When you think about teaching your child about money, what topics come to mind? More than likely, you’ve considered the need to teach your child about things like saving, budgeting, and perhaps even how to manage a bank account.
But have you given any thought to more lofty goals, like how to save money for a home, for college, or for a car?
These kinds of financial goals can be daunting for anyone, but especially for a child with diverse learning needs. It often requires the sort of abstract thinking that is challenging for any person but particularly problematic for a child with autism or another unique need.
That’s not to say it’s impossible. In fact, to teach your unique learner about investments and long-term purchases, you should break things down into several mini-steps. This will help you both work toward a goal of financial literacy – and financial independence.
Identify Short-, Mid- and Long-Term Goals
If you read our article about creating SMART goals for financial planning, you probably already know the importance of having your child establish short-term, mid-term, and long-term financial goals.
When it comes to saving for a long-term purchase, this rule continues to apply. While you can certainly have your child save for multiple financial goals, one of the easiest and best ways to save for a long-term goal is to break that goal down into multiple sub-goals (with short and mid-term goals laying the groundwork for your child to meet his eventual long-term goal).
For example, if his long-term goal is to save up enough money to buy a house, the first goal will likely be to establish an emergency fund that covers rent in the meantime (we’ll get to the logistics of emergency funds in a moment). This could be the short-term goal, or your child could select another goal, like saving up enough money for a down payment or realtor fee.
Setting multiple goals “within a goal” is a smart way to prepare for the future. Not only will it enable your child to meet his long-term goal with relative ease, but it will also help break things down into more manageable chunks. This is vital for any child, but particularly for a child with unique learning needs.
Write these goals down somewhere where your child can revisit them often and see to it that he actually does!
Track Spending and Establish a Budget
Next, you need to teach your child how to track spending and establish a budget to help him stick to his spending goals.
If he doesn’t have a lot of expenses or even that much income coming in, then this should be relatively easy. Again, these items should be written down and clearly visible so that they can be referred to often. Encourage your child to look at his budget and spending on at least a monthly basis and to make changes to those patterns and designations as needed.
Setting up a savings account and checking account, if your child hasn’t already done so, is a good step toward saving for a long-term purchase. That way, your child won’t be stashing cash under a mattress where it can easily be lost or stolen.
Create an Emergency Fund First
Do you have an emergency fund? If not, you might want to consider making one – and you should definitely include this in your list of strategies as you begin to teach your child about saving for a long-term purchase.
Establishing and contributing to an emergency fund is vital. In fact, it’s one of the most important short-term savings goals you can work on. Emergency funds are designed to help you pay for expenses that are out of the ordinary, or that aren’t part of your normal budget.
For instance, while your car payment might fall within the realm of your normal budget, a car repair would not. Many people also establish emergency funds so that they have money to cover their bills if they lose their job or have to deal with a major health crisis.
Even if your child isn’t living on his own, teaching him the value of creating an emergency fund before saving for any major expenses is vital. You can start small with this. Say, for example, that the only monthly expense your child is responsible for is gas for his car.
You can still follow the typical rule of thumb when it comes to creating emergency funds and have him set aside three to six months’ worth of expenses. It won’t be very much money, but it will be enough to cover the bases.
Utilize Multiple Savings Strategies
If your child is saving for a particularly large goal, like college or even the eventual purchase of a home one day, you may want to tap into other resources that can help make financing these large purchases easier.
Even if a long-term purchase is further away on the horizon, it may be beneficial for you to educate your child now on the resources that are available for these sorts of investments.
Teach your child about things like mortgages (not necessarily a savings strategy, but something that you’ll need to discuss in detail). Explain how concepts like escrow and down payments work so that your child has at least somewhat of an idea before he heads out on his own.
Once your child has a goal in mind for what he wants to save for, help them tap into strategies and tools that can help him save. For example, look into high-yield savings accounts or certificates of deposits. These might be better for saving for long-term goals than simply stashing money in a piggy bank!
Don’t Be Afraid of Credit, but Be Smart
You will also want to explain how credit plays into many of these long-term purchases. Talk to your child about how buying things on credit isn’t necessarily bad – and that it’s necessary in order to build credit that can be used for making long-term purchases, like buying a house or a car.
However, just as you explain how credit can be beneficial for these long-term purchases, be sure to also explain the risks. Talk to your child about compounding interest and make sure he understands how to use credit wisely.
Tap Into Resources for Individuals With Disabilities
There are all kinds of resources and tools for funding long-term purchases when it comes to individuals with disabilities. Many of these are tailored specifically toward homebuyers.
For example, the Department of Housing and Urban Development has approved housing counselors in every state who are not only able but also prepared and certified to help individuals with disabilities purchase homes. If your child falls within a low-income bracket, you may qualify for HUD’s Section 8 Homeownership Voucher Program.
Beyond that, if your child has a case manager with your state’s version of Developmental Disabilities Administration (example for Washington state), check with them about additional resources your child may qualify for.
Use Digital Tools
Of course, no app will take the place of a solid financial education. However, there are plenty of digital tools you can tap into to help your child learn more about how to save for a long-term purchase.
For example, Chime Banking, with whom we are not affiliated, will help you save a bit of each paycheck into an emergency fund account, while Qapital (also not affiliated) will help you save a bit of money from each paycheck to fund the purchase of a car.
When Possible, Earn More
Although it sounds a bit trite, it’s important to teach your child that saving can only go so far – at some point, they may need to expedite their progress to a financial goal or long-term purchase by earning a bit more.
Encourage your child to be a good advocate for himself and know when it’s appropriate and necessary to ask for a raise at work. Teach him the value of picking up a side job or another revenue stream here or there – but also make sure he knows himself well enough to understand when enough is enough to avoid burnout.
Keep Things in Perspective
Whether it’s a new car, a house, college, or even just an expensive pair of shoes, it’s important that you teach your son or daughter to keep things in perspective when it comes to saving for investments and long-term purchases.
While saving and working hard to make money is important, it’s also vital to keep things in perspective. Saving for a financial goal is a good way to take responsibility for your life, but no single goal should take priority over everything else. It is important to continue to pursue personal, professional, and even recreational goals, too.
With time, he’ll soon learn the value of planning for multiple goals at once – and how to juggle all of these priorities, too.
Further Reading
- Angela Colley: 4 Tips for Buying a Home if You’re Disabled
- U.S. Department of Housing and Urban Development: Homeownership Vouchers
- Investor: Certificates of Deposit