How do you help a senior who has managed her own finances for decades ?
The answer is “very carefully, ” and it’s not a joke. It may be be easy, but it is critical.
Consider the following:
- The senior has probably paid her own bills, followed her own savings plan, made her own investment decisions, and has survived for many years without your involvement.
- The senior — like everyone else — is reluctant to show anyone their finances.
- Offering help to manage finances can be a sign of no-confidence. And yes, she will take it personally. So would you.
- Offering assistance can trigger fears that the person is trying to “take over,” which is a red flag indicator that they are losing independence.
Given these potential responses, should you even offer to help? The answer is “yes.” A little help can make life easier for the senior and those who support her.
Financial experts tell us that almost everyone can benefit from a periodic review of both their finances and financial management. In offering to help seniors, the secret is to focus on “Financial Management” rather than “Finances.” She may accept your help with finances later.
A significant number of seniors can benefit from a fine-tuning of their financial management, while leaving their finances alone. Financial management is more of how your mother deals with finances rather than the actual finances. There are areas where the two overlap, of course, and financial management discussions often lead to discussions about the amount, location, and financial health of the person. But to start, you will avoid some conflict by offering to help with the paperwork, bill paying, income and expense tracking , and taxes. These are the mechanical aspects, or “Financial Management.”
If a senior needs help with the finances, you may need to start a separate conversation. Sometimes these conversations grow naturally out of discussions on Financial Management.
The Financial Management Inventory
Almost everyone can improve their financial records and processes. And seniors — simply because they have had more time for records to become disorganized — can benefit greatly.
A Financial Inventory is both an organized system to identify and manage financial information AND a system to maintain that inventory. All the effort to create an organized inventory is wasted if the senior can’t or doesn’t maintain it.
A good financial management inventory is usually divided into the following sections, although many seniors will need only some of those listed, while others with complex financial situations will need more.
- Income records
- Bills and expenses
- Checking account
- Credit cards
- Assets, such as home, car, vacation homes, and items over $5,000
- Loans and obligations
- Wills, trusts, and final arrangements
- Miscellaneous records
- A summary or guide to the financial records
The physical structure of these records is critical. It must be easy for the senior to manage. A four-drawer file cabinet may look good, but if the senior cannot get into the two lower file drawers, it may not be practical.
Office supply stores have a wide array of storage containers and storage systems. One easy-to-use type is the portable plastic tub for hanging file folders. If buying tubs, verify you have a location where the senior can easily move and open the tub. Another option is a single or two drawer file cabinet placed on a table or stand so the senior can access the cabinet without bending.
When determining what existing records to keep, you will probably uncover many old records that have no value. As a society, some of us save too many documents for too long. Utility bills, for example, are seldom needed for more than a year , if that long. USA.gov has excellent guidelines for document retention. Documents and records destined for destruction should be shredded rather than dumped in the trash.
Before setting up a filing system, organize the storage units into sections (such as Income Records, Bills and Expenses, etc.). With a file folder system stored in a file cabinet or tub that uses hanging folders, label the hanging folders for each of the sections. The individual file folders will fit in each hanging folder.
Once you decide what to save, move the records into a file folder with easy-to-read labels. A labeling gun is a worthwhile investment. Always work with the senior to verify she understands and accepts the filing system.
Using the bills and expenses file and checkbook, review with the senior how she pays bills. Are they automatically deducted? If so, is there a list of automatic deductions, their amounts, purpose, and dates? Review the schedule of manual payments — how does she know a bill is due? And how will she be notified if a bill is late?
Examine the checking account — is it regularly balanced or audited? Is an adult child also on the account? If not, this may be the time to add your name so you can pay bills if the senior is unable to handle that chore.
Review each policy for dates, amounts, and beneficiaries. Verify that beneficiaries are up to date. If you are not familiar with the insurance company, do an internet search to verify they are still around. Make a list of policies and beneficiaries for the folder.
Review investments for amounts and beneficiaries. Help the senior make changes in beneficiaries to keep them current.
Once you understand the income and expenses, construct a generic monthly calendar for when to expect income, and typical dates to writes checks or submit electronic payments. Review that carefully with the senior. Print enough copies so it can be used by the senior as a checklist.
Some payments are due quarterly, semi-annually, and annually. Create a list for those payments.
Financial Power of Attorney
Discuss obtaining a financial power of attorney. These are valuable if the senior is unable to sign checks or documents during a prolonged period.
Once a senior is organized, check with them monthly to verify the organization still makes sense.