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Financial planning for the special child

By Anil Rego
November 14, 2014 08:56 IST
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When one has a child, there is a certain amount of joy and pride in watching them grow up, and if for any reason the child has special needs, then the joy is different and if anything more. There is a certain amount of care that needs to be taken while financially planning for a child, and all the more so if the child has special needs.

Let us take a look at some of the things that one should keep in mind.

The first thing to take into account is the various costs involved, such as medical, and other related expenses. Once you have a broad idea of the costs, it is then advisable to break this down into more detailed costs, so that you have a clear understanding of the budget that needs to be in place.

This is apart from the other regular costs such as schooling, clothes, etc. Ideally, one should have a monthly budget charting out the income and all the various heads of expense. This will ensure that the savings and investments are done each month, and unnecessary expenses and debt doesn’t build up.

The next thing parents need to keep in mind while planning is the child’s future, especially after they grow up. Will they stay with you, shift out?

These questions must be kept in mind, especially when planning for the long term future of the child. One should appoint a legal guardian to the child who can take care of your child in the case of some unforeseen event happening to you.

It is also advisable to keep a letter of intent, that is, a note of all the things that the child requires, such as doctors’ details, prescriptions, things not to do, etc. and ensure that this is up to date and in the hands of the guardian as well.

One of the most important things to do is to keep detailed records of the child’s condition -- you never know when the test done years back will come in handy.

Look at getting health insurance at the earliest; this will reduce medical costs -- which even if it won’t cover the existing disability, will at least ensure that any other medical costs are covered. The earlier that one gets this, the better, as the premiums will be lower when the child is younger.

It is also imperative to keep between three to six months’ income in a savings account. This should be used only in emergencies and kept aside from other investments and savings. One can use this to fall back on in case of any unforeseen situation which leads to loss of monthly income. This is all the more important in the case of special needs children, where there is likely to be a regular outgo of money in terms of various health related costs.

Starting investing at an early stage of your life to reap the benefits of compounding. One has to choose an investment plan which yields highest potential for growth at as low risk as possible. It is advisable for you to invest in mutual funds through systematic investment plans. Since a SIP ensures that one doesn't need to time the market, the investment takes place each month irrespective of the market condition thus individuals can benefit from both -- an up market and down market.

It is advisable to remain invested through SIPs for as long as possible, as investors can then benefit from the power of compounding. An investor putting in Rs 1,000 per month through a SIP will have over Rs 18 lakh in 30 years (assuming a return of 9 per cent per annum) thanks to the power of rupee cost averaging and compounding.


  • Budget for the costs of medical and related expenses
  • Take into account the long term future, and plan accordingly
  • Keep money aside for emergencies
  • Remember to take medical insurance
  • Invest early

Note: Picture used only for representational purpose

Photograph: Nina Matthews Photography/Wikimedia Commons

Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.

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Anil Rego