Financial Planning for Your Parents

David Sung | June 8, 2015

Talking with your parents about their finances can be difficult and make both parties feel uneasy. After all, your parents are supposed to be concerned about you and your personal and financial health, not the other way around. But as your parents grow older, it is imperative that you get involved with their finances and understand their financial plans for the future before you retire yourself.

It can be hard to think about your parents getting older or passing away. But the Golden Years can be expensive when it comes to medical expenses, and sometimes, assisted living costs, and you need to make sure they’re properly prepared.

The first step to understanding your parents’ financial situation is to ask. This can be one of the most difficult things to do, but once you break the ice you may find discussing finances with them to be both eye opening and informative, as by then both parties are likely well versed financially.

One way to casually discuss the topic is to first talk with your parents about your own finances and ask for advice and how they have handled their own situation. This way, you are not directly asking your parents about their finances, but “learning” about financial planning via their financial past, present and future. You can use their examples as a jumping off point to dig deeper into their personal finances.

Assess the Current Financial Situation

Learning everything you can about your parents day-to-day finances can help you to understand their level of financial literacy and competence, and to make sure they are not being taken advantage of financially. If they allow, try to find out everything about your parents’ finances such as how much they are paying for monthly bills. Examine their checkbooks and look for any errors in balancing. Check their bank statements and look for abnormalities such as duplicate payments and transactions, large amounts or multiple payments to an unknown entity. Look for evidence of debt that you’re unaware of.

After this initial assessment, it is time to learn about their future financial plans and plan for the inevitable. Talking with your parents about death is never an easy task, but there are a few things that must be discussed such as finding out what arrangements your parents have made for the future as it pertains to:

  • 401(k), IRA or how much they will get from a pension
  • Health insurance
  • Long-term-care insurance
  • Investments

You should also ask your parents where all documents containing important financial information is kept. These documents will most likely include:

  • A will
  • A living will
  • Life insurance policies
  • Financial account information
  • Financial advisor’s contact information so he or she can be located when needed

If you see signs that your parents are making financial mistakes, it may be time to become more involved with your their finances. If you are not up to it, you can hire a professional to perform and monitor routine financial tasks such as paying monthly bills. If you see that your parents lack a long-term financial plan or need help with debt and financial arrangements, it may be a good idea to contact a financial advisor or a financial planner.

Your parents need to have all their finances in order and have a plan for their future. Though it is not an easy discussion to have, you must keep in mind that one day your parents may not be able to have this conversation with you, leaving questions unanswered and plans unknown.

More Articles

What is an APR Rate, and How is it Calculated?

APR rates are an essential part of applying for loans. Learn what an APR rate is and how it’s calculated in this beginner’s guide.

Read More >

Why Do Loans Have Different Payback Periods

When shopping for loans, you might be surprised at how different loan payback periods are. Learn why loans have different payback periods here.

Read More >

Working With Direct Lenders When You Have Bad Credit - What to Know

Bad credit can make accessing loans or other funding difficult, but not impossible. Learn tips to working with direct lenders with bad credit in this guide.

Read More >

Trusted provider of cash loans since 1996


Connect With Us

Loan Amount is subject to loan approval. Loan terms and availability may vary by location.  Approval rate based on complete applications received across all Cash Store locations. Customers can typically expect to receive loan proceeds in less than 20 minutes; however, processing times may vary. Loans / Advances are provided based on approved credit. Each applicant for credit is evaluated for creditworthiness. Vehicle is subject to evaluation for title/auto equity loans.

Please see the Licenses and Rates page for additional product details.

Cottonwood Financial offers consumer credit products that are generally short-term in nature and not intended for long-term borrowing needs.

In Texas, Cash Store is a Credit Services Organization and Credit Access Business. Loans are provided by a non-affiliated third-party lender. Please see the Licenses and Rates page for links to Consumer Disclosures and choose the one for the product and amount that most closely relates to your loan request.

Customer Portal residency restrictions apply. Availability of funds may vary by financial institution.