11 Tips for Managing a Loved One’s Finances

Keeping the Peace in the Family

There are a lot of reasons you may find yourself managing the finances of a loved one. Spoiler alert: You probably won’t see most of them coming.

Whether it’s advancing age, medical issues, financial trouble, or an accident or emergency, these types of situations can leave you feeling overwhelmed at best and panicked at worst.

Being responsible for your finances is one thing, but being responsible for someone else’s?

No need to hyperventilate. You've got this.
No need to hyperventilate. You’ve got this.

Whether it’s for the short term or the long haul, you may very well end up in this situation. Studies show that 75% of adults say that adult children have a responsibility to provide financial assistance to an elderly parent in need.

This was something I never even considered as a reality unless it came along in retirement, and by then I would have plenty of extra time and my own financial stability in the rearview mirror.

You can guess that’s not where this is going.

A couple of years ago, in our early 30s, we had to start taking care of a family member’s finances. It’s not what we expected in this stage of life, but in true YNAB style we had to roll with the punches.

Today I’d like to share 11 tips that my husband and I have learned along the way:

1. Consider Motivations

Obviously, you care about the person in question or you wouldn’t be on the short list of people to call. It’s important, though, to consider the motivations of the loved one you are helping. Have they lost the ability to take care of things because of disease or age? Are they simply no longer interested in managing the reins of day-to-day spending?

Maybe they are in dire financial straits and actually don’t want help but clearly need help. Finances can be a tricky topic to discuss, so put yourself in the other person’s shoes to consider your approach. Will it also give you peace of mind to help them?

Lay the groundwork by discussing motivations for all involved. Is it a family affair? Are there multiple parties who have an interest in helping this person out, or does it fall solely on you?

2. Don’t Forget the Legal Stuff

What type of legal protection do you or they need? Consult your state’s laws on shared accounts, consider an attorney, and think about what documentation you’ll need to put in place. If someone is fighting an illness, will you need power of attorney to act on their behalf? Do they need a trust set up? It pays to get a professional involved if needed.

3. Be Transparent

Having a system in place where all parties can get the information that they need is important. The last thing you want is to create family drama out of an offer for help. This is where YNAB can come in handy—showing living costs, sharing reports and data, and making sure all of their money is accounted for.

4. Cash is King…or is it?

How involved will your loved one be with their day-to-day expenses? Do they need everything to be handled, or will they still want some control? Will they want an easy way to get cash for spending, or do they plan to spend from their main account?

It can be helpful to decide this up front and create any necessary accounts to manage things. If they are going to spend according to their YNAB budget, maybe there is no need for a separate account for bills. But if they have no interest in tracking their expenses or spending, a cash budget can make it easy to delineate what the parameters are for daily spending.

Check with your bank to see if they have an option for a savings account with an ATM card for withdrawals, or consider a pre-loaded debit card. Just be sure to check on any fees before you decide.

5. Automate, Automate, Automate

If you’d like to build up a wall of resentment and add a list a mile long to your already stuffed to-do list, then by all means do everything the hard way.

We did for far too long.

And then we got wise to automatic bill pay and decided it was worth it to take the time to get as many things on autopay as possible. Bonus: it finally inspired us to set up all of our own regular bills on autopay, too.

6. Therapy Helps

I could joke about this one, but I’m 100% serious. It is helpful to understand that money and emotions are intrinsically tied. If you are stepping in to help a loved one with finances, did you learn some of your money habits from them? There is a very good chance this process will hold a mirror up to your own financial habits. Have you changed your methods from what they have instilled in you? Are you ashamed of some of the same problems they are having? You’re going to butt up against some old money mindset issues.

If you are handling finances for an aging parent with your spouse, chances are that one of you will have a stronger emotional response.

My husband and I found ourselves in this very situation, and eventually found our way to couples therapy. We realized so much of what we were dealing with was outside of our control, and we were taking things out on each other. We had to abandon our good guy/bad guy dynamic and get a new system. (See: “Assemble Your Team” below.)

At the very least, find a trusted person you can discuss this with. You’ll find it is much easier with emotional support, and if you can dig in a little further on your “why,” you will be able to play the long game.

7. Get Them Invested in Saving

When dealing with someone who is struggling financially, it can be hard to move away from the mindset of spending all of their money and living in the paycheck-to-paycheck cycle. One way to get around this is to find out what they have been missing with their current methods.

Get your loved one on board with saving by clearly defining their goals.

Has it been ages since they’ve been on a vacation? Find out what their next escape will cost and make a plan for them to take that trip.

Do they always go into debt during the holidays because they fail to plan? Talk about what they want to spend now and put it in the budget so they can spend guilt-free when December arrives.

One note here: If you are helping someone curb spending, you may have to have a family chat about gift expectations. Maybe everyone takes a Christmas gift hiatus for a year. Maybe new guidelines are imposed, or you draw names instead of buying for everyone. Perhaps you go handmade. Whichever route, it will be easier if the whole family discusses options. Here are 16 Free (or Almost Free) Gift Ideas to inspire a new tradition.

8. Assemble Your Team (and Then Take Turns)

Who will be helping you with this endeavor? Be honest about who has time to dedicate to the actual tasks it will take to keep things running smoothly. Even if it is a team effort and other family members will be pitching in, we have found that it is helpful to have one point person in charge of the day-to-day tasks.

Once we set up our system, we compiled everything in a binder and in YNAB, so that it can easily be handed off if the current point person finds themselves without the bandwidth to handle it. When my husband got a new job, I took over. We communicated with the entire family to let them know who could be contacted about financial questions or concerns.

We also made it clear that he was NOT available at the time.

Be real about the strengths of your team, and don’t fight their weaknesses. You may realize there is someone who will never be interested in day-to-day management but could contribute in another way; for instance, we’ve found that one of our family members is interested in investing, so they are the point person on the investment strategy.

9. Embrace True Expenses

Duh, you’re thinking: That’s Rule Number Two. But much like tip #7, it’s a good time to consider if any true expenses have been ignored or put off. Is their life insurance up to date? Do they have a will or need to pay to have one set up? If they have an illness, should additional long-term care insurance be considered? Do they need different healthcare or prescription coverage? Perhaps they plan to drive their current car for the rest of their life but haven’t considered that the cost to maintain it might go up.

Account for upcoming expenses to future-proof your budget.

Not to be morbid, but, what about end-of-life expenses? Would they like to have their funeral planned out?

These are not the most fun conversations to have, but taking time to consider them could take a huge load off of everyone involved.

10. Look at the Long Game

Is this situation forever or is it temporary? Consider that as you set your pace. If someone is just in a temporary bind and needs help, you may be able to set them up with systems that will help when, or if, they take things back over.

If you’re looking at a forever situation, it might be helpful to adjust your expectations. Will you change someone’s spending habits, or do you need to approach things differently? Is it time to accept them as they are and move on?

11. Add it to Your Routine

Once you have the basic system in place, decide how often you’ll check in on the finances. We check in weekly since our loved one’s finances are fairly simple and we’ve automated so much. Typically, I just add it to our Friday payday routine.

I have all the expenses set up as scheduled transactions, so I check that they have matched and approve any transactions that are waiting. I import new transactions, and I assign any new dollars a job. I’m careful to check on those true expense categories to make sure they are building as necessary, and then I make sure the transfers are scheduled for their cash budget.

It takes me 10 to 20 minutes each week, tops.

It hasn’t been the easiest transition (see: therapy), but a couple of years in, we are feeling like we finally have a system that works for us. We’ve been honest about our expectations, and have the goals of everyone involved in mind. We are also ready to hand it off when another family member is ready and have ensured that things are set up for a seamless transition.

I hope that if you find yourself in this situation, this list helps you to make a plan to keep the peace in your family!

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11 Tips for Managing a Loved One’s Finances