Taking Care of Mom and Dad: Encourage Them to Keep Detailed Records

There are long books dedicated to the practice of making household budgets. But there's a mechanically simple process for checking your parents' finances.

To start, buy a small receipt book. A notebook will work...a day-planner is great. Also, buy one packet of blue pens and one packet of red ones. Keep one red pen and one blue pen with the receipt book at all times.

For one month, help your parents save all of their receipts. Work with them to keep the paperwork...or keep a detailed record of everything they spend. Make it an experiment: From whatever tomorrow is to that same numbered day next month, encourage your parents to create a record of every expense.

Have them put the receipts in the receipt book once a day. Using the red pen, list the expenses -- amount, date and party paid -- in the book at least every other day...in a clear, chronological order. If you have to help them, do it. Include everything -- from the 50 cents they gave your daughter for an 'NSync sticker to the $2,500 check they wrote for this month's mortgage payment.

Make a note in blue of every deposit your parents make into their bank account (if they have multiple accounts, focus thiseffort on whichever one they use primarily). Count every kind of deposit in this list -- salary, bonus, dividends, transfers from other accounts, loans from friends, money from family. Try to keep the deposits in chronological order with the expenses...but don't sweat it if the order gets a little mixed up. The main point is to include everything.

Keep these records for the full month. Resign yourself to being an anal-retentive bean counter. At the end of one month, it's time for analysis.

The main question: How do the blue total and red total compare? Don't be surprised if the red total is larger. This is usually explained by credit cards, lines of credit and interest expenses. If your parents net out payments (usually by check) to consumer finance companies, they should end up with numbers that come close to matching.

If credit card charges account for more than 20 percent of their total expenses, they are probably using the things too much...and should be cutting back.