For caregivers, the first and most important tip about managing someone else’s money is to treat it like you would your own – and then be even more careful. You want the money to last as long as possible and for your loved one to have every dollar they need.
It’s a difficult job, but not necessarily stressful. In most cases, your loved one will have few bills, making money management a straightforward process. If you take to heart some good tips to guide you, managing someone else’s money will become second nature to you. The following looks at a few of the most important tips.
Create a Joint Account
One of the biggest hassles with money involves dealing with bank bureaucracy. To avoid issues down the road, ask the person you provide care for to add you onto their bank account. That way, you can directly handle money. While it might seem easier to put all the money together, it’s not. Mixing money makes it harder to track, so keep their money in separate accounts.
Power of Attorney
This allows you to make financial decisions on behalf of your loved one in case they become unable to do so. Becoming a power of attorney is an important step to take so there no difficulties arise with money management down the road.
Communication With Family
Other family members will take interest in how money is spent, including siblings, aunts and uncles and cousins. From the outset, make it clear when and how you plan to spend money and agree to let everyone know if an emergency arises that requires extra money. Keep detailed records and hold regular family meetings to discuss financial issues.
Also, make it clear what you need from each sibling, whether it’s time or money. Always ask for support rather than assuming they know what you need. Also, make sure to discuss estate planning with your parents or loved one while they are still of sound mind – it will save your family from petty arguments and divisions down the road.
It’s also helpful to set up a system to track and pay bills. The system should take into account the following.
- Determine how much money your loved one has in all accounts
- Determine to the penny what bills they must pay each month (electricity, cable, phone, streaming services, etc.).
- Make a list of the due date of each bill.
- See if it’s possible to set up automatic payments so that you don’t have to manually cut a check or visit a website each time you make a payment
- Keep records of every payment you make, and every dollar they receive through places such as pension funds, social security, etc.
Managing someone else’s money becomes stressful only when people do not have a plan to follow. By creating a smart plan and staying with it, a caregiver can provide good stewardship of their loved one’s money while also keeping family squabbles over money at a minimum.