10 Tips for Single Parents to Secure Their Special Needs Child Future

For a single parent managing professional and personal life is a daunting task. With no support at hand many times they have to rely on professionals especially where children’s care is involved. Life gets tough when there is a special needs child to care. Managing constant care of the child which involves managing therapies, schooling, and personal care is difficult by self and so it requires good support.

Single Parent Planning

While there are personal issues to resolve managing financial affairs is also a key factor in having a secure future. Many single parents dealing with lifelong issues and lack of enough support delay financial planning. This leads to a shortfall in meeting their child requirement. Having a financial roadmap and addressing issues at the right time can bring financial security for the child and themselves.

Here are 10 tips for a single parent to prepare for a better future when special needs childcare is the primary objective:

  1. Start Budgeting

As a single parent, finance can take a hit if you are not aware of where you are spending it. Budgeting separately for the special needs child is important and advisable.  A budget helps you in knowing month on month what’s going out of your pocket and where. You rely on a single income and so many times you will have to run on tight budgets especially in the initial years of your child life.  Then there will be loan EMIs to repay which cannot be deferred or missed. Also, there will be frequent changes in your expenses as the needs of your special needs child change. You are better placed to accommodate any changes in your finances if you follow budgeting.

  1. Don’t Miss An Emergency Fund

A necessity for a single parent that emergency fund is created.  With a special needs child the scope of what can be termed as an emergency just increases. If you are short of funds then you need help and being a single parent that may not be easy. It’s wiser to create an emergency fund which should be slightly higher than traditional planning. So with special needs child having a buffer of 9-12 months should be an ideal approach.

  1. Have Adequate Insurance

Life, Health and Disability insurance are three pillars of a secure future. For a single parent, it is more important to cover themselves for these three risks. Life insurance should cover your special needs child lifetime care cost and all your liabilities since there will no one to repay them after you.  Life insurance should run not only for a few years but maybe for a lifetime since the child will be dependent for life. With 100-year term plans a reality the parent can plan for a good life cover and for more number of years.  Similarly, health insurance should be bought and do not rely just on your employer insurance. Health Insurance for the child does have limitations and so creating a health fund is advisable. Lastly, disability, if it comes, can be disastrous with no support available. Covering yourself through disability insurance should be given top priority. The cover should be able to compensate your income loss if you are permanently disabled.

  1. Work For a Stable Career

The career choice is very crucial for a single parent. You may not have options of taking a career risk which requires support for running your child expenses. So you need to work towards a stable career which can sail through at least initial 15-20 years of your child life.  If you plan to go on your own then ensure you have 3-4 years of buffer to maintain your special needs child expenses.

  1. Stay Low on Debt

Debt management is integral to any financial planning. Being a single parent situation will arise when you will feel the pressure of going towards loans to meet your requirements.  Keep your debts in a manageable limit since you have a lifelong requirement to meet. It’s wiser to avail debt only when you have seen that you can repay. Any default at any stage may create problems not only for the loan but for other financial aspects due to low credit score.

  1. Maximize Employer Benefits

You have limited income and limited resources. It’s difficult to plan everything through your savings. Salaried parent has many benefits from their employer right from investments to accommodation to live. Some of the employers may have special benefits if you have a special needs child to care. Maximize your employer benefits. EPF contribution, Superannuation, Gratuity, LTA, car on lease, accommodation, and monetary benefits for child care and many others. One of the few good aspects here is that some of these benefits help you save a lot of money thus minimizing your own resources.

  1. Start Investing

Any wealth generation needs time and early you start lesser you have to contribute.  With a special needs child, the requirement will be life long and so you will need funds at every stage of his/her life. For later years of your life, there is no recourse but to save and invest so that you have enough money for you and your child. Start investing today. Create separate buckets for your child life and fill up each bucket with the right investment tools. But do not be too conservative as you need right returns to combat inflation and accumulate more.

  1. Complete Estate Planning Documents

What after me? That’s the question to be answered and without an estate plan, you cannot do so. For your special needs childcare create a private trust which will manage the assets you will leave for him.  Plan for funding of this trust with your investments and life insurance.  Write a will to ensure the assets are bequeathed to the trust after you. There might be a situation when you may be incapacitated. Who will make the decision then? Create a health power of attorney for such a situation. Lastly with the living will in the application now you need to write one. Thus for every situation, you can think about you need to have the right tool ready today.

  1. Write A Letter Of Intent

You have a wish for your child care after you. It remains a wish if you have not written down it. A letter of intent describes your child life and your vision for him/her. Future guardian and trustees can refer to this document to know more about your child.

  1. Plan Your Retirement

Retirement is as important as your present. With life long care of a special needs child, you need to be proactive to ensure you have funds for your child. Be prepared for more working years of your life if situation demand. Identify the amount of money you will need for both of you when you retire from work. If needed adjust today’s cash flows and save more for your retirement. Where will you live? Will you relocate if needed? Who will manage child caré if you are incapacitated then?  All these questions are important to answer to prepare well for your retirement years.

For single parents, there will be many social issues to deal with. Good to identify early in life and be prepared for your future. But most important keep a check on your finances and adapt to financial planning approach early in life.  Hire a Financial Planner and Estate Planner to plan for your child future. And don’t forget to take care of “ Special You”.

About the Author

Jitendra P.S. Solanki

Jitendra is a SEBI Registered Investment Adviser (INA10000184) and has earned the much-respected professional designation of Certified Financial Planner (CFPCM ) and Chartered Trust & Estate Planner (CTEPTM). He is a post graduate from IIT - Roorkee and has spent 15 years in Financial Services Industry working with leading financial institutions & Banks, advising families on their Financial well-being. Jitendra specializes in advising families with special needs children on various financial & legal aspects.

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