Editors' pick: Originally published Nov. 3.
Financial caregivers--those 90 million Americans tasked with caring for a loved one suffering from disease, injury or advanced age--have a huge responsibility in making the correct money management decisions for those individuals, and need to prepare accordingly.
That's the outlook from the Washington, D.C.-based Caregiver Action Network, which cites the 90 million figure and notes that "financial caregivers play an important role in ensuring that all finances -- from routine to complex -- are managed wisely, helping their loved ones maintain the best quality of life possible."
"Financial caregivers play a major part in helping their loved ones live stable and viable lives," says Corey Carlisle, foundation executive director at the American Bankers Association Foundation, which works closely with the CAN in educating financial caregivers. "It's extremely important that caregivers understand their role in managing day-to-day finances and planning for future expenses to ensure that all their loved ones' needs are met."
To give caregivers more tools to make their jobs easier, and their financial management performance more effective, the ABA -- and other experts contacted by TheStreet -- offer a list of tips for caregivers to better understand their roles.
Know the legal ramifications. "Financial caregivers, such as those with a power of attorney, trustees, and federal benefits fiduciaries, are fiduciaries with a duty to act and make decisions on their loved one's behalf," the ABA states. "Learn the legal responsibilities of your assigned authority in order to better execute your role."
Budget accordingly. Caregivers may be in charge of daily, unexpected and future expenses their loved one may incur, the ABA adds: "Especially if the beneficiary has a fixed income or limited finances, it's extremely important that caregivers minimize unnecessary costs and budget accordingly to ensure that all money is properly allocated."
Keep information safe. Keep track of everything, advises Chris Wong, chief executive officer at LifeSite, a document management systems provider. "It's imperative to keep financial records organized," Wong says. "Everything from account numbers to renewal dates for insurance policies should be easily accessible and kept in a secure location." Wong, who has a family of four and two aging parents, says losing vital paperwork is a big issue for financial caregivers. "With the number of natural disasters in the past six months alone, paper files and safe deposit boxes have been destroyed by floods and fires," he adds. "Digital record keeping has advanced quite a bit in recent years, and a financial guardian should navigate all options."
Watch for burnout. Gretchen Kubacky, a psychologist in Los Angeles who acts as a financial guardian for her 76-year-old mother, advises financial guardians to know exactly what they're getting into. "When you become a financial guardian for someone else, you rarely pause to think, 'Am I ready for this?'" she says. "You'll need the financial knowledge and emotional wherewithal to power through botched accounts, cash shortages, argumentative and uncooperative service reps, and the most phenomenally mind-boggling pile of papers ever, and you need to be aware of that." Kubacky cites burnout, resentment, frustration and depression as frequent emotional outcomes for financial caregivers as a result. "You can't control the level of need; you've may feel you've gotten stuck with all of it, and that it's totally unfair," she adds. "All of this can be frustrating."
Look for red flags. "Seniors have become major targets for financial abuse and fraud," the ABA adds. "Make sure to stay alert to signs of scams or identity theft that may put your loved one's assets in peril. Consult a banker or other professional advisors when you're not sure what to do."
Being a financial caregiver can be a rewarding job, but there's no doubting it's a tough one. Make it easier by adhering to the above tips, and up your game as a personal money manager for a loved one.