Daily Money Manager: The Most Important Job You’ve Never Heard Of

This is long because I want you to have something comprehensive. The value you’ll get from this will justify the many days and nights it took to put it together.

This is not short story fiction. It’s something that’s all too real.

Visualize this.

You are in your seventies and have been married to the same wonderful person for decades. You’ve been together so long you couldn’t imagine life without them.

Now picture this.

Your spouse has suddenly died, making chaos sprout everywhere around you. Despite the outpouring of help from your family, friends and community, you still don’t know up from down right now.

Your spouse was your world and everything changed in an instant. And now, what used to be the responsibility of your spouse has now been thrust upon you.

You’re a resourceful person so you start doing the tasks that your spouse used to do. Things like laundry, grocery shopping, and mowing the lawn. You now make your own dinner, coordination your own social calendar, and fill your own prescriptions.

Your family – bless their hearts – helps keep you emotionally and mentally stable. And your friends always lend a sympathetic ear or let you vent your deep pain.

But your daily finances are in tatters.

Your spouse took care of everything financially. I mean, you don’t even know the bank names where your money is kept. And if there ever was a family budget, it’s hidden in a place you would never look.

Who’s going to manage your daily money needs and coordinate your financial future?

The answer in a moment.

Sadly, this first scenario happens to millions of people a year. And surprisingly, so does this second scenario.

Imagine again you’re middle aged and have a couple of kids in school. Life’s good but business has you flying to all corners of the map. When you get precious home time, you want nothing more than to spend it bonding with family.

Despite your attempts to prioritize life’s demands, 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 fulfilling familial commitments or that monthly promise of a get together with your best friend.

But in the blur of life you forget to pay the credit card bill on time. It was the third time this year you were nailed with late fees and finance charges simply because you lost track of it. And let’s not talk about the bank overdraft fees that keep stacking up.

You even want to set up an annual budget, but again, who has the time? First you need to get your short and long term debt under control. You know, the debt you have no plan for either.

How can you get your financial ship sailing in the right direction again?

Why This is Critical

First, let’s understand why the unintentional chaos of these financial situations is so life-altering.

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 in16 countries what their biggest cause of stress was. The runaway answer?

Money.

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.

And I know someone that can help you do all these things.

The Daily Money Manager.

A Brief History of Daily Money Management

If you’re not interested in the evolution of Daily Money Management (DMM) just skip ahead to the next section.

DMM type services were first provided as a component of various professions’ jobs in the 1950s and 1960s. It wasn’t until the late 1970s that programs devoted exclusively to DMM emerged. And this only happened with a push from the AARP to promote DMM with volunteer programs.

Later on, for-profit DMM programs sprung up in some communities – first with limited size and scope – but eventually expanding into new services and growing in size.

DMM in the U.K. right now mirrors the struggles in America years ago. If you want a picture of the barriers, you can read about how some people in the U.K. are approaching bringing DMM to their shores (start on page 5). A more comprehensive look at an outsider’s view can be found at the U.K.’s Centre for Policy on Ageing.

Back in America, DMM is 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.

DMM is a developing profession in many ways. Just remember its relative youth compared to longer established financial roles like a banker, accountant, or stockbroker.

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 certainly 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.

The most common DMM roles can be found on the AADMM website. But I’m going to break this down for you in more depth and in a more useful way.

Educator

Whether you’re a widow managing money for the first time or an immigrant from a cash economy where checks, credit cards, and electronic payments don’t exist, you may be unfamiliar with common financial practices.

These people need someone to teach them. And any good DMM 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 the short or long course on them.

The more you share about your needs, the more a DMM will educate you and connect you to essential resources.

Advocate

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 DMM 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. Hell, you may rather have someone remove your finger nails painfully slow over paying the bills. Wouldn’t it be nice to outsource this or have someone set up a system for you?

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)

Pretty good stuff, right?

Creating and Maintaining a Budget

Ahhhh, budgeting. There are few practical skills in life 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.

A DMM will administer as big of a dose of accountability as you want or need.

Well-informed, well planned, and realistic budgets are the bread and butter of a DMM. From your spending on carrots to Ferraris, they will guide you to make the right choices. And if your life situation changes, they can revise the budget to reflect your new reality.

If you need a mental butt kicking they will offer it up (if that’s what motivates you).

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

Show of hands. 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. Reconciling account activity might even be part of your DMM’s standard package of services too.

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.

Document Management

Whether it’s physical mail, email, or that massive filing cabinet, a DMM can manage old and new documents. Their 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.

Automating Finances

A DMM is at their best when invisible.

Most can create a “set it and forget it” environment to (mostly) 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 at 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 you when you sit down with other professionals. Having a liaison who speaks the language of other professionals can be huge.

Risk Management

Many people do poorly managing their risk with money. That is, if they even realize they are taking a risk.

A DMM may not have formal training in risk management but inherent to the job is an understanding of risk. They will constantly be assessing if you’re taking risks inconsistent with your financial goals.

But eventually we all need to engage in risky financial behavior. Having an objective pro that knows the ins-and-outs of risk will be even more valuable when this happens.

Miscellaneous

Remember when I said this was not an exhaustive list of roles because DMMs wear many hats based on a number of factors? Here are even more tasks they may complete on your behalf:

• 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 DMM

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.

The Elderly

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 kinds of things 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 DMM 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.

And guess what? The simple act of paying bills can get complicated as a person ages. A utility bill might be paid multiple times or inappropriate tips or bonuses (both too big and too small) for services might be paid out.

Even worse, when bills aren’t paid seniors run the risk of having their utilities shut off or losing their housing. Paying the electric bill on time might seem trivial but it can help seniors maintain their independence.

The Mentally and Physically Disabled

People with disabilities of all shapes, sizes, and degrees are prime candidates for benefiting from working with a DMM.

These are some common scenarios that benefit heavily from getting a DMM involved:

• 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 Dang Busy with Life

I won’t bore you with more examples but there are hundreds of reasons, most totally legitimate and understandable, why you just don’t have time to handle the budget, bill payment, and piles of documents yourself.

People Who Can’t Afford Accountants or Attorneys

According to this, a DMM 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 run you significantly less than similar services from an accountant or attorney.

To further the point, the Brookdale Center for Health and Aging & Longevity completed the first scientifically rigorous study about the cost effectiveness of DMM. Their main finding:

Individuals that were able to die at home with full DMM/Case Management services in place had substantially lower lifetime costs compared with similar hypothetical individuals placed immediately in a nursing home.

The lifetime savings was over $60,000.00!

If you want more information about this check out their presentation on the value of a DMM.

Where a DMM Is Going to Look for You

DMMs have some familiar hang out spots. Here are some people they network with and places they might be looking for you:

1. Local neighborhood associations focused on elder services
2. Religious figures (e.g., clergy)
3. Geriatric care managers
4. Non-profit organizations that deal with the less affluent or elder services
5. Elder law attorneys or estate and business planning attorneys
6. Financial planners
7. CPAs, accountants and tax advisors
8. AARP referrals
9. The Local Administration on Aging
10. Health care professionals like a physical and occupational therapist or primary care doctor
11. Social workers

How to Analyze a DMM as a Prospective Client

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 you should ask when determining whether a specific DMM is right for you.

Remember: A DMM should be simplifying your financial life. They should be assisting with making daily financial decisions or empowering you through education and organization to make your own decisions.

Fantastic DMM Related Resources

This section could be pages and pages long. I don’t want to overwhelm you so I’m only highlighting the best of the best.

Bonus points if you look for apps on your smart phone or tablet related to DMM.

General Websites

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: Although DMMs exist in Canada and are spreading across the pond, the U.S. has almost exclusive domain over DMM. The AADMM is the most well known and most respected DMM related organization. Depending on the need and level of information required, they can be 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: I explored Khan Academy in my first Free Resource Friday if you want more background. 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.
• Brookdale Center: You don’t have to live in New York City to get the most from Brookdale Center. They’re all about healthy aging and longevity and I recommend a visit to their DMM specific page and the multimedia content of their 2009 DMM Policy Symposium.
• UK Centre for Policy on Ageing: The U.K. is trying to determine whether instituting DMM is the right thing to do. In the process, they created a 50 page document with a focus on fraud prevention an 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.

Specific Websites

There are niche websites or articles dealing with DMM that have a more subjective tone to them. I can’t recommend most because I’m trying to look at this objectively. But if you search around you might find a real gem like Carole Evenchik’s DMM website.

Here’s just a small subset that are worthy of your time:

• Smart Money ran an article years ago about the process and benefits of a DMM for an 80 year old woman with Parkinson’s Disease.
• 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 DMMs

Recap

DMM is much more than just checking Mint.com or Quicken every day.

It’s a discipline that turns good motivations into good actions and good actions into good habits.

To be clear, I’m not trying to convince you that hiring a DMM is right for you. But it may be a good decision for someone you love.

Now it’s your turn.

Please leave a comment about the most valuable part of the article or what else you’d like to see added to it.

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