Every once in a while life dishes up large, one-off expenses that can de-rail all our plans. If my plans were de-railed, then it could well affect the future of my daughter with additional needs.
Things that she needs might not happen. In the next few years she will leave full time education and move towards an adult life, with the challenges and expenses that might bring.
I’m not suggesting that her independence is a given , but it can only be a realistic option if I start the planning now. For her to grow as a person she might need help from me to see her into an independent or assisted living situation. I discussed some of the pitfalls of this a while ago in House To Rent, No Experience Required. Indeed, if this is to be the case I should take my own advice in Zero Credit Score to Hero Credit Score.
Maybe this purposeful saving needs some defining as to how it is different from an emergency fund and three months living expenses. For me, purposeful saving is consciously saving to spend on a large ticket item that is coming up in three to seven years. In other words a clear plan to save money for a date in the not too distant future where the money saved will be spent; whereas an emergency fund and three months living expenses are essentially disaster funds, just in case, which hopefully I never actually need.
Purposeful saving is saving for a larger, one-off expense. An obvious one is to help my daughter with additional needs move into independent living accommodation or semi-independent accommodation whichever suits here at the time; I imagine this would take quite a few thousand where I live, and possibly more once the extras are included.
There might be countless other things I might need to do for my daughter with additional needs, but there is also my other daughter to consider too. In the next three to seven year period she will be going to university and we will be contributing to her living expenses and accommodation costs. This trickling effect each month could be a real drain if I haven’t planned for it, and started to save for it.
So the obvious question is how do I save for the larger, one-off expenses? Exactly the same way as I built up my three months living expenses. Decide on the time when I’m likely to need this money, and add up roughly how much I will need. Then count how many months between now and when I will need this money by, and divide the amount of money I will need by the number of months I have to save this. Again, the simple solution is to save via an automated payment into a separate savings account. If I have to make the payment manually each month, there will be months when it doesn’t happen. That’s not just my nature but human nature.
The benefit of doing this early and planning for larger, one-off expenses is that it saves stress. If I know it’s coming up in the back of my mind, then there’s no point in putting my head in the sand. To not do this would mean that I would then have to take the money from a place I shouldn’t: my emergency fund or those three months living expenses. Doing this would jeopardise my long term plans, and in my position with a daughter with additional needs I can’t afford to let that happen. Far better to cut back on one budget item a month for long term peace of mind than not planning.
Next week, in part six of this Planning Ahead series, we will talk about long term savings, which will provide real financial security for our children with additional needs.