Simplifying Their Finances
The natural tendency is for finances to get more complicated over time. You move from one city to another and you keep your old bank account, but you also open one at a new local bank. You change jobs and now you have two retirement accounts instead of one. By the time you are in your sixties it isn't uncommon to have a dozen different accounts. With that many accounts it is easy to fall below the minimum balance on an account and start accumulating fees. Even worse it is possible to forget about an account completely. Let's look at the steps to simplifying accounts:
- Identify the Accounts to Keep Most retirees need three banks: A local bank where they can walk in and talk with a real person. An online bank that will give them a better interest rate. A retirement provider that will manage all of their retirement accounts. The goal should be to consolidate all of their accounts into those three banks.
- Automate bill payment and direct deposit Once you have consolidated accounts, the next step is to set up automatic bill payment and direct deposits to reduce missed due dates and trips to the bank.
- Create account alerts Next, set up account alerts to notify your parents—and, if they agree, you—about low balances, large charges, or unusual activity.
- Get advance permission to share information. Your parent can authorize their bank, insurer, or a doctor's office to speak with you without authorizing you to make financial decisions.
Helping your parents with daily money management
Most of our parents have been taught their whole lives that their money is a secret that they shouldn't share with anyone except for maybe their spouse. Sharing the details of how they spend money with their children is going to be an adjustment that takes time. It is important to understand that the hardest step of helping your parents with daily money management is likely convincing them to let you help.
- View-only access or a caregiver banking program. Many banks let your parents share read-only visibility or set limited access. This can add a second set of eyes without allowing you to move money. Each bank has a different name for this type of access (Fidelity: Inquiry Access, Vanguard: Information-only Access, TIAA: Inquiry Only, Charles Schwab: Authorized Viewer or View-only Access, Merrill: Third Party Access — Read-only Access, Edward Jones: Account Sharing — View Only, Voya: Authorized Designee — Inquiry Access, Wells Fargo: Guest User — View Only, U.S. Bank: Shared Access User — View Only, Chase Business: Access & Security Manager — View Only)
- Personal Financial Aggregator Apps Personal financial aggregator apps are a great way to view activity across multiple accounts for managing money. They are even more useful if you are trying to help manage your parents' money. Like the view-only access above, they only let you see the money, not spend it. And it is often much easier to set up than creating the view-only access. I personally use two Monarch Money accounts, one for my finances and one for my parents. You might also consider Quicken Simplifi, Copilot Money, YNAB, Rocket Money, Empower Personal Dashboard, Kubera, and Tiller.
- Joint Accounts If your parents want help with actually paying the bills it is time to start thinking about joint accounts. Both people own the money and can use it. It is convenient, but it also exposes the funds to the other person's debts and can affect inheritance, so it is worth a careful conversation, and often professional advice, first.
- Durable power of attorney for finances. Power of attorney documents are discussed more in the legal section of this site. A power of attorney for finances can be set up to allow you to spend your parents' money. Their accounts stay in their name, and they decide how broad the authority is that they give you. As discussed in the legal section, it is a good idea to put this in place in case of an emergency where you would need to spend their money to cover a hospital or nursing home. You can also consider it for daily money management, but it is probably not going to be the right solution.
Hiring professional help
Sometimes the best way to help your parents is to hire someone to do the job. There are paid services that can handle daily money management.
- Daily money managers (DMMs). Professionals who handle bill paying, statement review, deposits, insurance paperwork, and coordination with tax preparers. Some hold the Certified Daily Money Manager (CDMM) credential. You can search for one through the American Association of Daily Money Managers.
- Bill-pay services. Subscription services such as SilverBills receive, review, and pay bills on your behalf, often with a dedicated account manager. Costs commonly run from roughly $10 to $100 a month depending on the plan.
- Spending and monitoring tools. Prepaid cards with spending controls, such as True Link, can limit where and how much is spent. Account-monitoring services, such as EverSafe, watch for unusual activity and alert family. These help when overspending or fraud is a concern.
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