Challenge Yourself To Save
The person you are today will be the person who pays for your special needs family member’s quality of life in the future. You can do this by saving some money each month, starting now. Taking action today will increase your peace of mind and give you the chance to have enough money available to supplement your family member’s life in the future.
Most of the time, families with special needs members expect to have access to government supports – right now by income through Supplemental Security Income (SSI) and health care, room and board through Medicaid.
Unfortunately, people with disabilities do not have guarantees of continued support at current levels. Personally, I cannot imagine a time where the people of this country will say to people with disabilities that they will no longer have basic supports for food, shelter and medical care. Most people I work with on planning, saving and investing assume that government benefits will be in place. If that is true, we do not have to put additional money aside to replace those benefits.
But what do families do to increase the quality of life and access to community, entertainment and personal satisfaction? The government programs do little to support anything outside bare necessities. Most recreational programs are not included. There is little money for people with disabilities to get job training. Vacations, computers, telephones and all the small things that make our lives rich and enjoyable are not included.
You must take action today to provide your family member with more in life than the government provides. As discussed before, review with your financial planner and attorney how to use a special needs trust. This is a critical tool for most families in protecting assets for your special needs family member and providing for supplemental needs.
A trust alone does not insure there will be money available for your special needs family member. You need to find ways to save to have money in the trust when you pass away.
You can save in several ways—through your home or other real estate, by investing in your own business or through investment assets like stocks, bonds, or mutual funds. You can also use contracts like life insurance or annuities (that typically invest in stocks or bonds and act like other investment assets).
You must address any debt issues before you can think about saving money in any of the ways mentioned before. Prepare a budget, pay off your debts other than your house and get your financial house on solid footing.
Email me for a spreadsheet to use for budgeting if you need help.
The next step is to put money into an emergency fund—you will want a few months of expenses in reserve to cover unexpected events like a medical emergency or a job loss. This way, you will have time to plan out options rather than rack up more debt.
After that is done, where do you begin? How do you decide whether to keep money in cash, pay off the mortgage, invest in the stock market or find another way to accumulate money over time?
Sit down with a financial planner to review your options. Should you save more towards your house or retirement plan? Do you get a match from your company to encourage savings and how does that factor into your savings? How much money will you want to have down the road to add to quality of life for your son, daughter, Mom, Dad or spouse to have an enjoyable, fulfilling life?
Why start today? The two biggest factors in meeting your long-term financial and life goals are time and regular contributions to savings.
According to research by Morningstar, a person who starts saving at age 25 needs to put away $381 per month to have one million dollars by age 65 (assuming a 7% rate of return). A 45 year old needs to save $1,920 per month. That is more than $1,500 dollars a month more that a person needs to save by waiting 20 years to get started.
The good part of this is that it is not too late for anyone. As a society, we are living longer than ever, giving us more time to let our money accumulate. The key is for you to change your habits and behaviors in small ways to give you the chance to put money away that can add up over time.
Saving is a habit and one that needs encouragement. Start your new habit in a small way. You cannot run a marathon tomorrow if you have not run even one mile. The same with savings. The more you do it, the better you will be.
Here is your challenge for the next month. After reading this article, take the next 10 minutes to decide one or two ways to save an additional $10 to $50 per week (depending on your income and spending).
Find a place to save the money—like a glass jar on your dresser. See how you do this week. Fill the jar every time you choose to save instead of spend. At the end of the week, see how you have done. If you are over your amount, celebrate, give yourself a high five and pat on the back and get ready to do it again.
If you did not make it, take time to review your week. What stopped you? Emergencies or lack of thought? Focus on the reasons you are saving so you can stop yourself the next time you just spend, spend, spend. Review your budget and cut if you have to.
You and your special needs family member will be well rewarded by making these choices today. Find a professional to work with who can help you save and invest over time. You will thank yourself in years to come.