End the stereotypes for World Down Syndrome Day with early financial literacy instruction

Check out his financial planning anecdote:

Like many 25-year-olds, Patti loved her daily lattes. Unlike many 25-year-olds, Patti also had started saving for retirement and had started an emergency fund, just as her parents did when they were her age. But after Patti got her master’s degree, she had to start paying back her student loans. She didn’t have enough money each month to pay back the loans and also meet all of her other living expenses and savings needs. So, she started skipping the coffee shop and applying the money saved to pay her loans. The lattes tasted great, but she knew saving for the future would last longer.

Would you think that Patti has Down syndrome? This anecdote is taken from this comprehensive guide, developed by Voya Financial’s Voya Cares® program and the National Down Syndrome Society (NDSS) as an effective tool to help parents teach their children with disabilities about financial wellness.

For adults with disabilities, especially those with developmental disabilities, one of the biggest barriers to financial inclusion is stereotypes, but that is followed closely by a lack of education that stresses the importance and the basic components of financial wellness in a way that addresses their unique needs. This guide works to overcome both of those barriers.

The guide helps to shine a light on the unique, and oftentimes fluctuating, financial needs of the underserved disability and special needs community, while painting a picture of a community with the same wants and needs as the nondisabled population. At the same time, it includes information and resources to help individuals with disabilities and their families make more informed financial decisions, so they can better prepare for financial independence and a secure financial future.

A key feature of this resource aims to provide people with disabilities and special needs, their families, caregivers and professionals with important financial guidance on personal assets and both employee and government benefits and how they interact with each other.

Financial wellness instruction for young adults with disabilities can be approached by emphasizing the following key lessons that will maximize time and learning.

Keep spending in check: Creating a budget

Creating and following a realistic monthly budget is a good first lesson to tackle on the journey to financial wellness. Much guidance has been provided on how to cut expenses, but for adults with disabilities, focusing on the other side of that equation — setting the budget amount — is equally as important. For young children, the monthly budget amount is determined by the parent. For older children over 18 years old, determining the monthly budget amount may be more difficult, as income streams may include more than salary, but also may include income from savings vehicles such as trusts and ABLE accounts, as well as government benefit payments.

To determine a budget amount, begin by adding together government benefits payments, take-home income, any earnings from savings and brokerage accounts and any supplemental income received.

Then add up what is spent each month on essential fixed expenses, such as mortgage or rent, utilities and other loan repayments and discretionary expenses, such as eating at restaurants. Subtract the total expenses from the total income. The amount of remaining income will be needed to complete the subsequent steps to achieving financial wellness.

Prepare for the unexpected: Starting an emergency fund

An emergency fund is readily accessible accumulated assets intended to help pay unexpected financial expenses — for example, an unplanned medical bill — to avoid having to dip into retirement savings or going into debt. For people with disabilities and their families, however, the need for emergency savings is particularly acute, not because they may experience different types of emergency situations, but because they are more likely to and the impact may be more far-reaching.

For example, when it comes to environmental and man-made disasters, individuals with disabilities are disproportionately affected¹ due to inaccessible evacuation, response (including shelters, camps and food distribution), and recovery efforts.

In addition, people with disabilities are more likely to experience medical emergency situations². Adults living with a disability are more likely than those without a disability to report owing medical debt (13% vs. 6%).

A rule of thumb is to save between three- and six-months’ expenses while working, and as much as a year’s or more during retirement. People with disabilities and their families, who often struggle to make ends meet, may have a difficult time finding the funds to put into an emergency savings account. If an emergency fund cannot be started using monthly earnings, take another look at expenses with an eye toward cutting the least necessary items. Another funding option is putting an annual tax refund toward emergency savings or adding to it from other windfalls like gifts, bonuses or selling things that are no longer needed around the home.

Determine when to borrow: Managing debt

It’s easy to end up in debt, including student or car loans, a mortgage and credit cards. Debt can be a convenient and practical means to obtain goods or services that otherwise would have been out of reach, if the purchase were to be made in cash.

On the other hand, debt also represents a financial challenge,³ as people with disabilities may have difficulty establishing good credit due to low income or unemployment. Many face discrimination that keeps them from accessing credit lines, such as credit cards or bank loans.

As a result, 33% of working-age disabled households had used alternate financial services, such as payday, pawn shop loans or rent-to-own services, compared to 23% of non-disabled households.

It is best to avoid unnecessary debt by having an emergency savings account. But if debt is incurred, here are some tips to help manage the debt:

• Pay down the account with the highest interest rates first.
• Investigate debt consolidation strategies that take multiple balances and combine them into one monthly payment, especially if the new debt will have a lower annual percentage rate that will reduce interest costs and make payments more manageable or over a shorter time period.
• Adjust monthly household budgets so that retirement savings can continue, even when paying down debt.

The guide — Financial Wellness: A guide for individuals with disabilities, their families and caregivers — is available to download for guidance in planning for financial wellness.

However, when it comes to long-term financial planning for people with disabilities and their families, there is no substitute for talking to an attorney and financial professional who are experienced in helping individuals and families in the special needs community make more informed financial decisions to improve their lives and start them on their journey to full inclusion in society.