How to avoid a financial drain caring for a child with special needs?

Aug 30, 2019

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Parenthood is easy. Said no one ever. You need truckloads of love, patience and in today’s world financial resources for your child’s upbringing. The costs are likely to go higher if you are caring for a child with special needs. There may be additional expenses for medication, special therapies, long-term stability, etc.

All these can cause a huge financial and mental strain if you do not start with financial planning from an early stage. Here are some tips which will aid you in this process.

Prepare a budget

It has been rightly said that “a budget is telling your money where to go instead of wondering where it went.” Planning for the financial requirements of the child should be started as early as possible. The plan should take into consideration factors such as type of special needs or disabilities, earning potential in future, etc. Also, do not forget to extrapolate and consider the impact of inflation.

The long-term plan then needs to be broken down into a monthly budget. It should consist of regular childcare expenses, therapy costs, doctor visits, vocational training, etc. This monthly budget combined with your living expenses will give you an estimate of money available for savings.
Build a corpus

Now that you know how much money is available for monthly savings and the long-term corpus that you want to build, choose investment instruments that are suitable for you. While at first the corpus might seem like an impossible amount but with a disciplined saving approach, it can be accumulated.

For individuals who are ready to take some risk, investments in equity (through regular SIPs) can be a good option as they have the potential to beat inflation in the long run.
Emergency Fund

Life is known to throw curveballs every now and then. Unforeseen expenses can cause a lot of anxiety, especially when you are caring for a special child. Try to create an emergency fund for such situations. If you do not have enough funds available (post your monthly budget), you can utilize lump-sum cash inflows such as yearly bonus etc. for this purpose. Liquid Funds are a good investment option as they can be encashed quickly when needed.
Insurance

Adequate insurance is a necessity in this case. If the child is likely to remain dependent financially on the parents in the long term, it is a wise decision to invest in life cover for a long period.

Health insurance can help ease some of the medical expenses. Unfortunately, there are limited medical insurance plans which cater exclusively to such special needs. Family floater health insurance plans (with a top-up) may also be a good alternative.
Skill-Building

It is important to invest in skill-building or vocational training for your child. It will not only help in making them more independent but also build up their confidence and belief in themselves.

Life will keep on throwing curveballs. But we have the option of hitting those over the boundaries. Timely financial planning, regular savings and lots of love will ensure that you and your child have a great life together.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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