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Publication #FAR9040

 

Navigating Your Parents' Finances1

Josephine Turner2

Figure 1. 
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If you've had to make the possibly difficult decision to take care of your parents' finances, there are a number of steps you need to take to get things in order.

Financial educators recommend that the first step is to track their cash flow. This may be difficult because parents often hide money from their children, may not remember where they've put their money, or may not have kept records. Typically, income exceeds expenses until age 70, after which savings are usually needed to meet expenses.

Once you've determined where the money is coming from and how it's spent, check your parents' bills and expenditures to identify errors. If you find transactions that aren't clear, you can request information in accordance with the Fair Credit Reporting Act. And if you discover any suspected fraud or financial abuse, you should also report it to appropriate authorities immediately.

Finally, if they haven't already done so, prepare a net worth statement. This will help you determine how long your parents' savings will last. Identify ratios that will help you in planning their finances. For example, you should set a goal that for each dollar of debt, they should have $25 of assets. For retirees, no more than 10% of their income should be going to debt, and they should have 70 to 90% of their net worth in investment assets, although that ratio can be lower for homeowners. If necessary, seek the help of a qualified and trusted financial professional to help you navigate what's best for your parents.

Listening, learning, and living together: it's the science of life. "Family Album" is a co-production of University of Florida IFAS Extension, the Department of Family, Youth and Community Sciences, and of WUFT-FM. If you'd like to learn more, please visit our website at http://www.familyalbumradio.org.

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Footnotes

1.

This document is FAR9040, one of a series of the Family Youth and Community Sciences Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida. Broadcast as program 252 and published March 2009. Reviewed March 2012. In the interest of time and/or clarity, the broadcast version of this script may have been modified. Visit the EDIS website at http://edis.ifas.ufl.edu.

2.

Josephine Turner, associate professor, Department of Family, Youth and Community Sciences, Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL 32611.

The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other extension publications, contact your county Cooperative Extension service.

U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, Dean.