11 Tips for Managing a Loved One’s Finances

There are a lot of reasons you may find yourself handling the finances of a loved one. In fact, you might not see some 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?

You may very well end up in this situation whether for the short term or the long haul. About 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.

It can be a lot to navigate, especially when there are so many emotions involved—and when life already feels chaotic. 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

Depending on the complexity of the situation, you may need legal protection for yourself or for your loved one. State and national laws vary, so consult an attorney for help on what documentation you’ll need. If someone is fighting an illness, will you need power of attorney to act on their behalf? Do they have a will or trust set up? It pays to get a professional involved if needed.

If you’re looking for an early primer with US law, the AARP has some great resources on this topic. 

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. Transparency is where YNAB Together can be very helpful.

If there are any family members who need oversight on your loved one’s finances, you can set them up with their own YNAB login and give them access to your loved one’s spending plan while still keeping your personal financial information private. Everything will be documented and accessible to them so your conversations can be more productive. 

4. Cash is king…or is it?

In some cases, your loved one needs help managing bills and regular expenses, but is still handling limited spending money. If that’s the case, decide up front whether they’ll be using a card or cash so you can set up appropriate accounts for day-to-day spending (with legal access for yourself if needed). If they are going to spend according to their plan, maybe there is no need for a separate account for bills. But if they have no interest in tracking their 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. Some of these services may involve special fees, but it may be worth it for convenience and clarity.

5. Automate, automate, automate

When you take on management of someone else’s finances, it can be overwhelming simply because of the sheer number of tasks involved. Complexity has built up over a lifetime, and all of that falls on your shoulders all at once. 

Sometimes, it can feel easier to manage bill payments manually, because it takes considerable effort to set up auto-pay. But I promise you, doing everything manually is not the way to go. We did that for far too long. 

As soon as you’re able, set up automatic bill pay for as many things as possible. The extra effort up front will mean much more peace later. Bonus: it finally inspired us to set up all of our own regular bills on autopay, too.

6. Therapy helps

It is helpful to understand that money and emotions are intrinsically tied. If you are stepping in to help a loved one with finances, all of the money habits you learned from them will be laid bare. There is a very good chance this process will hold a mirror up to your own financial habits. Or, if you’ve overcome some of those old patterns, it may dredge up some difficult memories.

These feelings may overflow into other relationships. If you are handling finances for an aging parent with your spouse, chances are that one of you will have a stronger emotional response. 

When my husband and I found ourselves in this very situation, couples therapy helped enormously. 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 the process is much easier with emotional support.

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.

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 the holidays often land them in debt? Talk about what they want to spend now and put it in YNAB 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)

Be clear from the start who will be involved with managing your loved ones finances. It’s important to 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. 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 your true expenses

Duh, you’re thinking: That’s Habit Two. But much like tip #7, it’s a good time to consider if any true expenses have been ignored or put off, especially if it’s an older relative. It may be time to start a discussion about life insurance, a will, and long-term care decisions.

It can be a difficult topic for many but consider end-of-life expenses, too. Would they like to have their funeral planned out? Taking the time to discuss these topics shows you care and could reduce stress for everyone involved. 

If you need help starting this conversation, check out Death Over Dinner, a helpful guide on talking about these difficult topics with loved ones. 

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 back the reins.

If you’re looking at a forever situation, it might be helpful to adjust your expectations. Spending habits that have developed over a lifetime may be difficult to change now without straining the relationship. 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 their YNAB spending plan 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!

Do you or a loved one need to change your money mindset? Sign up here for a workbook full of thoughtful questions and activities to help you uncover your priorities and organize your expenses.