How to Balance the Expenses When Aging Parents Move in With Adult Children
A survey conducted by the National Alliance for Caregiving and AARP has found that one in four households provides care to a relative or friend aged 50 or older. The Federal Trade Commission estimates that 500,000 older people need help with their financial affairs. Having aging parents move in with adult children may seem like a logical solution, but it's not a one-way road. Parents and adult children should work together to balance expenses and ensure the costs are fair for everyone.
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Things You'll Need
- Pencil and paper
- Checkbook registry
- Copies of all bills
- Computer
- Expense-tracking or budgeting software
Instructions
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Track expenses and income before the parent moves in. Keep track of how much money parents are spending in their existing lifestyle, and the expenses of the adult children without parents in the household. Track these items in categories, like food, utilities, gas and other common expenses.
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Evaluate change in expenses after parents move in. The adult children will be taking on additional expenses with another family member in the household; particularly if the parent isn't healthy and requires medical care. If the parent's income can support it, he or she should pay the child for any change in expenses after he moves in.
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Establish a household fund. This is a fund that the parents can contribute to after they move in, to offset any rise in expenses. Ideally, the fund should cover all increases in expenses, plus a little extra for fluctuation.
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Create a budget for the parent. In many cases, the parent's income will be more than the cost of the additional expenses that the child incurs when the parent moves in. The parent should be entitled to keep this additional income for entertainment, medical bills and personal savings, if desired.
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Discuss rent and utility costs. In some cases, adult children won't expect any money contributed by the parents for these costs. In other cases, parents may contribute a portion of the rent and utilities. Discuss these costs before the parent moves in, so everyone is clear about the agreement and feels that the costs are fair.
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Share expenses among siblings. If one sibling is caring for an elderly parent, he or she may want to request the other siblings to offset a portion of the expenses. It's fair for siblings to split expenses, but better to get this agreement before a parent moves in.
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Find and maximize financial aid for for the parent. Government programs, such as Medicare, Medicaid and Social Security, can provide monthly income or assistance with medical bills and medical care. This helps to offset the expense of having an aging parent move in; particularly if the parent is in poor health.
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Tips & Warnings
Discuss how you'll handle costs before your parents move in. A clear understanding up front helps to avoid surprises.
Adult children: don't take advantage of your parents. He or she is entitled to keep income above the expenses; you don't automatically become a financial manager when your adult parent moves in.
Alternately, don't let aging parents take advantage of you. If the parent is financially capable, request financial contributions for all additional expenses.
In 30 states, adult children are legally required to pay for necessities for aging parents. Know what the law requires when considering financial arrangements. You may be required to pay for necessities before state programs apply.
References
Resources
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