A: One of the hardest parts about being a caregiver for an aging parent, relative or loved one is helping them manage their finances – an area of their lives that can quickly spiral out of control if they become incapacitated or simply overwhelmed by daily living. Helping them straighten out their finances can be tricky, especially if they don’t ask you outright for help.
The best place to begin is to start a dialogue about how they are handling their bills, and how you might assist. Once they agree to let you help, sit down with them and gather information so you can make a proper assessment of their situation. Focus on what assets they own (real estate, bank account savings or investments like stocks) and what they owe (credit card debt, mortgages or other bank loans). Next, sketch out a monthly financial picture. How much do they receive in income from Social Security, pensions or interest from investments, like stock dividends)? Then look at their expenses. How much are they paying to service their credit card or mortgage debt, or to run their home (water, heat, electricity, home insurance, and phone bills) or cover their other daily expenses (food, pets, entertainment, gas money, car insurance, etc.)?
If they’re struggling to make ends meet, it may be time to explore whether or not their assets are liquid, and whether it makes sense to tap into them. For example, if your loved one has to make a hefty credit card payment every month, it may be smarter to sell stock to pay off the debt and avoid double digit interest rate charges.
Before you make any major move, it’s a good idea to meet with a financial advisor and get professional advice to understand all available options. The ultimate goal is to help your loved one enjoy their senior years and live stress free – the best way to do that is to help them understand their financial “big picture,” so they know exactly where they stand, and help them set up a monthly budget that allows them to spend their money wisely.