances like bills accumulating, unexplained expenditures, or sudden purchases can all indicate difficulties in managing financial affairs.
Technological advances can feel exclusionary to older generations who are not up to date with internet or mobile banking. With more and more of our financial affairs being managed online, fewer options are available for elderly people who are used to traditional banking and handling their money matters face-to-face.
Learning how to help your parents with money management could be the solution to overcoming some of these challenges. From assisting with technological difficulties to assuming full responsibility for their finances during times of need, managing your parents’ money may be a necessary step as they age.
How to help your parents manage their finances
Establishing whether your parents need or indeed want help with their finances is the first step. Ensure that you act tactfully when broaching the subject, as talking about financial matters can be a difficult conversation to begin. Encourage open communication to create a safe space where your parents feel that they can talk to you about areas where they may be struggling.
The next step is getting together to discuss the money matters that may be causing concern to your parents. Whether they require help with budgeting or managing bank accounts or they would like you to handle their affairs completely. Clearly outlining your responsibilities will enable you to help them without overstepping their boundaries.
Transitioning to receiving support with financial management may be challenging for your parents, as they’ve likely handled their own affairs for a lifetime. Introducing changes gradually and one at a time, such as sitting down together to tackle bills first, can help them adjust to the idea and appreciate your help.
Once your parents are more comfortable with having you deal with their money matters, you can start organising their finances and implementing an effective money management strategy. Gathering together and neatly filing all the necessary documents, account information, certificates and wills in one secure place ensures that they can be easily accessed when needed.
Practical tips for managing finances
Helping your parents with their finances can be made more manageable with these practical tips:
- Organising Paperwork: Ensure that all important documents, such as bills, bank statements, and insurance policies, are neatly organised in one place and readily accessible.
- Tracking Monthly Expenses: Keep a close eye on all incoming and outgoing finances to gain a clear understanding of your parents’ spending patterns and financial commitments.
- Budgeting: Collaborate on creating a budget that reflects your parents’ income and expenses.
- Setting Up Online Accounts and Bill Payments: Simplify financial management by setting up online banking accounts and automating bill payments, making it convenient to oversee finances from anywhere.
- Addressing Debt: Tackle any outstanding debts together and establish a structured repayment plan.
- Streamlining Payments: Consolidate recurring payments and subscriptions to streamline the payment process and minimise the risk of missed deadlines.
Remember, there are many ways that you can support your loved ones in managing their finances, so choose the ones that best suit their individual needs. Regardless of the method chosen, maintaining open communication and documenting actions are essential for fostering understanding and trust within the family.
Tips for taking over someone’s financial affairs
If you find yourself in the position of assisting your parents with money management, it’s essential to keep these considerations in mind:
Clear communication
Talking about financial affairs with your parents can be a difficult conversation. However, communication is key when it comes to helping manage finances in a family to avoid disputes and disagreements. Clarifying what level of help your parents need is important so that you both know where you stand and don’t overstep boundaries.
Organisation
Getting all your parents’ paperwork together is the next step to take. Once you have access to this information, you will gain a better understanding of your parent’s financial situation. There is a lot to consider, from finding out whether your parents are entitled to financial support or benefits to helping them manage their pensions or investments.
Banking and bills
There are now many more efficient ways to pay bills than there used to be. Whilst advances in modern technology are seen as beneficial to younger generations, internet and mobile banking do not always cater towards helping seniors manage finances. If your parents lack the necessary digital skills, they may turn to you for support in setting up internet banking and paying bills online.
Budgeting
Awareness around income and outgoings can help you lay out a budget for your parents to stick to. Budgeting is important at any time of life as it keeps spending in check and limits the risk of accruing debt. Discussing spending with your parents is helpful in order to ensure that they are happy with the proposed budget.
Writing wills
If they haven’t done so already, encourage your parents to have their wills written. Without proper wills in place, there is no guarantee that their estate will be distributed in accordance with their wishes. Ensuring that your parents have up-to-date wills is a crucial aspect of financial management and provides peace of mind for all the family.
Power of attorney
What would happen if one or both of your parents become unable to make important decisions about their finances? Having a Power of Attorney ensures that there is a designated individual to make financial decisions on behalf of your parents in case they are unable to do so themselves, providing peace of mind and ensuring their financial affairs are properly managed. Learn more about Lasting Power of Attorney in our helpful guide.
Estate management
Effective estate management is essential if your parents have properties and other financial assets to be transferred in their will once they pass. This is especially important in regards to inheritance tax and how this affects your parent’s estate and transferral of wealth.
Financing care
As your loved ones age, they may not be able to look after themselves or live alone without additional support. Your parents may already have care preferences in place, and assessing their budget allowance for financing care is the next step. Once their budget for care is established, funding or benefits may be accessed if eligible, and their care plan can be actioned.
For more information on the costs of care take a look at our guide to financing and funding home care.
Assessing capacity to manage finances
Helping parents with money management could be an ad hoc arrangement, such as offering advice or setting them up with online banking. However, if your parents lose the capacity to manage their financial affairs, this becomes a much greater responsibility.
Should your parents become unable to manage their money, they may be deemed as no longer having the mental capacity to manage their own financial affairs. If this is the case, to take over the responsibility of managing their finances, you will need to register for a financial Power of Attorney.
What is a Power of Attorney?
A financial Power of Attorney allows your parents to give you the legal right to handle their affairs with third parties such as banks, paying bills and making decisions about their money or property.
While there are many examples of power of attorney, Lasting Power of Attorney is the most common. This is a long-term arrangement when an individual has lost their mental capacity to deal with finances or make any other important decisions.
As dementia progresses, managing financial affairs understandably becomes challenging, and might necessitate appointing a Power of Attorney. Depending on the circumstances, this legal authority can be granted to one or multiple individuals. It allows them to manage various aspects of the individual’s life, from financial matters to healthcare decisions, ensuring the individual’s wishes can be carried out on their behalf.
Lacking the mental capacity to make decisions means that an individual can no longer:
- Understand information relating to a decision
- Remember information long enough to make a decision
- Reach a decision by weighing up information
- Communicate the decision by any means at all (talking, sign language, hand gestures)
Ideally, a Power of Attorney should be set up as a precaution in advance or at the very latest in the early stages of the individual experiencing reduced mental capabilities. However, if the individual’s mental capacity is in doubt, a professional assessment is required.
For more information on Lasting Power of Attorney, take a look at our guide which details all you need to know.
Discussing care options with your parents
Along with managing your parents’ financial affairs, their care should be a top priority. If they still need to create a care plan for themselves, starting this conversation with them can be helpful. Only through open communication can you establish what your parents’ care preferences are, should the time come that they require extra support.
Through effective money management and gaining a better understanding of your parents’ financial situation, their care plan can be budgeted for. By helping your parents manage their estate, they can remain financially stable while enjoying the benefits of receiving care in their own home.
If your loved ones would prefer to retain and stay in their home rather than sell up and move into a care home, home care is an option. Home care ensures that your loved ones get the support they need whilst living as independently as possible. Their daily routines remain undisturbed as they are assisted with tasks they might find difficult.
Arranging home care, whether that’s live-in care or visiting care, gives you the peace of mind that your loved ones are being expertly cared for whilst you handle other matters.
How Trinity Homecare can help
Whether you’re ready to begin home care or just making enquiries, do not hesitate to get in touch with our friendly care team today. We offer a free no-obligation enquiry service so you can get all the information you need without any pressure.
Call us on 0207 183 4884, lines are open daily from 7.30 am to 5.30 pm. Alternatively, complete our online enquiry form, and we will be in touch soon.
