A Financial Wellness Checklist for Those with a Disability Part 1: Budgeting and Saving

If you have a disability, you’re already aware of the unique financial challenges presented by your condition. It can take more work to understand the best practices for navigating money management. The good news is that there are several tools and techniques available to you to make your finances more efficient and bountiful in the long run.

In this first installment of our series on money mastery for people with a disability, we’ll discuss spending and savings.

Budgeting

If you’re on a fixed income, it’s essential to have a budget in place that will allow you to not only meet your expenses but also create savings. After all. it’s inevitable that additional costs will pop up at some point. You may also have some variability in your expenses because things like doctor visits, medication costs, and other bills related to your condition tend to fluctuate. It makes sense to go back at least half a year to create an average of your monthly expenses. That way you get a sense of when you can sock away funds for the lean months or for upgrades to any assistive tools you require, such as a wheelchair or respiratory equipment.

ABLE account

Ordinarily, a disabled person having $2,000 (or, for a couple, $3,000) or more in assets would preclude them from receiving Supplemental Security Income (SSI) benefits. In 2014, the Achieving a Better Life Experience (ABLE) account was created to help with this issue.

For people who became disabled before the age of 26 and meet the requirement for severity of disability, it’s possible as of 2023 to save up to $17,000 per year in an ABLE savings account. Funds in this type of account, according to the ABLE National Resource Center, can be used for qualified disability-related expenses (QDEs), which are expenses for supplies or services related to the account owner’s blindness or disability that assists them in increasing and/or maintaining their health, independence and/or quality of life. These may include expenses related to education, food, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services, and other expenses. ABLE account funds grow tax-free, and withdrawals are not taxed as long as they’re used for a qualified disability-related expense.

If you don’t qualify for SSI, you may still be able to open an ABLE account if you have a qualifying disability as determined by a doctor. For more information, visit ablenrc.org.

Individual Development Account (IDA)

An IDA is a savings account created to help people with more modest incomes build wealth and achieve financial empowerment. IDAs can be used to start a business, pay for schooling or training, or purchase a home.

Funds contributed to an IDA at an approved financial institution are matched by private or public sources. When you make recurring deposits for a pre-determined time, your contributions are matched, usually at either a ratio of 2:1 or 1:1, depending on the IDA program.

Remember that you may need to finish free money management training to qualify for an IDA. In the big picture, this is a small commitment of time and effort that could help propel you to greater financial freedom. Other qualification criteria may include income, asset, or employment requirements.

An added benefit of IDAs is that they won’t impact any SSI benefits you receive because the money in the IDA—including the matching amount and any interest you earn—doesn’t register as earned income.

Visit acf.hhs.gov/ocs/programs/afi for more information or to find a local IDA program.

Plan to Achieve Self-Support (PASS) account

PASS accounts are specifically designed to help people receiving SSI or Social Security Disability Insurance (SSDI) start a business, expand their education, receive new work-related training, or otherwise achieve a work-related goal.

The advantage of a PASS account is that the funds saved don’t count against the asset limits for receiving SSI. Visit ssa.gov/disabilityresearch/wi/pass.htm for more information.

Special needs trusts

These trusts are another way to accumulate and protect assets without worrying about benefits being reduced or eliminated due to government-set resource limitations. Specifically, if you receive a monetary gift from a loved one to help cover your expenses, putting it into a special needs trust can keep you from losing benefits like Medicaid or SSI. A trustee manages assets in these trusts and thus the assets aren’t counted as being under your control.

Special needs trusts come in two main types: pooled and individual trusts. Pooled trusts combine funds from a group of families and invest them together. The fund is run by a nonprofit that spends money for each beneficiary within the trust.

To learn more about trusts and to see if one might be suitable for your situation, speak with an attorney experienced in special needs trusts.