In our last 2 articles, Zeke and I talked about:
The importance of starting to plan for your special needs loved ones NOW
The 7 steps you need to take to start your special needs financial journey.
This week’s article is all about starting the 1st step on this journey and taking action!
Boy that sounds good doesn’t it?!?….. taking action!
Say it with me…. “I’m taking action!” 😊
IMO, the best 1st step to take on this journey is… to create a budget!
Creating a budget for any family can be challenging.
When you have a child with special needs, it requires even more careful planning.
That’s because it’s not just the “typical” everyday expenses and savings goals that you need to account for. It’s so much more!
Every family has to think about needs and wants.
Needs are essentials, like food and housing.
Wants are discretionary but include everything from entertainment and travel to building an emergency fund and saving for retirement.
Simply keeping track of and balancing all of that can be complicated enough!
In addition to all of that, special needs families also have to include the costs of therapies, medical care, specialized classes, or necessary equipment for accommodations.
That can take some next-level budgeting skills!
Is it any wonder that the life of parenting a special needs child can feel both overly demanding AND impossibly overwhelming?
If you think you are alone and on an island, needing to figure this all out by yourself, you’re not… far from it.
Zeke and I have been there and done it successfully!
Take it from us: armed with the proper knowledge and a proven plan, and with a well-thought-out budget and a bit of creativity, you can gain both control of your finances and the peace of mind you need that everything is covered! 😊
Video Preview:
If you want to see the preview of our video , check it out here!
If you want even more details, ere are five steps to help you create a budget that works for your family, while ensuring you take care of all of your children’s unique needs.
1. Assess All Monthly Income Sources
The first step in building a solid budget is understanding exactly how much money is coming into your household each month.
Knowing your monthly income will help you make realistic decisions when it comes to allocating funds for various expenses.
Start by identifying and making a comprehensive list of all the income sources your family have coming in.
The regular income from your main job will likely be the primary source.
Also be mindful of any income that comes in from:
- Secondary jobs or side hustles
- Overtime
- Commissions
- Other additional income that you earn.
Next, don’t forget to include any sources of “unearned” or “passive” income and includes:
- Alimony and/or child support
- Government benefits like SSI and SSDI
- Income from investments/interest/dividends
- Rental income from investment property
- Distributions from trust funds
The biggest thing to remember is that every incoming dollar counts and needs to be accounted for.
Next identify how and when you are paid for each of those sources.
Do the checks come to you every two weeks, bi-monthly, or monthly?
It makes a difference!
For example, getting paid on the 1st and 15th of every month means you get 24 pay checks every year. But getting paid every 2 weeks no matter the date means you get 26 pay checks every year.
This will affect how you manage your cash flow.
It’s also important to consider any periodic payments, such as bonuses, seasonal work, company stock options, and even tax refunds.
The problem with some of this periodic income is that it is not necessarily guaranteed income. Some years you may not get it…
When setting your budget stick with the guaranteed money so you can plan around what you know and can accurately predict. 😊
Personally, I would recommend stashing any periodic income as a “life fund”.
A life fund is a buffer of at least 3 months’ worth of all expenses saved up in liquid assets.
The purpose of a life fund is that can be used for emergencies and business opportunities.
For now, don’t worry about it, we’ll discuss this in more detail in a future article! 😊
2. Itemize Regular Monthly Household Expenses
Once you know your income, it’s time to tackle your regular household expenses.
This includes both fixed and variable costs, with extra attention paid to any unique expenses that arise from having a special needs child.
Start by tracking your family’s spending habits for 2-3 months to get an accurate understanding of where your money is going.
Be sure to account for both fixed expenses and variable expenses such as:
- Rent/mortgage payments
- Student loan payments
- Gym memberships
- Subscriptions
- Car payments
- Utilities
- Groceries
- Clothing
- Gas
- Gifts
- Entertainment.
And don’t forget insurance! 😊
Insurance is all about risk management, and managing your risk is a crucial component of financial planning, especially for families with a special needs child.
Coverage can range from health insurance to disability insurance to life insurance and provides critical financial protection in times of need.
Don’t forget insurances and other benefits you pay for that are automatically deducted from your paychecks!
To calculate how much you are actually spending on each of those you first need to know how often you get paid.
For most people, paychecks come twice a month (for example, on the 1st and 15th of every month) or else they come every 2 weeks, regardless of the month.
Once you know your frequency, multiply the benefit cost on your paycheck times 24 (2x/ month) or 26 (every 2 weeks), then divide by 12 to get your average monthly cost for that benefit.
For example, Joe has group life insurance through his employer where $17.23 is deducted from every paycheck.
Joe gets paid by direct deposit every other Friday, so that is 26 pay periods. He multiplies $17.23 x 26 so he is paying a total of $447.98/year for this benefit, or $37.33/month.
That’s an important number to know for Joe to budget with.
Do the same for automatically deducted retirement plan contributions too – multiply and divide to get your actual average monthly amount — but make sure to categorize that as a savings, not an expense!
Identify Special Needs-Related Expenses
One of the most important steps in this process that parents of neurotypical children do not need to do is to accurately identify the costs specific to caring for a special needs child.
These expenses are often significant and can also vary greatly depending on your child’s unique circumstances.
Take time to outline all recurring and one-off expenses directly related to your child’s care.
This might include but are not limited to:
- Therapy and counseling services
- Medications and supplements
- Specialized education programs
- Adaptive equipment (wheelchairs, sensory tools, etc.)
- Transportation to appointments or therapy sessions
- Additional childcare or respite care needed for you
- Special Dietary Needs
Add it all up and then divide by 12 to calculate average amount you spend every month on special needs-related expenses.
3. Create Your Budget – Shortfall or Surplus?
Once you’ve assessed your income and identified all expenses, it’s time to create your budget.
The goal is to ensure that all of your expenses are covered, and you have a clear understanding of whether you’re operating at a surplus or shortfall.
To create your budget, you make a column for all your monthly expenses and add it up, then make a column for all your monthly income sources and add them up, too.
Spreadsheets like Excel or Google Sheets work great for this!
If you want a FREE spreadsheet that you can use TODAY to fill out your 1st budget then Click HERE.
After adding up each column, subtract expenses from income.
If there is money leftover then that means you have a budget surplus… congratulations! You can use that budget surplus to allocate more funds towards your short- or long-term goals. (See below)
On the other hand, if your expenses are greater than your income then you will get a negative number when you subtract, which means you have a shortfall or budget deficit. If you find yourself in that situation then you need to figure out how to cut back on expenses OR how to increase your income.
I recommend doing all of this by hand at least the first time so you get practice, but in case that is just not your thing then you are in luck as there are also several great online budgeting tools you can use: Empower (My Go-To 😊), EveryDollar (Zero-Based Budget Tool), and an under-the-radar tool that is growing on me, Cleo.
4. Set Financial Goals and Re-Prioritize Spending
Once your initial budget is in place and you learned where your money is currently going, it’s time to begin thinking about both short-term and long-term financial goals and how to re-prioritize your savings if you have a surplus of any kind.
Short-Term Goals
Short-term goals are all about your upcoming needs and objectives in the next 6-12 months, such as saving for an upcoming vacation or similar large expense, paying off credit card debt, or preparing for a medical procedure.
Building an emergency fund is another critical short-term goal, especially for families managing unpredictable healthcare costs.
Long-Term Goals
Long-term planning involves considering your family’s future needs, such as home modifications, education planning for your children, savings for retirement, and even long-term care as you and they grow older.
These are best tackled if you have already accounted for your short-term goals first, because those are usually going to take more immediate priority.
Where and how and how much you save for your long-term goals is going to be very specific to your individual family’s needs and circumstances.
It can be hard to think too far ahead about your own future when every day is full of thinking about caring for your special needs children, but it is still necessary to give yourself permission to “put on your own oxygen mask” and take care of yourself too.
For example, if your employer offers a tax-advantaged retirement plan, make sure you understand how that plan works and if there is any company matching on your contributions.
That way you can try to maximize your retirement savings by at least contributing the minimum amounts necessary to get the maximum match.
This is free money you do not want to leave on the table!
Consider working with a financial advisor who specializes in special needs planning to set up a savings plan that will ensure continued care for your child (like Zeke! Lol 😊).
5. Review Regularly and Course Correct
A budget is not a static document… boy, I wish it was! 😊
Life with a special needs child can be challenging and unpredictable, and your budget should be flexible enough to account for these changes.
So last but definitely not least, you need to review and adjust your plan regularly to further refine where your spending is being prioritized.
Monthly Check-Ins
When you’re just getting started, I recommend having monthly budget reviews for the first 6 months or so.
That way, you can start to see the patterns around when and where your money is coming and going, and you can learn how to further refine how much you should realistically allocate to each expense and savings category.
So set aside 20-30 minutes each month (Yes, that is all it takes!) to review your budget and see if your spending aligns with your plan.
If there are any unexpected expenses or shifts in spending, then you can adjust accordingly.
Seek Feedback and Reassess
It is a good practice to involve the whole family in the budgeting process, and that can help you to understand everyone’s needs and priorities.
You use that feedback to regularly reassess your financial goals and make necessary adjustments to your monthly budget that reflect any new priorities or changing circumstances.
Course Correct
Don’t hesitate to course-correct as necessary.
Life changes, and so should your financial plan.
Flexibility and patience are key in navigating the unique financial landscape of a special needs family.
Wrap Up
By following these five steps—assessing income, tracking expenses, identifying specific care costs, setting goals, and regularly reviewing—you can build a budget that works for your family and provides the financial stability needed to support your child’s needs and future success.
In conclusion, budgeting for a special needs family requires a blend of careful planning, flexibility, and resourcefulness.
Live The Life You Love, Want, And Deserve! 😊
Do you need 1 on 1 coaching and guidance?
Schedule a call with my friend Zeke Zimmerman here!
