Difficulty managing money is not an uncommon problem. People from all backgrounds struggle with managing money. It doesn’t matter the age, gender, or health condition. From paying bills on time to budgeting, balancing a bank account, and managing debt, there are a lot of elements to managing money.
Helping someone manage money can often mean taking simple steps and not necessarily taking over everything, removing the responsibility from them. Here is how to protect their independence and manage money for someone else.
Ask them about their goals
Before trying to manage anyone’s money, it’s very important to know what they want to do with money and understand their goals. Ask them what they would like. If they’d like to pay off debt, increase their income, lower expenses, invest their money for the short- or long-term, and more. Have a frank discussion regarding their philosophies on money and what their hopes are.
Talk to a financial advisor
If they have wealth to manage or what you consider a sizeable amount of money, consider going with them to meet a financial advisor who can further advise them on managing and growing what they have. A family office offers much of the same services as estate planning and assistance with growing wealth within the family context.
Outline income vs expenses
Draw up a simple budget based on their last month. Ask them to see last month’s bank statements and use them to write out what income they received and what their expenses were.
Categorize their expenses, i.e. rent, utility bills, insurance, eating out, etc. If you feel it’s appropriate, recommend to them ways to lower expenses, i.e. purchasing groceries on sale, lowering utility bills, eating out less, and more.
Make a calendar for bills
Write down deadlines for bills. Make sure that the due dates are clearly stated. Consider following up with your person to ensure they have paid the bills. If you know the money will be there, arranging pre-authorized debits may be another step.
Identify debts and highlight interest rates
A part of money management is controlling debt levels. If a person already has significant debt, if it’s not overwhelming for them to see it, write out each debt, how much is owed, and the interest rate for each. A plan can be made between you and them on what debts to pay monthly and how.
Use a budget planning app
An alternate way to budget, especially if you are familiar with apps, is to use a budget planning app. Many money management apps are out there, each a little different from the next. Find an app that you can both use to manage their accounts.
Arrange access to their bank account
If they agree, ask for formal access to their bank account. This way, you ensure things are paid on time and can help look after their accounts without having someone in front of you to provide access.
Set up a joint bank account
If you want to monitor purchases or control, to some degree, how much spending money a person has, a joint bank account may be the option to go with. Someone can also add your name to an existing account, converting it into a joint bank account if that is easier.
Look at their government benefits
Ensure the person is claiming all the benefits they are entitled to concerning the government and taxes. If you know the area of taxes, you may also want to review their last income tax report to identify areas where you know they could have claimed more. If you’re uncomfortable doing this, connecting with a family office or tax advisor may be another solution.
Research different financial products
To help someone manage money and finances, there may be ways to help them that they haven’t thought of. Research different financial products. A personal loan. A line of credit. A credit limit increase or decrease. A different fee structure for their chequing account. Even switching banks can be advantageous if a particular offer or service would help save money, grow money, or protect their financial status.
Ensure they are checking their mail
As handy as email is, a lot still gets sent out by mail, including notices from the government, credit cards, collections notices, certain utility bills, and more. Ensure you or they regularly check mail, verifying they aren’t missing important information.
Help by attending meetings with them
When meeting an advisor face-to-face, go with your person. Make sure they’re getting the right information. Ask questions. Clearly explain complex concepts to them if they don’t seem to understand. Take notes to review with them later. This is all to ensure your person is not being taken advantage of or won’t make a decision too quickly.