Chapter 8: The Financial Plan

ULTIMATE GUIDE TO SPECIAL NEEDS PLANNING

How to Create a Special Needs Plan that Allows Your Child to Live a Purposeful, Impactful Life

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Chapter 8: The Financial Plan

FINANCIAL PLANNING FAQs


WHAT IS FINANCIAL PLANNING?


Financial Planning is the third step toward creating a comprehensive Special Needs Plan. A Financial Plan should analyze your family’s current situation to determine where you’re doing well and where you need to become more efficient with your finances so that you can enable your entire family—including your child with special needs—to enjoy a wonderful life. What this is means is—Financial Planning should educate, organize, and prepare you to meet all of your family’s current and future needs.


WHAT ARE THE BENEFITS OF FINANCIAL PLANNING?


The true benefit of creating a Financial Plan is you will have the necessary strategies that, if applied appropriately today, will allow you to feel confident that you’re doing everything possible to enable your family to thrive now and in the future.

WHAT SHOULD MY FINANCIAL PLAN DO?


Your Financial Plan should do three main things:

  1. Provide the means to pay for the goals you have created in your loved one’s Vision Plan, and
  2. Address the challenges of how to provide the resources needed, as determined by your Resource Plan.
  3. Answer the concern of how to provide for your child for his/her lifetime, when you are not here to provide for them.


HOW OFTEN SHOULD I UPDATE MY FINANCIAL PLAN?


We highly encourage families to update their loved one’s Financial Plan every year, as key details are likely to change over time.

HOW DO I LEARN MORE ABOUT FINANCIAL PLANNING?


To learn more about Financial Planning, check out our blog post Financial Planning: Does Your Financial Plan Account for the Abundant Hopes and Dreams You Have for Your Child?


HOW DOES THE ENABLE FINANCIAL PLAN TOOL WORK?

Creating a Financial Plan with ENABLE is a collaborative process! To get started, the ENABLE Financial Plan tool walks you through a series of key questions to evaluate your current level of financial preparedness. You will also need to share various key financial documents and details with the ENABLE team.


After completing the assessment and sharing your records, the ENABLE team analyzes your current financial situation and develops recommendations for how to improve your current situation and plan. You and one of the ENABLE financial advisors will schedule a series of phone and/or video calls to discuss your family’s current financial situation and strategies for improving it and reaching your goals.


Then, after you and your advisor have developed a thorough and effective plan, the ENABLE team will implement the strategies necessary to allow both your family’s financial situation and your loved one with special needs’ financial situation to thrive simultaneously.


After creating your initial financial plan, comprehensive financial planning clients will continue to meet with an ENABLE advisor at least once per year, to review and adjust their plan as life events occur and key details change.

The ENABLE Financial Plan tool is available at the ENABLE website. Learn more here: https://enablesnp.com/purchase-services/


In our experience, we have found that many families delay creating a Financial Plan—not because they view it as unimportant—but because they feel overwhelmed, frustrated, and confused by the process. When ENABLE team works with families on their Financial Planning, our intention is to make their process as easy, efficient, and affordable as possible. We empower the families we serve to feel well-prepared for their futures.


Let’s Start Planning!

Ok! You’re ready to create a Financial Plan for your loved one with special needs. Just follow the steps below to start planning!

  1. First, you should be aware that the details of a special needs financial plan are more complex than a typical family’s financial plan. For this reason, it’s important to do your homework and be sure you feel confident planning in this area.
  2. You may find it helpful to register for and complete the JarredBunch* JB WealthFIT online course. It’s not just about retirement. It’s about setting yourself up today for a healthy financial future. To live the life you want to live…today, and in the future. This financial education course is designed to provide you with the tools and resources necessary for making smarter financial decisions – to reach your full financial potential. Learn more here: https://jarredbunch.com/jbwealthfit/
  3. Additionally, the following resources will help you get started with your financial planning:
    1. Download the free “Live the Life You Want” e-book
    2. Take the exercise to Discover your WHY for Money
    3. Get a Free Retirement Plan Check-up, Score Your 401(k), and Analyze Your Investment Strategies using three tools available from the homepage of the JarredBunch website
  4. Review the following Rules for Financial Success:
    • Ideally, achieving financial balance should be your first goal. This can be done by adhering to THREE simple rules that ready you for growth:
      1. RULE: Become a first class saver by saving 15%-20% of your income annually. This is one of the most important ingredients to reaching your full financial potential. If you can’t do this, then everything else has to work that much harder. It puts additional pressure on all other aspects of your financial life, including a greater likelihood of failure! What is standing in the way of your saving this amount? Write it down. Figure out how to overcome these obstacles so you can reach your full financial potential. Hint: Remember, your financial model can help you find lost opportunity. You can recapture those dollars, and add that to your savings.
      2. RULE: You should always have at 3-6 months of cold hard cash on hand. It would even be wise to have 6-12 months of near-cash (i.e. short-term bonds) that are easily accessible as well. A cash cushion provides multiple benefits, such as giving you the ability to increase your insurance deductibles and lower your premium payments. It gives you peace of mind knowing that whatever short-term obstacle (accident, fire, job loss, illness) may pop up that you can easily handle it without having to go into debt. Plus, you have the ability to capitalize on an opportunity that may present itself, take a trip, make a substantial purchase (whether it be something you need or simply want) and more.
        • Cash can also make you a happier person in general. In Jonathan Clements’ book, How to Think About Money, his research found that those with cash on hand – and in the bank – were much happier than those without any or with small amounts.
        • HELPFUL TIP:  Opt out of your 401(k) until you have built up your short-term liquidity! Take care of today first and you will be better equipped to take care of tomorrow. Statistics show that 28% of all 401ks have loans against them, and it’s because this liquidity bucket is neglected or never filled to being with.
        • Understanding the 401(k)
          1. 401(k) Traps:
          2. 10% penalty if you withdraw before 59 ½
          3. Taxed as ordinary income
          4. Limited investment options
          5. Must withdraw a portion at 70 ½ or suffer a penalty
          6. Match can go away
          7. Can create double taxation
          8. Can’t use it to pay for other life events
          9. Typically use more expensive mutual funds
          10. Are all 401(k)s bad? NO! If your company has one and they provide a company match, you should at least participate to the point of the match. But not until after you have sufficient liquidity. Discuss this with your personal advisor.
      3. RULE: Short-term debt should be zero. Period. Liabilities are what hold most people back. Short-term debt negates any future profits on your balance sheet. For example, $19,200 debt x 5% interest (lost opportunity) = $253,570 in 10 years. In 20 years, it’s upwards of $666,000. 
        • Two of the most common short-term expenses among our clients are automobiles and credit cards. Cars depreciate 50% after the first three years on average. Look for used cars with low mileage that you can drive for a long time. You can often find a used car that is 25% cheaper than a new car. So if you must carry auto debt, then do it smarter.
        • Credit card debt can wreak havoc on your financial life. Interest rates average around 15%. That’s extremely high! This is exactly why Rule 2 is so important. If you have adequate liquidity not only can you pay off your credit cards every month, but you can limit what you charge on them since you have the ability to pay for things in cash. Think of it this way – if you have credit card debt carrying 15% interest, every dollar you don’t completely pay off costs you $0.15 each year. While there are always special circumstances, a good general rule of thumb to live by is if you can’t pay for it in cash, you probably can’t afford it.
        • You may need to slow down short-term debt payments in order to build liquidity and get protection in place first. You may even need to restructure your debt. But it is critical that you follow this order to provide relief, reduce stress, and build the foundation for growth.
  5. After fully evaluating your family’s current financial situation, consider and discuss the following questions regarding special needs financial planning:  How much money will it take, in today’s dollars, to provide your loved one with all of the services, resources, and opportunities to ensure that he or she lives a great life?
    If you weren’t here to provide for your child, what are some activities and amenities you would want to make sure your child had access to?
    Does your personal/family financial plan align with your Special Needs financial plan?
    Is your financial professional aware of your Special Needs Vision, Life, and Resource Plans? Has he/she created your personal/family and Special Needs financial plans to achieve your outlined goals?
    Have you discussed your Special Needs financial plan with potential future guardians? 
  6. Implement any and all strategies to ensure that your family and your loved one with special needs are financially secure today – and every day in the future – no matter what happens.
  7. Annually, review and update your financial plan as details about you and your family change and evolve.

To help you make sure you’ve thought through everything, we’ve created a BONUS Financial Plan checklist for you to use. Download this guide by clicking the yellow "Send me my FREE copy!" button below to receive access to the checklist now.


*JarredBunch is an independent Registered Investment Advisory whose mission is to educate, guide and counsel its clients to achieve their full financial potential. Phillip C. Clark, Founder & President of ENABLE Special Needs Planning, is an Investment Advisor Representative through JarredBunch.

DON'T HAVE TIME TO
READ THE ENTIRE GUIDE RIGHT NOW?

Not a problem! Let us send you the e-book version so you can download it and read it at your convenience! 

As a BONUS we'll also include the Essential Special Needs Planning Checklist to help you make sure you've planned for everything!

Just tell us where to send your resources: