When it really comes down to it, your financial health depends on you. The decisions you make and the habits you sustain will make you or break you more than any other factor. Even for parents of children with disabilities.
Yes, there are other factors that can pull the rug out from under you or, conversely, give you an unexpected advantage. This is not a sanctimonious rant about how everyone, regardless of their situation should pick themselves up, get a job and figure it out. Many people have been dealt a very bad hand in life, who have no supports and are not able to work, are stuck in an endless round of minimum wage jobs, or have to deplete all their assets to cover medical costs.
For the rest of us, it is what we do with the money we earn that determines how we fair. Of course, the amount of money we earn plays a role. So can market performance. Just don’t believe earning more money, buying the “right” investments, receiving an inheritance or even winning the lottery somehow equals financial health. There are high income earners in terrible financial distress and there are low income earners with a sold financial foundation and a plan for the future.
You have money. You also have multiple priorities. The problem is these priorities are competing for your limited resources. You just don’t have enough money to pay for everything you want.
Parents of children with disabilities have it tougher. If you are one of these parents, you probably earn less money, especially if you are a single parent. If you are married, there is a good chance you or your spouse has left the workforce to be a fulltime parent for your son or daughter. And to top it all off, your expenses are higher as you pay for therapy and other services your child needs.
But earning more money isn’t a silver bullet. Increasing your income helps cover expenses. And yet how easy is it for priorities to multiply at an even greater rate? It is always easy to spend more than you earn, regardless of the size of your paycheque. When you have a child with a disability, there is an endless stream of services, programs, therapies and private schools that can eat up thousands of dollars a month.
There has been an explosion of treatment and service options for children with autism. Families are spending as much as $5,000 a month on therapy. It is hard to say no to a therapy when it is your son or daughter. But sacrificing financial stability to cover expenses for your child is not a sustainable strategy. You can do it for a while, but it won’t work in the long run when your son or daughter needs your continued support.
So how do you make decisions with your money when key priorities are competing for the same resources?
Managing your family’s finances is not just about the numbers. It is never just about the numbers. You don’t earn and save money for the sake of earning and saving. There are always underlying driving forces and so there should be. And yet, all too often, financial discussions focus primarily on the money.
And yet, when we talk about our financial situations and what to do with it, we talk about the numbers. We talk about how much we earn, how much we spend, what we have saved and how much we owe. But how much do you talk about what you need the money for? All too often, conversations with financial professionals focus on investment and insurance products, with little mention of your needs and concerns.
It is difficult to figure out which financial strategies and products you should employ when you are not sure of what they are for. Many of my clients are parents in their 50s who are supporting a child with a developmental disability. They think a lot about retirement and making sure their adult child will be well taken care of after they have died. But that is not enough to go on. You need to know more.
There is an old joke that helps illustrate the point. A man walks up to a ticket agent in the Chicago bus terminal. He tells the ticket agent he wants a one-way ticket to Springfield. The ticket agent says, “Okay, would that be Springfield, Illinois, Arkansas, California, Colorado, Florida, Georgia, Idaho, Kansas, Kentucky, Main, Massachusetts, Michigan, Minnesota, Missouri, New York or Nebraska?” The man thinks for a moment and responds, “I don’t know, anyone will do.”
It is not enough to say you want to retire at 65. Neither is saying you want to make sure your daughter with Down Syndrome will always be financially secure. You might as well say you want a one-way ticket to Springfield and leave the rest to fate. What does retirement look like for you? What does financial security for your son or daughter really mean? What type of lifestyle are you intent on having when you are retired? What would you be willing to settle for, if you had to? What type of support does your son need today? Will he need more support when you are older and possibly infirm?
Tell me what your vision of retirement looks like and we can start estimating how much you need to live during retirement. Stating you want to travel is not enough, though. How often do you want to travel? What does travel look like for you? For some people, that means visiting relatives in California and for others it means eating their way through France, Spain and Italy. Which Springfield are you talking about?
You need to take the same approach when estimating your son or daughter’s needs. How independent are they? Will they be able to shop for their own food and cook it themselves? Do they need 24-hour care? Would they want to live on their own or with a roommate? Can they navigate public transportation? Will there be family members around to help?
At the very least, you should understand your core needs and your child’s, in concrete terms. What pieces absolutely must be in place, when are they needed and how much will they cost? With that information you can make decisions with your money that align with those needs.
There are many things you can do with your money to prepare for the future. There is a vast array of investment options. Same with insurance. One investment or insurance policy is not inherently better than another. They are all vehicles that can help you arrive at particular destinations. Figuring out what is best for you is not an exercise in simply comparing different products against each other; it is an exercise in figuring out if they will help you arrive at your intended destination. Know where you want to go and you have a much better chance of arriving there safe and sound, otherwise you may end up in Springfield, Missouri when you should be in Springfield Colorado.
Our son is 25 years old with a developmental disability. He lives with me and my husband. Your article made me think our own situation. I am 51 years old and my husband is 54 and we really feel it is difficult to save for our retirement and make sure our son will be okay too. We have been putting aside money for retirement, hoping it will be enough to support us (and our son). My son is on ODSP and has an RDSP that we contribute to. We would do more but we are not sure what we can afford. We put away money and then something pops up that we have to pay for. New tires, repair to the house, etc.
I get it. It is not easy when you don’t know what costs you might be facing next week, next month or next year. But, my question to you is, at the end of the month, do you know what your money was spent on? Or are you asking yourself where did all that money go? If you don’t know where your money is going or if you do but you are not happy with your spending habits, it isn’t hard to be worried about what you can afford. The issue I am talking about is control. I am not talking about will power. When I say control, I am talking about being able to make informed spending decisions. To do that, you have to understand what you can afford BEFORE you decide to spend money on something.
Most of our expenses are fairly fixed and predictable. Mortgage/rent, car insurance, cable, phone, property tax, etc. It’s the other spending that make or break the spending. How much do you spend on groceries every month? Eating out, entertainment? Vacations? Luxury items? Kids activities, hobbies, memberships? How much do you want to spend on those items, especially if means less money for other things like retirement and safeguarding your son’s financial security?
I am not suggesting that you are spending too much money on discretionary items and services. I am suggesting that you might think you are spending too much on these things. If you find out that you are spending more than you want to, the next question is how to you change your spending?
This is one key area I work with many clients on. First helping them get a handle on how much they are spending in different categories and then how much they would like to spend in those different areas. Once we have that, we build a mechanism that helps them make spending decisions. We use a cash flow management strategy that lets them know where they are at with their spending throughout the month. Knowing where you are at with your spending at any given time will tell you if you are on track or off track. With that information, you know if you feel comfortable spending money on a particular item or service before you pull the trigger.
Keep in mind that this is not putting yourself on a strict budget. Most people don’t like budgeting because they don’t want to limit themselves to spending certain amounts on different things each month and they really don’t want to deal with all the work it takes to track everything. It is simply about having an easy mechanism that tells you where you are at with your overall spending at any given time and that will help you make decisions you can live with.
Great answer. You need to know where you are at before you can go forward.
Good luck to Sharon T