As your parents get older, they may find that managing their finances has become a confusing and difficult task. Neglected accounts can result in unpaid bills, steep fees, overdraft charges, and mounting debt. With your own family and career to manage, the thought of taking over your parents’ bank accounts can be very stressful, but it doesn’t have to be.
With a little bit of prep work, you can make the job of managing your parents’ bank accounts as easy as possible.
3 Steps to Get Your Parent’s Finances Under Control
1. Get Organized
When taking on the duty of managing your parents’ bank accounts, the first step is to get organized. Start by gathering and reviewing account statements to understand your parents’ current financial status, including where their income is coming from and what their spending habits are. Fully review and abide by account requirements to ensure your parents aren’t hit with unnecessary fees. For example, some banks charge a monthly fee if the balance of an account drops under a certain amount.
Tip: If your parents’ banking institution charges lots of fees (account maintenance fees, ATM fees, overdraft fees, transfer fees, etc.), imposes limitations on transactions, or has inconvenient requirements, consider changing banks.
The next step to managing your parents’ bank accounts is to automate deposits and payments. Make sure all income is automatically deposited, including pensions, Social Security, and brokerage income. For bills and other payments, set up online bill pay or automatic withdrawal. Not only will automating deposits and payments help avoid checks or bills getting lost in stacks of paper and junk mail, but it will also make managing your parents’ bank accounts a much simpler process for you.
Just because your parents’ finances have been put on autopilot, doesn’t mean your job is done. The last step to managing your parents’ bank accounts is regular monitoring. It’s important to review bank statements on a regular basis to ensure that deposits and payments are being made as expected. Regular monitoring allows you to easily identify any unnecessary spending and make adjustments to the budget as needed. You’ll also need to keep a close eye on account balances and to make sure they stay under FDIC limits.
Tip: When monitoring accounts, keep an eye out for any suspicious activity, such as unauthorized withdrawals and identify theft.
Helping elderly parents with finances can be challenging. In many cases, mom or dad is not mentally or physically able to assist. In other cases, they resist help. Consider hiring a neutral third party, such as a CPA or attorney to help you work through this transition. At Marcia L. Campbell, CPA, we are committed to helping your parents thrive by caring for their personal and financial wellbeing.
If you are interested in learning more about how we can help, please contact us by filling out a Contact Form or giving us a call at +1(949) 686-3608.