A brief reminder to look out for your parent’s financial wellbeing during this unprecedented time.
April is Financial Literacy month in North America. During this time, we should take a close view at the financial strains we may be experiencing, but more importantly, our parents. If they are well into their retirement years, take this opportunity to help them assess or reassess their finances. One of the biggest fears most have of retiring is outlasting monies saved for this time of life. Don’t underestimate this point; it can be a stress point that may not be visible to you but is always on their minds.
You can start with a simple cash flow analysis. What is your parent’s income, and what are their expenses each month? Pensions and benefits are generally paid monthly, while annuities tend to be on a quarterly schedule. Ask about all types of income and expenses, so you have a full picture. Once done, you know if they have enough money each month and potentially what they need to cut back on or put into other assets.
Yes, this can be a difficult discussion. My Dad would not let anyone look at anything money related, while my Mom wanted all the help she could get. Framing the conversation to each will help get by most resistance. Be persistent, it may take a while and some examples of others not managing their money well to move them into accepting help. “I’m doing fine” is not an acceptable response. Let them know that this potentially impacts you should they not plan properly. Consider hiring a money manager or investment planner as a non-partial person. They may be angry with you initially but will come around and thank you later one. It’s the ounce of prevention, a pound of cure kind of thing.
Medical expenses tend to be least understood and one that drives the most stress. Each government has plans for those over 65 years old, but policies vary based on how and when they signed up and what benefits are available. Medical costs rise the older you are with some charges paid for while others are not requiring payments out-of-pocket. Take time to understand your parent’s benefits plans, both commercial and government. Understanding plan details can save money as they age. There are too many cases of having to sell off assets to pay for medical expenses only to drop into a ward of the State. Don’t let this happen; have the discussion.
Many countries are aiding with the financial stress of the pandemic by sending money to those based on incomes. If your parents qualify, help them make the best use of that money either by paying off existing bills or saving for a future event.
If you are well-off and will take on the financial responsibilities of your parents (good for you!), now is the time to work with your financial planner to make any adjustments. Markets are up and down, investments are taking severe hits, and new realities are shaping the future. Checking in will ensure stability in your plan.
Literacy with money is key to planning, but sadly, many people fail to learn about money and hope it works itself out. Don’t do this; it’s too important. I’ll save you all the statistics on financial literacy, they are out there for you to find, but you need to take this seriously.
Many organizations have simple tests to provide a reference about your financial literacy. Search for them or take those from the links below.
Financial Industry Regulatory Authority (FINRA) quiz.
First Financial Credit Union. (This is a PDF download and is a bit more extensive)
Money Management International has a 30-day financial exercise to help get this under control in an easy-to-do way, one step each day.
Whatever you decide, get started today. You will thank yourself in the future, and your parents will be proud that they raised such a smart child.
Honor – Knowledge – Life, it’s what we do.