Note: A version of this article was originally published in September 2011 and has been significantly updated since then.
This is not Daily Money Manager fiction. It's something that's all too real.
You're in your seventies and have been married for decades. You've been together so long that you couldn't imagine life without him or her.
Now picture this.
Your spouse has suddenly died and chaos sprouts everywhere around you. Your spouse was your world… and everything changed in an instant. Even worse, your spouse's responsibilities are now your responsibilities.
Your family – bless their hearts – helps keep you emotionally and mentally stable. And your friends always lend a sympathetic ear.
But your daily finances are in tatters.
Your spouse took care of everything money wise and you don't even know where the bank accounts or the family budget are (assuming you can confirm there is one).
Who's going to manage your daily money needs and coordinate your financial future?
This first scenario happens to millions of people every year, and surprisingly, so does this second scenario.
Imagine again you're middle aged and have two kids in school. Life's good, but business travel is brutal. When you're at home, you want nothing more than to spend it with family.
But you're beyond overwhelmed.
One day it's doing maintenance on the house. The next day it's nurturing your career. And the next it's that monthly get together with your best friend.
But in life's blur, you forget to pay the credit card bill … again. The late fees and finance charges are as painful as the realization that things just aren't the way you want them (not to mention the bank overdraft fees that are piling up).
How can you get your financial ship sailing in the right direction again?
Read on for more … but one way is to download the free book, spreadsheets, and more tools that I and countless others use to simplify, organize, and be money wise.
Why This is Critical
This may not come as a surprise, but the American Psychological Association found that money was the biggest cause of stress by far. And this isn't just an American problem.
An international Reader's Digest poll asked people in 16 countries what their biggest cause of stress was. The runaway answer?
People that assist the elderly and disabled like to cite a statistic to further hammer home the importance. As many as 7 percent of adults receiving Social Security benefits in the U.S. have difficulty managing their finances according to AARP (Hylan 2006).
That's approximately 6 million people who struggle with the day-to-day tasks of managing their financial lives!
The overwhelming message: getting a better grasp of our daily money management could reduce overall stress levels, debt levels, late fees and a host of other ugly things.
Yes, there is someone that can help you do all these things.
The Daily Money Manager.
What a Daily Money Manager Can Do For You
Daily Money Managers and the profession of Daily Money Management – both commonly referenced by their acronym “DMM” – are not mainstream.
So what does a DMM do? This is not an exhaustive list as they take on different roles and tasks depending on their client base, professional certifications, and many other factors.
Here's a breakdown of the most common and useful roles.
Whether you're a widow managing money for the first time or an immigrant from a cash economy, you may be unfamiliar with common financial practices.
These people need someone to teach them. And any good Daily Money Manager knows how to educate.
Just received a credit report and credit score that might as well be in a foreign language? They will translate for you.
Need to learn personal finance software like Quicken or Peachtree? There is a good chance they can teach you.
The more you share about your needs, the more a Daily Money Manager will educate you and connect you to essential resources.
Maybe nobody ever took your side in a dispute with a creditor or financial institution. Or maybe just the thought of trying to penetrate the corporate bureaucracy makes your skin crawl.
A Daily Money Manager can help.
They can also help navigate the labyrinth of medical paperwork and the health care industry on your behalf. Oh, and they'll inform you about services, benefits, and insurance you never knew you were entitled to.
Bill Payment and Review
You may be terrible at paying the bills on time. Heck, you may rather have someone slowly remove your finger nails rather than paying the bills.
A DMM will be your bill payment guru and then some. They will:
- Get you simple, custom reports on bill payment activity.
- Check for overcharges, errors and signals of fraud.
- Answer questions about that one section of the bill that confuses the crap out of you.
- Shuffle your money around to pay a bill from the right account at the right time.
- Make sure reimbursements are being made for your healthcare.
- Set up a dedicated bill payment account (if you want).
Now that's good stuff.
Creating and Maintaining a Budget
There are few practical money skills more important than creating and maintaining a budget.
If you even have one, odds are nobody is holding your feet to the fire when you blow up the budget on coffee, clothes, diapers, cars, and groceries.
But a Daily Money Manager will be your accountability ally.
Well-informed, well planned, and realistic budgets are their bread-and-butter. And if your life situation changes, they can revise the budget to reflect your new reality.
Pro Tip: You always retain the right to make crazy or ill-informed financial decisions. A good DMM will never force a decision upon you that you're not comfortable with or that they feel doesn't meet your underlying needs.
Expense and Income Tracking
Do you understand where your money is coming from and going?
A DMM can verify all your income sources, document your household expenses, and put it all into a simple report (and don't forget to check into reconciling financial account activity).
They can also monitor bank statements to make sure a Power of Attorney, home healthcare aid, or other key service providers aren't doing anything shady with your money.
Whether it's physical mail, email, or that massive filing cabinet, a Daily Money Manager can handle old and new documents. They're way more than a fancy mail sorter and opener.
Options could include:
- Scanning or saving documents to a secured website for your review or other people you authorize.
- A streamlined, on-site shredding and storage operation.
- A tax document system that makes filing taxes easier and your Accountant love you.
- Some crazy organizing method you want someone to start and maybe even finish for you.
Get creative with your request for document management or let a DMM use their system to work magic for you.
A Daily Money Manager is at their best when invisible.
Most can create a “set it and forget it” environment to automate your daily financial needs.
The best part? They can do this for you or empower you to do it for yourself. You get to choose.
Taking off on vacation becomes seamless because all your bills are paid automatically. The days of worrying who is picking up your bills and paying them when you're not home are over.
Referrals and Coordination with Other Professionals
DMMs by nature need to collaborate with other professionals. Most see themselves as an essential part of a team helping you get the most out of life. So when you need a referral for a financial planner, accountant, lawyer, or other professional, you can turn to a DMM to leverage their contacts and resources.
Assuming you want them to, some will even attend meetings with other professionals with you. Having a liaison who speaks the language of other professionals can be huge.
Many people do poorly managing their risk with money. That is, if they even realize they are taking a risk.
A Daily Money Manager may not have formal training in risk management, but their understanding of risk is inherent. Eventually, we all need to engage in risky financial behavior, so having a neutral professional that knows the ins-and-outs of risk will be even more valuable when this happens.
Yes, there are even more tasks a Daily Money Manager may take on. For example:
- Comparing bank accounts or credit cards to find the ideal one for your unique situation.
- Helping two people keep separate finances while living together.
- Notary services.
- Making bank or credit union deposits.
- Assisting financial guardians of people important to you.
Don't know if the DMM you're talking to does any of these things? Ask.
What a Daily Money Manager Can't Do For You
A DMM is a part of your financial team, but doesn't replace other members. Most aren't also lawyers, accountants, social workers, certified financial planners, medical expense managers, or geriatric care managers.
This means they may:
- Refer you to reputable lawyers but can't give you legal advice
- Prep and organize your tax documents but only to hand them off to an accountant
- Share the details of your money picture with your financial advisor but not help you invest your money
- Consult with a geriatric care manager to help you stay independent
DMMs know something about a lot of topics but will defer to more appropriate people for many of your needs.
Who Needs a Daily Money Manager
Pretty much everyone could use a professional to manage their day-to-day finances. But some people are more likely to benefit from the services and products of a DMM.
Credit for part of the information below – some taken verbatim – goes to the National Center on Elder Abuse.
Professionals who work with seniors have long recognized that individuals who are unable to manage their finances are at risk for impoverishment, homelessness, institutionalization and guardianship.
Unfortunately, these are not uncommon for seniors:
- Constantly losing a check or cash.
- Forgetting what accounts their money is in.
- Forgetting they even have an account at a financial institution.
- Lending money and not remembering when, how much and to whom they gave it.
- Failing to collect rent from tenants.
- Excessive spending on useless items, sweepstakes or contests.
- Unusually large donations to charitable, fraternal, religious or political organizations.
- Granting power of attorney to someone and then arguing over how their money is being used.
More recently, people have come to recognize that the elderly are susceptible to exploitation by unscrupulous family members, acquaintances, and predators.
For example, people may assault or threaten elders to gain access to money. Taken to an extreme, they may withhold food or life sustaining medication to hasten a decline in health or death, thereby gaining access to their assets.
A Daily Money Manager can prevent exploitation by shifting control of vulnerable seniors' money to trustworthy third parties. Seniors then become less vulnerable to threats or intimidation and can eliminate other peoples' motives for causing them physical, emotional and financial harm.
So avoid unpaid bills that could lead to utilities being forcefully shut off or, even worse, losing a home.
The Mentally and Physically Disabled
People with various disabilities are prime candidates for Daily Money Manager resources. Common scenarios include:
- Physical conditions (e.g., arthritis) that make tasks like writing checks difficult.
- People having cognitive challenges like dementia.
- Loss or impairment of sight, writing and hearing.
- Someone who wants an alternative to court‐appointed conservatorship.
People Who Are Just Too Busy
I won't bore you with more examples as there are hundreds of reasons – most totally legitimate and understandable – why you just don't have time to handle the budget, pay bills, and shuffle piles of documents yourself.
People Who Can't Afford Accountants or Attorneys
According to this, a Daily Money Manager is going to get you some serious bang for your buck. Whether it's just a one-time thing or on a regular basis, a DMM will cost significantly less than similar services from an accountant or attorney.
In other words:
Individuals that were able to die at home with full Daily Money Manager or Case Management services in place had substantially lower lifetime costs compared with similar hypothetical individuals placed immediately in a nursing home. – The Brookdale Center for Health and Aging & Longevity
The lifetime savings was over $60,000.00!
Where a Daily Money Manager Is Going to Look for You
Daily Money Managers have some familiar hang out spots. Here are some people they network with and places they might be looking for you:
- Local neighborhood associations focused on elder services
- Religious figures (e.g., clergy)
- Geriatric care managers
- Non-profit organizations that deal with the less affluent or elder services
- Elder law attorneys or estate and business planning attorneys
- Financial planners
- CPAs, accountants and tax advisors
- AARP referrals
- The Administration for Community Living
- Health care professionals like a physical and occupational therapist or primary care doctor
- Social workers
How a Prospective Client Should Analyze a Daily Money Manager
An important caveat for Daily Money Managers is that they are not regulated by state or federal agencies. The American Association of Daily Money Managers (AADMM) offers some assistance toward self-regulation, ethics, and liability insurance coverage, but this is still incomplete.
So remember that DMM is a developing profession, unlike the long established financial roles of a banker, accountant, or stockbroker.
With that in mind, you'll need the appropriate mindset and tools to evaluate a DMM. Here are some things to ask, consider, and communicate when you engage one.
- Do they know their fiduciary responsibility?
- Do they have a contract for you to sign specifying what happens if bills are not paid on time?
- What are their security measures to ensure your private information (e.g., bank account numbers, website passwords, Social Security Number) stays private?
- Do they communicate what they need to get the job done so nobody's time (or money) is wasted digging up paperwork?
- What's the hourly rate and when does the clock start and stop ticking? Is it when they get in their car to drive to where you are or get to the next place after leaving a meeting with you?
- Is a free consultation included?
- What's the overall fee structure?
- Do they have any professional designations and/or certifications (e.g. financial, senior services, medical billing, or bookkeeping)?
- How often will you communicate with me and with what level of detail?
- Will they work on a trial basis and only allow access to one bank account at first? (the correct answer is yes)
The AADMM also has a brief list of questions that you should ask when determining whether a specific Daily Money Manager is right for you.
Fantastic Daily Money Manager Resources
This section could be pages and pages long, but I'm only going to highlight the best of the best.
These are the websites you've heard of and forgot about, didn't know existed, will be amazed to explore, or will otherwise simplify your life:
- AADMM: The U.S. has the most Daily Money Managers but far, but they do exist in Canada and are spreading across the pond. The AADMM is the most well known and respected DMM related organization in any country right now though, so lean on them as a go-to resource.
- Eldercare Locator: Elder abuse protection, financial assistance, fact sheets, long term care planning. If you're older or know someone who is (and who doesn't, right?) then this is for you.
- AARP Money Management Program: Daily money management for low-income seniors or those with disabilities. They aren't in every state yet but there is still some fabulous content. An overview of the program leads you into documents on topics like planning your personal budget, dealing with debt problems, managing your money, protecting your credit or protecting yourself against identity theft.
- Khan Academy: Their ever-growing section on banking and money is for those who learn best from seeing and hearing instead of reading.
- National Center on Elder Abuse: Applicable even for those who aren't elderly. This specific article provides awesome content covering insurance, risk management, best practices and more.
- UK Centre for Policy on Ageing: In the process of determining the role of the Daily Money Manager in the U.K., this organization created a 50 page document with a focus on fraud prevention (and encyclopedic knowledge of the state of DMM in the U.S.).
- Personal Finance Education Center: Welcome to Balance Track, brought to you by your local credit union. Not a member of a credit union? Don't worry, they don't ask you if you are. They provide worksheets, calculators, information organizers, and more for core personal finance management. Fair warning: a lot of this is beginner level but can be valuable to people with advanced knowledge.
- MoneyInstructor.com: Geared towards teachers and parents who want to introduce or expand the concepts of basic money skills and personal finance.
I'd be remiss if I didn't mention the tools that I and countless others use to organize their physical and digital landscape. You'll have them instantly when you join my email newsletter with the button below.
There are quality niche websites or articles dealing with Daily Money Management lurking in various places. If you search around, you might find a real gem like Carole Evenchik's website.
Here's just a small subset that are worthy of your time:
- Robert Brokamp of The Motley Fool wrote about how to know if you need a DMM. He took one for a test drive and had some good, concise insight about what he liked and didn't like about the services.
- BookkeepingHelp.com has a big directory of personal financial services professionals to search through, including Daily Money Managers.
The Bottom Line
Daily Money Managers do much more than Mint.com or Quicken can handle. It's a discipline that turns good motivations into good actions, and good actions into good habits.
So what was the most valuable part of the article for you? And what else would you like to see added to it? Let us know in the comments!