In many families, personal financial details aren’t always shared freely, especially between generations. But if you’re not familiar with your parents’ finances, you may be doing them — and yourself — a disservice.
Even with parents currently in good health, it’s wise to become familiar with their financial, medical and legal recordkeeping so you’ll be able to step in if needed. You may have to walk a fine line between appearing nosey or controlling and not spotting warning signals that something may be amiss.
When you visit your folks, keep an eye out for:
• Unpaid bills, late payment notices or utility shut-off warnings.
• Hints they sometimes choose between filling prescriptions and buying food or other necessities.
• An overabundance of junk mail, unlikely magazine subscriptions or cheap prizes, which could indicate telemarketing or get-rich-quick schemes.
• Unnecessary “home improvements.” Or conversely, signs that they can’t afford needed repairs.
• Signs of overspending or other indicators they’re living beyond their means.
• Uncharacteristic secretiveness or defensiveness indicating they’re embarrassed about problems or afraid their independence could be at risk.
Organize
One of the biggest problems people of all ages have with their finances is getting organized. Offer to help your parents create, and periodically update, files containing:
• Details of all major possessions and relevant paperwork (deeds, car registration, jewelry, etc.)
• Outstanding debts (mortgage, car loan papers, medical bills, etc.)
• All income sources, including Social Security, pension, 401(k), IRA, and personal savings.
• Bank accounts, credit cards, safe deposit box and insurance policies, including password, agent and beneficiary information.
• Will, trust, power of attorney, health care proxy and other documents showing how they want their affairs handled. AARP’s Web site (www.aarp.org/families/legal_issues) is a rich source of information about these and other legal issues facing seniors.
• Past income tax returns, and accountant or financial advisor contact information.
Budget
Chances are, your parents’ medical, insurance, food and other inflation-impacted bills have risen faster than their income — and recent downturns haven’t helped. Your parents need to know exactly how much money is coming in and going out. If they don’t already have a detailed budget, offer to help create one.
For tips on creating a budget, visit Practical Money Skills for Life, Visa Inc.’s free financial management site (www.practicalmoneyskills.com/budgeting). It features My Budget Planner, a comprehensive interactive calculator, as well as many other budgeting tools and tips.
A financial planner can help you and your parents understand the many tax, income and expense implications of retirement. If they don’t already have a planner, www.plannersearch.org is a good place to search.
Alderman directs Visa’s financial education programs. Sign up for his free monthly e-Newsletter at www.practicalmoneyskills.com/newsletter.
Even with parents currently in good health, it’s wise to become familiar with their financial, medical and legal recordkeeping so you’ll be able to step in if needed. You may have to walk a fine line between appearing nosey or controlling and not spotting warning signals that something may be amiss.
When you visit your folks, keep an eye out for:
• Unpaid bills, late payment notices or utility shut-off warnings.
• Hints they sometimes choose between filling prescriptions and buying food or other necessities.
• An overabundance of junk mail, unlikely magazine subscriptions or cheap prizes, which could indicate telemarketing or get-rich-quick schemes.
• Unnecessary “home improvements.” Or conversely, signs that they can’t afford needed repairs.
• Signs of overspending or other indicators they’re living beyond their means.
• Uncharacteristic secretiveness or defensiveness indicating they’re embarrassed about problems or afraid their independence could be at risk.
Organize
One of the biggest problems people of all ages have with their finances is getting organized. Offer to help your parents create, and periodically update, files containing:
• Details of all major possessions and relevant paperwork (deeds, car registration, jewelry, etc.)
• Outstanding debts (mortgage, car loan papers, medical bills, etc.)
• All income sources, including Social Security, pension, 401(k), IRA, and personal savings.
• Bank accounts, credit cards, safe deposit box and insurance policies, including password, agent and beneficiary information.
• Will, trust, power of attorney, health care proxy and other documents showing how they want their affairs handled. AARP’s Web site (www.aarp.org/families/legal_issues) is a rich source of information about these and other legal issues facing seniors.
• Past income tax returns, and accountant or financial advisor contact information.
Budget
Chances are, your parents’ medical, insurance, food and other inflation-impacted bills have risen faster than their income — and recent downturns haven’t helped. Your parents need to know exactly how much money is coming in and going out. If they don’t already have a detailed budget, offer to help create one.
For tips on creating a budget, visit Practical Money Skills for Life, Visa Inc.’s free financial management site (www.practicalmoneyskills.com/budgeting). It features My Budget Planner, a comprehensive interactive calculator, as well as many other budgeting tools and tips.
A financial planner can help you and your parents understand the many tax, income and expense implications of retirement. If they don’t already have a planner, www.plannersearch.org is a good place to search.
Alderman directs Visa’s financial education programs. Sign up for his free monthly e-Newsletter at www.practicalmoneyskills.com/newsletter.