During my time working in the social services field, I’ve met many low-income folks diagnosed with severe and persistent mental illnesses. Most of those clients receive Social Security Income (SSI) because they are not able to work full-time due to the severity of their illnesses. As you might imagine, many of them are not able to manage their own money**.
Some clients have been institutionalized for many years or have been committed to state hospitals. When they’re released from care, they don’t have any knowledge of the skills necessary to budget effectively. Don’t get me wrong, these aren’t “stupid” people, in fact many of them are smart and talented in other ways, they just haven’t been given a good set of financial “tools” to work with…No one has ever taught them! So when they finally move into independent or supportive housing they don’t know how to pay bills and make their money last until the end of the month.
Not surprisingly, without supports in place many of them fail. Luckily social service organizations, like mine, help clients budget their money, and in some cases become their representative payee (guardian of their money). As a representative payee (rep payee), we work with clients to budget their money, pay their rent, and purchase necessities. Sometimes we pay their rent and give clients an “allowance” to spend each week. Other times we pay the rent and give them the rest of the money in one lump sum to spend as they desire.
Often we become a client’s rep payee because the client is in rent arrears and is on the verge of being evicted. In those cases the judge at housing court might offer a deal to the client, “You allow Adult Protective Services or your social service agency to become your representative payee and they will pay your past due rent over a period of time so that you’re not evicted”.
This of course only works in some circumstances (when you live in supportive housing and have a landlord who’s willing to make a payment arrangement). Clearly a private landlord would just evict you and say “tough luck”.
So that got me to thinking about rep payee for non-clients and people not receiving Social Security Benefits. If you were a bad money manager and had the opportunity for a trusted third-party to manage your money, would you? Of course you’re here reading a personal finance blog so you’re probably a good money manager, or at least in the process of turning your finances around. But if someone else could manage you money for you, pay your bills and set up an allowance to keep you from over spending would you do it?
**many of the individuals living in our building have no problems budgeting their money and live independent lives without very minimal support.
Image: TaxCredits.net