Looking after a child with special needs can be quite stressful. Often, when dealing with all the emotional challenges that inevitably crop up, financial planning for differently abled children takes a back seat.
Managing finances gets harder when you have a child with special needs, which is why it’s important to realise that a family with special needs children needs to plan ahead in order to ensure that the child has the resources needed to thrive.
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While it’s certainly easier said than done, we at BankBazaar have compiled a list of questions that should cover everything you need to know about financial planning for the differently abled.
Why Do I Need To Plan?
Well, why not? By prioritising your finances, you can ensure that your child is provided with everything he or she may need during his or her lifetime. If you have a child with special needs, it’s highly likely that you have to live with a much lower disposable income all through your life compared to your peers.
Your monthly budget will most certainly have a skewed look about it since a large portion of funds will be directed towards medicine, regular physiotherapy sessions or vocational education. Therefore, when saving for two generations- yours and your child’s, you have to make sure your financial goals are not compromised.
Whether it involves taking care of your retirement needs or buying a house, implementing the right measures coupled with sound financial planning will ensure that the child’s needs and the needs of the family are taken care of.
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When Should I Start Planning For My Child?
If you’ve begun to understand the importance of financial planning for your special needs child, the next question that’s probably running through your mind is ‘’When is the right time to start?’’
Ideally, you should start planning as soon as you discover any kind of permanent disability in your child. Jitendra Solanki, a Delhi-based financial planner, who specialises in financial planning for families with special needs children said: “Financial planning should start as soon as the news of disability is heard. This is crucial since we have seen that the funds required always exceed the provision of parents and unless they provide sufficient time for accumulation, they will fall short of meeting the requirements.”
Bringing up a child with special needs requires constant care and supervision that can leave you with almost not time to think about your own or your child’s financial future. Therefore, the earlier you start, the better.
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How Do I Make A Start?
Your financial plan will rest on multiple factors such as the nature of the disability, future earning potential, your child’s life expectancy etc. You also need to take into account expenses like medical, educational, and recreational costs.
Fix a target – Note down all expenses that you can think of, and categorise them into ‘immediate’ and ‘long-term’ heads. This will help you understand how much money is needed and when.
Draw up a monthly budget keeping in mind your child’s present costs. Similarly, also try and forecast the approximate expenditure you and your family will incur over the child’s expected lifetime, factoring in inflation.
Once you have a clearer picture regarding your current as well as your expected expenses, figure out what investment options can help you tackle them head on.
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Invest In Skills – Disability should not be seen as a reason to neglect your child’s ambitions and goals. Overall awareness with regards to the needs of children with disabilities has improved exponentially over the years, resulting in society being more considerate to the situation in which such children find themselves.
Invest in evolving your child’s skill sets so that he or she becomes as independent as possible. Also, make sure to give your child a basic understanding of how to manage finances, if they are in a position to do so.
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Train Others – Although you probably always know what’s best for your children and no one else can possibly replace the amount of care and love you shower on them, you have to keep one eye on the future and identify a reliable caregiver who can take care of your child even when you are no more.
Make sure you find people who you can trust and with whom your child is comfortable. In case you can’t seem to identify anyone, you could consider making use of the services financial and custodial service companies provide.
You could even give your assets to the National Trust, which has been set up by the government to ensure that disabled children without appointed caregivers continue to receive the benefits of the assets in question.
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Plan Smartly – When drawing up a plan, your savings should cater to your child’s short- and long-term needs. And, should you happen to pass away at some point in time, make sure you plan ahead and arrange for an estate plan that will ensure that your child continues to benefit financially even after you are no more.
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Where Should I Invest?
Where to invest your hard earned money can be a little tricky since special policies designed to cater to the needs of the disabled aren’t very common.
However, there are Health Insurance schemes, such as Niramaya and Swavlamban, which the government runs for families with special needs children. Also, Star Health and Allied Insurance launched a Health Insurance policy last year to cover the needs of children with autism.
Unfortunately, with the exception of these schemes, there are no specialised policies currently available in the market, which is something of a disappointment.
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Here are few things that you should keep in mind when saving for your special child:
Ample Insurance Cover: Don’t forget to create a safety net for all members of your family, including your disabled child or children.
Since there are only handful of customised insurance policies available in the market for special needs children, make sure you include a health cover and a term plan in your portfolio. Also, don’t forget to disclose the child’s condition before nominating him or her in any policy.
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Diversify Your Investments: Invest in debt products like PPF and Fixed Deposits for your long-term investment needs. This will ensure that you get a fixed sum on maturity. If your children are young, investing in equity is a must since it tends to beat inflation while fetching you healthy returns over the long term.
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Plan Your Expenses Well: Put down all expenses that you can think of, and categorise them into short-term and long-term to get a sense of how much money is needed and when.
Emergency Fund: Your next step is to create a separate medical emergency pool for your child that can be used in unforeseen circumstances like a medical operation or the development of any serious medical condition.
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Reap Tax Benefits: The government offers certain tax related benefits under section 80(DD) of the Income Tax Act to those who have special needs children. You can read about Section 80DD in detail here.
Additional Reading: Section 80DD Deduction – Deductions On Medical Expenditure On Self Or Dependant Relative
Sound financial planning will give your child a secure future and will ensure that his or her monetary needs are always met. If the details are too complex to handle, don’t hesitate to seek professional help.