How to Budget With a Special Needs Child?

For any special needs child family there is lot more in budgeting. The expenses for meeting the child needs are higher. In most cases these expenses takes the major share of the income. The special child expenses enhances as the child grow but is a never ending affair. Families need to  have a clear identification of the child requirement else the finances can run into trouble at a later stage.  Moreover, there are other goals for which parents need to allocate from their limited savings.

Budgeting is a great tool to track your cash flows. By monitoring your expenses on a periodic basis you are able to identify where you are spending your money and how it is affecting your savings ability. A periodic monitoring helps you to take appropriate measures at right time if there are issues in your cash flows. You can also allocate a budget i.e. limit to your various expenses, to keep a check on your family spending habits.

Here is how special needs children families should do budgeting and what they need to consider while preparing it:

1. Identify Family Expenses

There are two kind of expenses- fixed and variable. Fixed expenses will generally comprise of outflows which will remain same month on month such as house rent, loan EMIs etc.. So you are well aware what is the payout. These expenses tend to increase only after a specified period.

The other category of expenses are variable expenses where you know the payout but not the exact amount. These will include utility bills, telephone bills etc… These expenses will vary within a range based on your usages. There may not be an exact figure but by tracking them for a certain period can surely identify this range.

The third lines of expenses are discretionary expenses which in general you do not track and so you are not aware how much your family is spending on monthly basis. Outing, movies, dining etc. will cover the list of such expenses. These are mainly for up keeping your lifestyle and are beyond your basic living expenses.

Below is a sample of an expense sheet created for monitoring monthly outflows –

Family Expenses

Identify your various expenses as illustrated above to know how much your family is spending. Here expenses of your child with special need is not included which are identified in next stage.

2. Identify Special Need Child Expenses

Once you have identified the family expenses now evaluate how much you spend on your special needs child care. Although you would be knowing some of them but you may not be aware how much is going out from your income month on month. This will include the cost for therapies, schooling, transportation, vocational trainings, purchase of support items, food, clothing etc. This evaluation is critical as it will give you an estimate on how much you are spending for your child care. Expenses which are on half yearly or annual basis can be broken into monthly to know your monthly outflow.

A sample expense sheet like below can give you a good estimation for your child expenses.-

Special Child Expenses

 

By identifying your child expenses separately it also helps you in estimating his/her future requirements.

3. Club The Two

Once both these expenses are identified it will give you the total outflow from your income. This analysis gives a clear picture of where your earnings is going the most. When you have a special needs child then his/her care do take major share of your income but most families are unaware on the future impact of this situation. If you have identified the breakup of expenses then you are in a position to take effective measures. For example you might be taking therapies privately which may be the reason of higher outflows whereas same service may be available at lower cost nearby. Similarly other expenses may be analyzed. The other objective of identifying the child expenses in detail is to estimate the future requirement. This will help you in identifying how much you will require for securing your special need child future.

4. Take Time To Evaluate Correctly

In few cases such as discretionary or child care you may not be able to estimate the expenses correctly at first instance. You will identify these expenses clearly when you monitor them for a specific period. But you need to start budgeting for which you should make some estimates initially and then track these expenses for few months. Collect bills, pen down if bill is not available, make diary or whatever means you use utilize it to monitor them.

After few months of monitoring will have an exact picture of your monthly outflows and your savings thereafter. If your savings are not enough you will come to know the real cause of it and then can take corrective measures. Also, with rising expenses it may be difficult to cope up with situation as your earning may not increase in the same ratio. Then you have to stretch your finances. Monitoring helps in avoiding such situation.

Budgeting is a simple tool. But more than that it’s actually a measure to keep a check on your outflows so that you can save money for your goals. With a special need child this is more than important because you have to plan for two generations and so need money for both. If you are not still following it good to start today and plan for the future.

Have you identified your special needs child expenses? How you are allocating for your other goals?

Share your views….

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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