Caring for a child with a developmental disability requires sensible financial planning, especially for Indian parents who may face unique cultural, systemic, and economic challenges. Here’s a practical approach to managing finances effectively:
Build an Emergency Fund: Start with a savings buffer—aim for 6-12 months of living expenses. This is critical because a child with special needs may have unpredictable medical or caregiving costs. Use a savings account or liquid mutual funds for easy access.
Invest in health insurance: Get a comprehensive health insurance plan that covers disabilities, therapies, and hospitalisations. In India, options like the Niramaya Scheme provide affordable coverage for people with developmental disabilities. Check if your employer’s insurance can be extended to dependents with special needs.
Plan for long-term care: The child WILL need support beyond your lifetime. Set up a trust—where funds can be allocated for their care without affecting eligibility for government benefits. Consult a lawyer to structure this. Check if some nephew or niece can be made a trustee so that your child’s interest is taken care of.
Leverage government schemes: India offers benefits like the Disability Pension (under state-specific schemes), tax deductions under Section 80DD (up to ₹1.25 lakh for severe disability), and the Unique Disability ID (UDID) card for accessing services. Register your child early to tap into these.
Budget for therapies and education: Therapies (speech, occupational, behavioural) and special schooling are expensive. Research subsidised options like NGOs or government-aided centres (e.g., District Disability Rehabilitation Centres). Allocate a monthly budget—say, 20-30% of income—depending on your earnings.
Save for the future: Invest in low-risk, long-term options like Public Provident Fund (PPF), Sukanya Samriddhi Yojana (if applicable), or mutual funds with a balanced portfolio. Aim for a corpus that grows faster than inflation (currently about 6-7% in India). For example, ₹5,000 monthly in a mutual fund at 10% annual return could grow to ₹16 lakh in 20 years.
Upskill or diversify income: If possible, one parent might consider part-time work or freelancing to supplement income, as caregiving can limit full-time employment.
Community support: In India, family and community often play a big role. Don’t hesitate to lean on relatives for emotional or financial support but set clear boundaries to avoid dependency. I know one childless couple who left a big corpus for their grandniece who was challenged. The older couple spent a lot of time with the kid.
Track expenses: Use apps or a simple spreadsheet to monitor spending. Prioritise essentials (food, medicine) over discretionary items. For example, if monthly income is ₹50,000, allocate about 50% to basics, 30% to the child’s needs, and 20% to savings/investments.
Seek professional advice: A financial planner with experience in disability planning can tailor a strategy. He/she could even help with the Trust management.
Emotionally, it’s tough, but financially, it’s about balancing today’s needs with tomorrow’s security. Start small, stay consistent, and adjust as you go.
PV Subramanyam
writes at www.subramoney.com and has authored the best seller ‘Retire Rich - Invest C40 a day’