Insurance is shifting the risk to someone or something that is more likely to be able to handle the catastrophic event. People often insure their life through life insurance, their income through disability insurance, their business through business overhead insurance, etc.
Unless someone has a well-established career, taking care of their finances is difficult in today’s economy simply because the cost of living is usually higher than the cost of labor. This means that it’s difficult to avoid a lower standard of living. Many jobs at or near minimum wage simply don’t pay enough to cover basic living expenses.
Still, it can be even more difficult to balance finances if a person has a disability that limits how many hours they can work a week. According to the U.S. Census Bureau’s American Community Survey, “Individuals with disabilities were less likely to be employed than individuals without disabilities, and those who were employed typically held jobs with lower earnings and also earned less than their colleagues with no disability.” In worse case scenarios, a person may not be able to work at all.
Assistance from the Social Security Administration
One source of financial relief for those who become disabled is available from the Social Security administration. Disabled individuals who meet with the established requirements for eligibility may qualify for either Supplemental Security Income (SSI) or Social Security Disability Income (SSDI) if they. While SSI will cover individuals who have insufficient work credits or who have never worked while SSDI is available to those who have got enough work credits.
Unfortunately, this assistance alone may not be enough to ensure a decent standard of living because unless someone with disabilities has some personal finance skills, they will have difficulty in managing their money and run out of it before the end of the month.
3 Basic Financial Skills
Here are some ways those on disability can manage their fixed income better:
- Make a budget.
Budgeting income proportions out how money is spent and prevents shortages due to accidental overspending. Once a budget is created, it needs to be adjusted over time. While income may have remained the same, circumstances change as well as the cost of things.
When preparing a budget, here are the 5 basic steps to take:
- 1. Review past information on income and expenses to establish a baseline.
- 2. Make reasonable assumptions on future expenses.
- 3. Determine all possible sources of revenue.
- 4. Calculate the total of all fixed costs.
- 5. Determine what expenses may not be necessary at all. In other words, distinguish between luxuries and necessities.
- Revise the budget every month as a budget is never static.
- Be aware of potential scams.
Unfortunately, those who are on disability are often victimized by scammers. They may be hoodwinked into investing in money making schemes that promise large returns for a low investment fee. They may also deceive them into giving out sensitive personal information like birth dates, social security numbers, driver’s license numbers, credit card numbers, and so on.
- Put aside money every month.
It’s possible to save money even on a fixed income if a person is able to create a realistic budget and stick with it. After someone opens up a savings account, they can set aside a certain amount each month, making sure to pay themselves before any other bills. While some money can be saved through a tight budget, other ways of saving money can come from tax breaks and discounts offered for people with disabilities.
Open A PASS Account
In closing, it’s important to mention the benefits of opening a PASS Account. Since those receiving Supplemental Security Income risk losing their benefits if their assets exceed the $2,000 asset limit, they should consider opening up a Plan for Achieving Self-Support (PASS). This account lets them save money even if they’ve exceeded their Supplemental Security Income while still getting their benefits. Information on how to get a PASS account is available from the Social Security Administration