Within a few minutes, Steven’s mother was sobbing over the phone. She haltingly admitted that she had taken out a loan against her house to get money to place in an alternative investment scheme. When the money-making operation collapsed in 2008, she was forced to deplete her retirement accounts to meet the mortgage payments, which were now four months overdue.
Thirty-two-year-old Jacinth* received a similar surprise. She returned to Jamaica after a seven-year stint overseas and recognised that her father was having challenges meeting all his monthly bills. She offered to help him take care of the utilities and groceries, but soon he began to request large sums to cover various debts. She then discovered that for many years he had made bad business deals and owed money for unpaid invoices, loans and taxes.
Both Steven and Jacinth are now faced with the harsh reality of fixing their parents’ money problems. Steven is particularly bitter about his mother’s calamity, as he explains that she was reasonably well off and was just being greedy in risking her house for more money. Jacinth is having a difficult time meeting the unexpected costs of clearing up her father’s financial fiascos.
When Parents Have Money Secrets
It can be hard for parents to admit to their adult children that they are facing money problems. They may be mentally stuck in the past when the family finances were never discussed in front of the children. They may also have a sense of shame that they have lost control of their economic freedom and are now dependent on their children.
Although broaching the issue of money may be challenging, it is important for adult children to know the truth about their parents’ finances. Secretive money transactions can have a serious impact on your parents’ financial future and well-being.
Albert* became worried when he noticed large unexplained withdrawals from his father’s bank account, which he jointly owned. His father was evasive about the use of the money when Albert confronted him, and refused to explain his actions. Upon deeper investigation, Albert found out that his father had been giving huge sums to his live-in housekeeper, at a rate that could wipe out his nest egg long before time.
It’s also important for you to be aware of how your parents’ needs might affect your monthly spending. If you have only planned to deal with your immediate bills, then being forced to unexpectedly take care of another person can throw your budget completely off.
Maria* knows the financial costs of unplanned parent care. Her mother moved in with her shortly after she retired, as her pension couldn’t cover the rent, utilities and food. Already reeling from the rising cost of living, Maria’s credit card bills are now mounting and she recently had to discontinue her monthly savings plan. She hopes that her mother will keep physically well, as she has no idea how she would cope with the medical costs of a chronic illness.
Finding Out The Financial Facts
Under Jamaican law, adult children are legally obligated to maintain their parents if they are not able to take care of themselves. As many older persons might not admit when they are not coping financially, it’s important to be proactive in unearthing the truth. Here are some steps you can take to start a money conversation with your parents:
- Visit your parents’ home and look around for bills or financial statements that may be lying around. Look out for past-due notices or unpaid portions, and ask questions if you see a trend.
- Share with them a story of a ‘friend’ whose parent has financial challenges, or find articles relating to this topic. Tell them that you are available to talk if they ever have any difficulties with money.
- If it’s hard to speak to your parents, write them a letter to explain that you know that the economic situation is challenging, and that you want to ensure that they will be able to manage.
- If they are involved with a social group for seniors, arrange for a financial presentation to be done on money management or estate planning.
Despite your best efforts, you might still be unable to get financial information from your parents. If you’re worried that you may have to eventually care for your parents, start now to practise smart money habits that can help to make your responsibility easier in the future.
* names changed on request
About the Author
Cherryl Hanson Simpson is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services. She is currently writing her first book, “The 3 Ms of Money: How to Manage, Multiply and Maintain Your Money.” Financially S.M.A.R.T. Services is Jamaica’s number one source for practical, down-to-earth and independent answers for all questions relating to personal finance. Get more smart money advice at www.financiallysmartonline.com and and www.financiallysmartadvice.com .
Copyright © 2009 Cherryl Hanson Simpson.