financial literacy

By: Tabitha Monahan, M.A., CRC
Transition Specialist/Counselor

Your child has turned 18. The application for Supplemental Security Insurance (SSI) has been submitted and approved. You’ve been assigned to be the representative payee to manage the SSI funds. How can you still help your child gain money management skills while managing the responsibilities as required by the Social Security Administration (SSA)?

What is a Representative Payee?

Many individuals with disabilities can safely and successfully manage their finances without assistance. However, due to their disability’s nature, many individuals are unable to manage their finances without help. In response to individuals who need assistance to ensure their needs are being met through their benefits, the SSA created representative payees. A representative payee is a person or organization assigned by the SSA to be responsible for the benefits that a person receives from the SSA and ensures that the beneficiary’s needs, such as housing, food and medical care are met. A representative payee can be a family member, friend or another person. When the representative payee is an organization, there is often a fee (determined by the SSA), but when the payee is a friend or family member, the payee provides this service at no cost to the beneficiary. The representative payee will make a budget for the beneficiary to ensure basic needs are met and provide money for savings and personal spending if funds allow.

A representative payee is responsible for tracking and keeping detailed records of how the funds are spent and must provide those records to the SSA when asked. Many payees also need to fill out an annual reporting to the SSA detailing how the funds from the previous year were used. Recent changes in the law amended who needed to fill out such reports. Now, parents and spouses who are representative payees and live with the beneficiary no longer need to fill out the annual report. However, they do still need to keep detailed financial records.

How can I support my child’s financial literacy as their representative payee?

I have been a representative payee for individuals with disabilities for the vast majority of my career. In that role, I also worked to increase the individual’s financial literacy skills and increase their understanding of their financial situation. Having the individual involved in the process has innumerable benefits, the most basic of being the respect for their human rights. By having the individuals involved as much as they are capable and is healthy for them, much of the animosity and much of the paternalism of having another person control their finances, can be dissipated. Some individuals will still choose to have minimal involvement in their finances due to anxiety, comprehension or individual priorities. But most will want a say. By meeting your child where they are in their financial journey, you can build their confidence, independence and autonomy.

The first step I like to take in building an understanding around finances is helping the person comprehend where their money is going. Maybe that will be showing your child a bank statement. Perhaps it will be showing receipts. For many young people, the amount they receive in SSI seems like a lot of money. Helping them understand the value of the funds they receive can be one of the most challenging tasks.

Another activity I like to do with the beneficiaries I assist is asking them to create their budget. How would they like to see their money spent? What are their financial goals? Do they want to live on their own someday? How much do they want to set aside for savings for more significant expenses or purchases, like first, last and security deposit; a car; a vacation? Below is a very basic budgeting form I like to use as a starting point.

Within the last few years, ABLE accounts have been getting a lot of press – and for good reason. For individuals who became disabled at birth or at a young age, an ABLE account is a wonderful way for the individual to save money for important needs and not have those assets affect the essential financial and healthcare benefits they need. The IRS recently updated the rules for ABLE accounts. In the resources below is an article from Disability Scoop with information about these updates.

One of the best ways to increase your child’s money management skills is to have them be responsible for portions of their money. They are many ways to do this, and it may take some trial and error to find the best way for your child. It is important to remember that you are not allowed to give the beneficiary direct access to the bank account as the representative payee. That means you cannot just hand over the debit card to your child. However, many companies offer programs that help young people (and adults) manage their money. I tend not to use the word “allowance” for adults when managing their money. Instead, I use words like “personal spending” or “Flex Money.” Whether I write a check to the individual for these funds or reload a prepaid debit card, giving the individuals the remaining money after necessities have been met gives them the freedom to make their own spending choices, whether good or bad. And yes, I have worked with individuals who were without personal spending money within days of receiving their excess funds for the month. Still, I have worked with individuals who have, over time, been able to build some savings and a greater understanding of money management. I have listed some in the resources, but these are not ones I have personally used, so please review and see which ones you think would work best for your family.

Another method that I find beyond useful to help build financial independence and assess current money management skills is to transfer the responsibility of paying a bill over to the individual. This should be a lower priority bill, like the cable bill, a streaming service or a cell phone bill. As time goes on and the person can pay the bill on time without prompts, increase the number of accounts the person is responsible for paying. As they build their financial independence, increase their personal spending to include funds for necessities, such as groceries and prescription copays. And remember, once a person has a representative payee, it does not mean that they must have one for life. Suppose your child is able to build the financial management skills necessary to manage their finances independently. In that case, a representative payee can be removed. If your child now has the skills to manage their own money, talk to one of your child’s providers. They can fill out a form to return this right to your child.

Have you been working with your child on money management skills? How have you fostered financial independence?

Resources:

Social Security Administration Representative Payee Webpage

Disability Scoop: IRS Issues Final Rules on ABLE Accounts

The Balance: The Best Debit Cards for Teens

Capital One MONEY Account

Dough Roller: Best Prepaid Debit Cards for Teens

FAQs for Beneficiaries that have Representative Payees

About the Author

Tabitha Monahan, M.A., CRC, is an experienced transition evaluator and vocational counselor. While she is well-versed in supporting a wide range of transition-aged youth, she is especially passionate and knowledgeable in helping clients and their families navigate the complex systems of adult services and benefits as well as medical and mental health systems. She is further adept in working individually with students of all abilities to empower self-advocacy and goal achievement.

To schedule an appointment with one of NESCA’s expert transition specialists or neuropsychologists, please complete our online intake form. 

Neuropsychology & Education Services for Children & Adolescents (NESCA) is a pediatric neuropsychology practice and integrative treatment center with offices in Newton and Plainville, Massachusetts, and Londonderry, New Hampshire, serving clients from preschool through young adulthood and their families. For more information, please email info@nesca-newton.com or call 617-658-9800.