Finances are an important part of life, and planning on an annual and long-term basis is essential. Families that have an autistic child have a larger financial burden and many times less income. Financial planning for families with an autistic child should take into account these 10 considerations to make sure they are prepared for the year to come and long term.
Families with autism have a greater financial burden than those that have neurotypical children. Consider these facts:
- A study published in Pediatrics in 2014 estimated families spend $17,000 more on autism medical and other expenses than families that do not have a child with autism.
- Research also found that lifetime costs of caring for a child with autism is about $1.4 million. Insurance and government assistance cover part of it, but families are burdened with high out-of-pocket costs when they also have lower income levels.
- A study published in 2012 (it evaluated data from 2002 to 2007) in Pediatrics showed that:
- Families with a child with autism had a 27 percent reduction of family income. These families earned almost $18,000 less than families that did not have a child with autism.
- About 62 percent of mothers who had children with autism were employed outside the home, compared to 71 percent of mothers who had children without autism.
- Mothers who had children with autism earned 39 percent less than mothers of children without autism.
- Studies show that married couples who have a child on the autism spectrum are almost 10 percent more likely to divorce than those who do not have a child with autism.
Financial planning is important for everyone, but it may be even more important for families with an autistic child to ensure you take control of your money and make the most out of every dollar. That is why it’s important to take these 10 considerations into account as you evaluate your finances.
1. Discuss the anticipated level of independence that your child will have in adulthood
So much of financial planning is looking to the future, especially for families with an autistic child. Your child’s future will impact how you save and spend today. Where does your child fall on the autism spectrum? Will they be able to obtain secondary education after high school, hold down a job and live independently (even with some help)? Or will they need more care and services as an adult so they will continue to live with you, a family member or eventually a group home? Or are they somewhere in between? The answer to this important question will have a big impact on how you plan your finances for the future.
2. Figure out your current net worth
It’s important that you know where you stand currently with your finances. A good way to do this is to determine your net worth.
Net worth is simply your assets minus your liabilities. Assets include savings accounts, retirement funds, investments, home value, etc. Liabilities include credit card debt, student loans, car loans, mortgage, etc. Here is a good template to use when determining your net worth.
I recommend completing the template on a quarterly basis, but at minimum, determine your net worth at least annually.
3. Determine your annual, five-year and long-term financial goals as a family
Once you know where you stand financially, it’s easier to make your financial goals for your family. What do you want your money to accomplish in the next year? Maybe you want to pay off a credit card, increase your emergency fund by a certain amount, take a vacation (small or big) and pay for Christmas gifts all with cash.
For five-year goals, think about a down payment on a house, reaching a certain savings goal with your children’s college savings, pay off student loans or cash flow home improvements.
Long-term goals may focus on retirement planning, college savings, estate planning and special needs trust for your child.
4. Make a plan to reduce any debts
If you have debts, one of the best things you can do is include goals to reduce them. Whether you have student loans, car loans, medical expenses, credit cards, personal loans or other debts, focus on decreasing those. Each loan includes interest. That means the loan cost is much greater than the principle amount you needed to cover the expense. Personal loans also have emotional and relational costs if those were taken out through a family member or friend.
Two popular ways to tackle debt include the debt snowball and the debt avalanche. What are these two approaches?
- The debt snowball method includes tallying your debts by amount, smallest to largest. You begin by focusing on the debt that has the smallest amount. You throw as much money as you can to pay off that debt while still paying the minimum amount on your other debts. Once you pay off the first one, you roll the money that you were paying on that one into paying off the next smallest debt. You keep using this process until you’ve paid off all your debts. Psychologically, some people prefer this method because they see the number of debts paid faster because you work from smallest to largest.
- The debt avalanche method is similar, except that you order the debts from highest to lowest interest. The pay-off approach is the same. However, you put more money toward paying off the debt with the highest interest first. Many times, this is credit card debt. This allows you to pay off the debts with the highest interest first, saving you more money overall.
When my husband and I were paying off debts, we took a combination approach. We started with the credit cards (which had the smallest amounts plus the highest interest rates), and we paid those off first. Then we tackled a motorcycle loan and student loans. Finally, we focused on paying off our car loans. Currently, all we have is a mortgage, and we pay additional on the principle each month to pay it off way earlier. We bought our current home in 2018, and we’ve already reduced the length of the loan by about three years by paying more each month. That will save us a big amount in interest if we keep paying at this rate.
5. Ensure you have the proper amount and type of insurance for both parents
Whether you and your spouse both work or if one of you stays home to care for your child(ren), be sure you have the proper amount of insurance for both of you. That includes life and health insurance for each of you. It also covers disability insurance for one or both of you, if you are working at a job outside of the home (or are self-employed). If you have your own business (primary or side hustle), be sure you have the proper business insurance.
6. Be sure your estate is in order
With a special needs child, it’s especially important that you have your estate planning done.These include a will, power of attorney, living will, guardian designation for your children and more to be sure your family is protected upon your death. This is an important part of financial planning for families with an autistic child.
If you don’t have these in place, make one of your financial goals to contact an attorney in your area as soon as possible and put these into place.
7. Evaluate your savings plans for your goals
Savings of different types play a big role in financial planning and creating a strong foundation for your money. It also allows you to build wealth over time.
Having an emergency fund of three to six months income is so important! It can act as a buffer when a medical or expense arises that you hadn’t planned for or anticipated. We can always expect that unplanned for costs will happen from time to time. An emergency fund allows you to cover it without going into debt.
Retirement planning also is a key to your financial plan. Whether you save through a 401(k) plan through your employer or an individual retirement account (IRA), it’s important to do so as early as possible. (Those accounts are for those of us who live in the United States. I know other countries have their own types of accounts for retirement savings.) The longer you put money into a retirement account, the more you are able to grow it through compound interest over your lifetime. If your employer offers matching funds of a certain percent, that is free money toward your retirement. Even if you feel like you cannot put much into your retirement account, put at least enough to obtain the employer match. Also, every little bit helps when it comes to retirement planning.
What other types of savings do you need? Are you saving for a down payment on a home? Do you have sinking funds in your budget to account for quarterly, semi-annual or annual expenses? Do you have any investments other than retirement? What about college savings plans for your children? Think broadly about what you want to save for in your financial plan.
8. Keep track of daily spending
As a personal finance geek, I am weird in that I love budgeting. (Yes, I know that many people view “budget” as a four-letter word!) I have found that it gives me more freedom in my spending and helps me to create a spending plan for our family. That allows me to not only budget for the normal monthly expenses but also put away rainy day funds to cover costs the come up infrequently or unexpectedly. For budgeting, we love You Need a Budget (referral link), also called YNAB. YNAB does have a cost. However, I found it pays back dividends in how well we are able to track and plan our expenses. Other free options in Every Dollar from Dave Ramsey and Mint.com.
There are so many ways to save money! However, the first step is to evaluate what you are spending and determine how you can trim your expenses. Do you spend too much on groceries? (With two teenage boys, this is an area we struggle with in our budget!) Could you switch to generics, change to a less expensive store like Aldi or use coupons if you don’t have a discount grocer near you? Do you eat out too much? To reduce takeout, could you batch cook on the weekends and freeze dinners to eat later. Is your electric bill sky high? Could you make a concerted effort to turn off lights, lower your temperature for heating/increase it for cooling or choose energy efficient appliances when they need to be replaced?
One way to gain ideas for how reduce spending and live more frugally is to follow some personal finance blogs. Some of my favorite are Frugalwoods, The Simple Dollar, Frugal Girl and The Penny Hoarder.
9. Determine if you are making the most of insurance and government benefits to cover care and services for your child
If caring for your child does not allow you to work enough hours or hold a job that brings in enough income for living, you need to first research your assistance options through your state. Many programs provide a safety net for families when they are needed. They can be key in helping you to overcome the financial burden of autism.
Applying for a Medicaid autism waiver takes some time – completing the forms and being put on the waitlist for the waiver, but it offers so many benefits. The waiver is generally not based on financial need but on the medical needs of the patient. Therefore, even if you make a decent income, your child may be eligible for the waiver, depending on which state you live in.
I know the waiver has been really helpful for covering services for our son J that aren’t usually covered by traditional insurance. He received a few years of music therapy through the waiver, which has been such a great way to help him cope with anxiety from his autism. It also covered summer camp because it was run by a provider for patient assistance and care services. He also has received behavior therapy that was in addition to seeing his normal therapist through our traditional medical insurance.
Your state deternines the type of services and the amount provided for each child. You also work with a case manager who helps to arrange and manage your child’s care that they receive through the waiver.
I was hesitant to apply because the wait was so long when J was young. However, our state received some funding that allowed them to eliminate the backlog, so he received the waiver so much earlier than we thought. We also were able to receive more services – such as music therapy – than we would have since those are covered by the waiver but not our insurance.
Depending on your child’s level of disability and your family’s financial status, your child also may be eligible for Supplemental Security Income (SSI). You can find out more here. This can be important for financial planning for families with an autistic child.
10. Consider long-term steps for your child’s future
If your child will need substantial financial help, care and services in the future, it’s important to start planning for those now.
For example, do you need to set up a special needs trust for your child? There are three types of special needs trust funds. Those include:
- First Party or Self Special Needs Trust Fund – This type of fund is created by assets owned by the person who has autism, and they are the beneficiary. These could be from an inheritance or another event such as a personal injury settlement. The fund must be created when the person is under 65 years of age and is considered irrevocable or cannot be changed. When the person dies, payment to Medicaid is required before distribution to anyone else.
- Third Party Special Needs Trust Fund – This fund is created by assets owned by someone else other than the person with a disability, such as a parent, grandparent or other person. This can be established either during the creator’s lifetime or as a part of their will. It is managed by someone other than your child, and it’s not considered their asset. That means they remain eligible for government assistance that requires them to have limited assets. This type of fund does not have to pay Medicaid upon the beneficiary’s death. Instead, the remaining funds can be distributed to whomever the creator designates.
- Pooled Special Needs Trust Fund – This type of fund is usually run by a nonprofit organization that acts as the trustee. For this fund, the organization “pools” assets from many different people into a master trust, and then it manages sub-trusts for the various beneficiaries. This type of trust can be helpful for those who do not have many assets to set up a trust individually for their child. This type of trust has a similar requirement as the self-special needs trust because it requires Medicaid be paid first upon the beneficiary’s death.
For more information about special needs trust funds, read this blog post.
Another financial option for your child may be the 529 ABLE (Achieving a Better Life Experience) account if your child is eligible.
Also, will your child be able to make their own financial and medical decisions when they turn 18 years old? If not, then will you need guardianship or would supported decision making with a healthcare proxy work? Find out more about your and your child’s options.
Do you have any additional steps that you take when financial planning for families with an autistic child? If so, what has worked well for you? Leave a comment below so that we can share and encourage each other along this journey.
References:
Tara A. Lavelle, Milton C. Weinstein, Joseph P. Newhouse, Kerim Munir, Karen A. Kuhlthau and Lisa A. Prosser, Pediatrics March 2014, 133 (3) e520-e529; DOI: https://doi.org/10.1542/peds.2013-0763.
Zuleyha Cidav, Steven C. Marcus and David S. Mandell. Pediatrics April 2012, 129 (4) 617-623; DOI: https://doi.org/10.1542/peds.2011-2700.
Ariane V. S. Buescher, MSc1; Zuleyha Cidav, PhD2,3; Martin Knapp, PhD1; et al David S. Mandell, ScD2,3. JAMA Pediatrics. 2014;168(8):721-728. doi:10.1001/jamapediatrics.2014.210.
Hartley, S. L., Barker, E. T., Seltzer, M. M., Floyd, F., Greenberg, J., Orsmond, G., & Bolt, D. (2010). The relative risk and timing of divorce in families of children with an autism spectrum disorder. Journal of Family Psychology, 24(4), 449–457. https://doi.org/10.1037/a0019847
