The Great Balancing Act: How to Obtain Financial Freedom for You and Your Family

tight rope

As more Boomers retire, many are choosing to pass financial decision-making powers onto their family members — often their adult children. The choice is prompted by their desire to maintain a sense of financial security and to ensure that their best financial interests are taken into account. Since older individuals are often the targets of financial scams, passing on legal responsibility can help them to avoid financial fraud.

Anyone appointed as a financial legal guardian for their parents or loved one faces a great responsibility and the pressure can be overwhelming. Luckily, the struggle faced by financial caregivers is getting more attention with positive results. Increasingly, more resources are being created for those who are managing the finances of a loved one (or who needs someone to help them manage their own).

Free Online Resource for Caregivers

To help out those who have assumed the legal caretaking positions, The Consumer Financial Protection Bureau (CFPB) recently released guides to help anyone who is legally responsible for making financial decisions for a family member. This includes anyone who has been appointed:

  • power of attorney
  • court appointed guardian
  • trustee
  • government fiduciary

Each booklet includes a compilation of common sense advice and also includes specific actions a person should take depending on their specific legal position. This free resource gives welcome guidance to caregivers who may feel confused about how to manage a family member’s finances while managing their own personal finances.

But before looking closely at these resources, you may have questions about how to handle this responsibility and how it will affect your own finances. Here are some tips to make sure you achieve a balance between your own financial security and the financial security of a loved one:

Keep your finances separated

When you take on legal responsibility for another person you might be tempted to absorb accounts to streamline the process or access checking accounts easily to keep tabs. However, the CFPB doesn’t recommend that you combine finances. Instead, keep accounts separated and organized. It sets clear lines and avoids blurred financial lines that can lead to confusion. It can also protect you legally in case things like bankruptcy, medical bills, or means-tested federal benefits come into play.

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Make decisions based on their best interest

You are responsible for their security and livelihood and it’s not a responsibility to be taken lightly. Any decisions you make should be in their best interest. You don’t just assume responsibility for making the best financial decision, but you also assume an ethical responsibility to make decisions that will result in the greatest benefit for your loved one. If a family member offers a suggestion which doesn’t reflect the best interests of your loved one it’s ok to say “No.” Stick to the financial course which will benefit your loved one the most.

Collect and keep financial documents

Though it’s always important to keep track of financial documents, it becomes imperative when making financial decisions for others. This includes statements, expenses, receipts. Keep them in a safe location and treat them with the same level of security you would your own financial documents.

Continue to take care of your own finances

No matter what your legal obligations are to your loved one, it’s essential that you take care of your own financial security. Put equal time and energy into creating a solid financial foundation for yourself so that you can ensure your own future financial stability. This includes contributing to your retirement, your savings accounts and paying off any debt you have accumulated. Don’t pay for a loved ones’ expenses from your own pocket with the intent to pay yourself later. The best way to ensure financial stability for another person is to make sure that you’re in a stable place in your own financial life first.

It’s a scary thing to assume control (even partial) over the financial security of someone else. If you are feeling overwhelmed, these new guides can help you set guidelines and manage finances effectively. The free online booklets are available for download or you can choose to have them delivered in bulk via USPS.

Image Credit Graeme Maclean

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