Financial planning for children with special needs

Children with Special Needs
A financial plan is meant for the betterment of your child’s future. It is extremely necessary when your child has special needs. For such parents financial planning plays an important role in their life.

A good financial plan can help you to figure out the cost of raising a special child and prepares them to become self-sufficient in the future.

Financial planning for children with special needs

The cost of raising a child can break all the odds which you have in your mind. It can take a lot more money than you expected to raise a child. A financial plan is a must for all the parents out there. Especially when you are raising a child with special needs, you need to be extra prepared in order to make those needs look ordinary in front of your child’s happiness and satisfaction. These needs can be anything such as therapy, medicines, or care.

A long term planning is very essential to ensure that your child is provided with good care even when you are no longer around them. So here we have presented some key steps that you need to take when you are planning for your special child.

Plan and Figure out the Budget

It is ideal to start planning as soon as you know about the special care your child requires. The plan would play a major role in your life as well as in their life. The plan you make is largely based on the nature of the care, life expectancy, future earning potential and housing needs. The first step is to estimate a monthly budget. This monthly budget should fulfill all the child’s basic needs such as therapy, schooling, and recreational activities.

The second step is to calculate and figure out the cost of your child’s long term care. It should cover his or her current age to at least the coming 10 years in the future. Like for example, if your child is in 1st standard now then plan according to his or her current age until he or she reaches the 10th standard. This method would give you an idea of how much you should start saving monthly to fulfill the needs.

Insurance is extremely important

One thing parents need to make sure is to get a life cover which is at least 10 times their annual income. Here is an example that will help you understand what the term insurance is and also different types of policies. Usually for parents with special needs children, retirement and worry about the cash flow after the retirement always go hand in hand. So to ensure the cash flow, you can invest in an annuity plan that can provide payments to your child even after you retire. Also, the health insurance policy is also equally important for your child. One important thing you should remember while looking for a health insurance policy for your child is that none of the existing policies extensively focus on the children. So the best option for you could be family wealth insurance that doubles up as a children’s health insurance policy.

To know more about children’s health insurance, here is a link to policybazar.com that will help in understanding better.

Create an Emergency Fund

Planning for a contingency expense is always a step number one in any personal finance book. An emergency fund to cover your unpredictable expenses can be very helpful in many cases. Saving for emergencies should be done from your liquid funds. It is extremely easy to create an emergency fund. Just open any bank account or just add a separate account in your existing bank account and deposit certain amount (usually 5-6 months of your monthly expenses). Do not set a online banking account for this. Doing so will make it easy to access the funds and there is a greater chance you will use the funds if you have easy access.

Setting up a Trust

One question that can make your worry is your child’s life after your death. One way to deal with that is to arrange an estate plan to ensure that your child gets continued benefits from your assets after your death. In the process of this plan, there can be two options that you can consider.

First is forming a trust and appointing a trustee who will act in the interest of your child. Another option is that you can create a “will” as soon as you start saving for your child. Remember to spell out clearly about the assets you are leaving behind for your child who is the executor of the will. To get started on both these steps, consult your family attorney.

Invest in their skills

Last and the most important tip is that as a parent you should invest in your child’s skills. Your child’s special ability cannot determine their future nor it can be a barrier to explore their full potential. Invest in developing your child’s skills so that in future he or she can become self-sufficient. Also, make sure you teach and guide them on how to manage their own finances.

For more information regarding special children’s programs and government schemes, we have listed down some links that can help you out.

  1. Autism India Organisation – Parent-child training program
  2. Autism India Organisation – Vocational Training
  3. Sai Connections – Autism awareness and training 
  4. Vekaspedia.in – Government Schemes and Programs.

Here are the takeaways

  1. A good financial plan must allow for a strict budget, create emergency fund, getting proper insurance to cover the unknowns.
  2. Do not forget to create a leave behind plan. Setting up the trust or writing a clear will is the way to go.
  3. Prioritize investing in your child’s skills and work to make them self sufficient. Do not forget to take leverage from various programs we have listed in the article.

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