Special Families have a daunting task of planning finances for 2 Generations. The fact of the matter is most special parents are running after various therapies and they may not be able to give enough attention to long-term as well as goal-based financial planning.
In the early days after Shlok’s
birth (that was way back in 2009 J),
I recollect in a book namely Uncommon
Fathers, a special father, Lloyd Robertson wrote that parents are likely to feel anger and sadness after
receiving diagnosis of a special child. The
feeling of anger is perhaps due to insecurity borne out of thought of caring
for the special child whose care is very expensive, and who is likely to
outlive his or her parents. In the early years I had spent countless nights
worrying about future (finances). As author Vinayak Sapre mentions his book
“Dohanomics”, in a way I was relating to Rahimdas’s couplet (Doha);
Kharach Badhyo Udyam Ghatyo, Nripati Nithur Mann Kin
Kahu Rahim Kaise Jiye, Thode Jal Ki Meen
Over the years, as I started
reading various authors ranging from Warren Buffet to Morgan Housel, I started
realizing that Incremental Savings
channeled to long-term investments can help us realize our financial security
through compounding of wealth …of course slowly and steadily …without taking
undue risks or rather calibrated risks along the way.
In his book, “The Psychology of Money”,
Morgan Housel delves into the behavioral and psychological aspects of money
management, highlighting the role of emotions, biases, and long-term thinking
in financial success. One should go through the entire book and its 20
psychological lessons.
I found its fourth chapter about compounding
very intriguing. Everybody who is into investing has heard of Warren Buffett
and how phenomenal of an investor he is. But very few people know that he has
been investing for almost 75 years. His secret to success is time. Buffett is not the greatest when
measured by average annual returns. Jim Simons, head of hedge fund Renaissance
Technologies, has compounded money at 66% annually since 1988; whereas Buffett
is at hardly a third at 22% CAGR. Simon’s
net worth was close to $21 billion when Warren’s was close to $85 Billion. Why
the difference? Because Jim Simons didn’t have as many years to accumulate the
wealth as Warrant Buffet did. Bottom-line,
start early – save more – invest wisely and keep doing it over very long times J
Here is small check-list that special parents can look at as broader markers in their respective journeys -
- Incremental Savings realized through monthly budget etc.
- Buying Term-Life Insurance and Family Health Cover
- SIPs in Large Cap/ Multi Cap MFs for conservative investors. Mid-Cap/Small-Cap MFs either through SIP or periodic investments (Only if investor has longer horizon for investments).
- Applying for UDID card and getting aware about various govt. schemes including Tax benefits etc.
- Pursuing Careers by Mothers – At the very least, Part-time/free-lance etc. + Exploring opportunities for supplementary incomes
- Asset Allocation – It could be DIY or with help of an RIA ( SEBI Registered Investment Advisor) for goal-based financial planning
- Taking small exposure to select few stocks where the investor have working experience or domain knowledge ( Only with long-term view and willingness for disciplined ongoing study/tracking )
- Estate Planning through Will & Trust
Caution- One of the crucial things that tend to be ignored in special
families is maintaining enough liquidity for near-term needs/ emergencies. For
special families, keeping funds worth of 8-12 months' house-hold expenses is very
important.
As author Vinayak Sapre mentions his book “Dohanomics”, our ultimate goal is to reach financial freedom. That is in a way embodied in Kabir’s couplet (Doha)-
Chaah Miti Chinta Miti, Manwa Beparwah
Jisko Kuchh nahi Chahiye, Woh Asli Shahanshah
In the same spirit, cultivating savings habit within family (including kids), Asset allocation & long-term Investment mind-set would go a long way in addressing financial needs of 2 generations…at least that’s the pursuit 😀
Don’t Forget to check out my blog article featured for IDPD last year; exactly an year ago on 10th Dec 2022- "Pursuit of Happiness (& Profits too !!!)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sachin Jakhotia, Bavdhan, Pune (India)
Sachin is a proud special
father of a 14-yr bright youngster, Shlok. He is an active investor is capital
markets and pays close attention to asset allocation and financial planning. He is
also NISM-certified Financial Planner.
For Comments & Suggestion, Please Contact - Sachin Jakhotia /C.+91 83088 79900/ shlok.ability@gmail.com
You can find me at:
Blog: https://shlokabiity.blogspot.com/
Linked-in: https://www.linkedin.com/in/sachin-jakhotia-4602711/
This post is a part of “International Day of Persons with
Disability” blog hop hosted by Sakshi Varma – Tripleamommy. #IDPD2023Bloghop.
Access all posts of this bloghop at Championing Diversity, Uniting Voices:Commemorating IDPD Together
Financial planning and estate planning can be a very anxiety inducing subject for parents of children with disabilities. This is because sadly mainstream society more often than not creates barriers that prevent PWDs from achieving economic freedom that so many of us simply take for granted. This is only one small example - but for every time a public space like a school or office is designed without accessibility features or tech devices or software or websites are designed without accessibility features, it cuts off the opportunity for anyone with special needs to get educated, feel independent and be introduced to ideas that can push entreprenerial spirit or get qualified in a highly paid skill.
ReplyDeleteThanks. A very valid point.
DeleteFinance is such a vital aspect of life. I feel your suggestions are valid for everyone. Of course, the expenses are higher with a special child and his/her needs. I have seen families besieged with stress, handling financial issues. I began hearing the audio book, The Psychology of Money, but left it in between. I think it's high time I sat down with a hard copy.
ReplyDeleteThanks for your comments, Ambica ji..
DeleteWould love to hear your take on "Psychology Of Money" after finishing the book :)
One can not neglect finance at all and this becomes even more important if you have children who may not be able to earn and may need more assistance throughout life. It is a nightmare for the parent to think how the child will sustain after the parents are no more. I am glad that you have included among many other ways to plan for finances, the various government schemes that can help claim tax benefits or monetary compensation.
ReplyDeleteHello Preeti,
DeleteThanks for your comment. Surely I have had nightmares during first few years of Shlok's birth ( regarding the future finances). But the key is allocating dedicated 2 hours every week for finances so that one can plan and take actionable steps in consistent manner.
It is very true that as parents we are always very cautious of our financial stability especially as soon as our children comes. The pressure to make good money to provide good future for our lil ones is at most important. Having a special child makes it double the stress as you know that they'll be needing your support forever. Becoming wise on how you handle your finances is a great way to deal with this.
ReplyDeleteThis is a very important topic especially as you say that we need to plan for two generations. In my case as well, I became serious about financial planning only after discovering my son's disability. Before that I was investing but in a very adhoc manner.
ReplyDeleteGreat to hear your personal experience. Most people need some kind of trigger for starting something significant to happen....I had also become very serious (about everything) after Shlok's diagnosis....But with consistent and clear focus, I feel much relaxed and confident about our Future & Finances ...And of course, Shlok's genuine "love" has been a true inspiration along the way..:)
DeleteThis is such an informative piece. Yes, disability and illness incur huge costs and often families with low income want to get rid of disabled members because they cannot afford to nurture them. But these tips are so important for even those who have the money but wouldn't have thought and budgeted things out well because of a lack of awareness. Like they say there are some problems that money can solve and if you have it then why not save up.
ReplyDeleteVery well said, Shruti ji
DeleteHighly Informative.
ReplyDeleteAnjena,
DeleteThanks for your kind comment. I would love to hear if there are any actionables that you can start in your personal finances ...