Money Matters, Baby Matters

When planning to start a family, it is important to consider how much the time and attention you are prepared to give them. All the money in the world will mean nothing to them if you cannot set aside time to bond with them, no matter how old they are.

It is also important to think about personal finances as having children would mean that your expenses would increase. Read on for information on money matters to consider when you are preparing to start a family.

Financial Priorities

When you first become a parent, there are two sets of costs that you need to examine: short term costs and long term goals. Short term costs include items such as baby cot, baby clothes and food etc, while long term goals include items such as healthcare, school fees and tertiary education expenses, insurance etc. While it may seem that the immediate priority is to cover the short term needs, if you do not start planning for the long-term goals now, you may struggle later when you have to provide for items such as your child’s tertiary education.

The table below shows the typical financial priorities over the years:

• Consultancy charges can range from $100 to $200, depending on the gynecologist. Some gynecologists offer prenatal packages, which can be between $600 and $1,500.
• Delivery packages can cost between $1,500 - $4,000 depending on the gynecologist and the hospital. You can find out more about the estimated hospital bill size for delivery at www.moh.gov.sg for more information.

Medisave Maternity Package

The Medisave Maternity Package allows you to withdraw up to $450 of Medisave for the pre-delivery medical expenses for all your children. This is in addition to the amount of Medisave that can be used for delivery.

See Ministry of Health website for more information on Medisave Maternity Package.

Insurance 

Medical costs can stack up so it is important to make sure that you have the right health insurance to cover your costs. Here are some things to think about:
• Make sure you have adequate medical insurance to cover both pre and post natal visits to the doctor 
• Some health insurance plans include extended maternity benefits - benefits for delivery, complications and neo-natal cover
• Take note of the waiting period for such benefits to kick-in
• Weigh up the benefits vs. the excess cost required to include such extended maternity benefits
• Read the terms and conditions carefully
• Make sure you understand any exclusions

Help with conceiving

Couples who have difficulties conceiving can use their Medisave to pay towards the cost for treatment for Assisted Conception Procedures (ACP). See Ministry of Health website for information on Medisave for Assisted Conception Procedures www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=19744)

The Government helps to make Assisted Reproduction Technology (ART) Treatment more affordable by co-funding the treatment costs in public hospitals. See Ministry of Health website for more information on co-funding for Assisted Reproduction Technology. www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=19744

Initial costs (from birth to 18 months)

It is  a good idea to prepare yourself for the initial costs that you will have to bear when baby arrives. An estimate for set up costs such as a pram, cot and baby clothes is generally between S$1500 – $5,000. The actual cost will depend on whether you buy new, branded items or choose pre-loved, no-frills items, or even hand-me-downs.

The table below outlines some of the regular monthly costs

These costs may appear daunting initially but there are steps you can take to manage these expenses.
• Plan a budget and cut down on areas where you can save, e.g. buying pre-loved items.
• Identify needs and wants. While it is natural to want to get the best for your children, bear in mind that children outgrow/ outwear things very quickly. 
• Consider involving grandparents or other family in childcare, or hire a maid who is also able to look after your children if you both go back to work.
• Make sure you are aware of what government help you can get.

Government help

The Government has various schemes to help parents with the cost of raising children. You should take these into consideration as part of your financial planning for the family.

Maternity leave and Government-paid maternity pay

Find out what your maternity leave entitlement is from your employer so you can plan your finances and childcare arrangements.

Visit www.babybonus.gov.sg for more information

Children’s Development Account (CDA)

• This is a savings account for your child that you can open at any OCBC Bank or Standard Chartered Bank branch
• You can continue to put money in the account until 31 December of the year your child reaches 6 years old.
• The Government will match your savings up to the cap of:
-$6,000 each for the 1st and 2nd child;
-$12,000 each for the 3rd and 4th child; and
-$18,000 each for the fifth and subsequent child.
• The CDA savings can be used to:
-Pay school fees
-Pay child care centres, kindergartens and special education schools
-Purchase MediShield or Medisave-approved private integrated plans for the child
-Pay for child’s medical related expenses

Going back to work

Do discuss with your spouse about who you want to take care of your child. Bear in mind that if one parent decides to stop work or to work part time, this will affect your finances and your lifestyle. It will also have an impact on long term financial planning.

If you decide not to go back to work when you have a child, make sure you take into account the loss of income when you do your family budget. Be aware that your contributions to your CPF accounts  will stop if you stop work.  This may affect the housing loan if you are using your CPF savings to pay housing loan installments. You could also be missing out on Government subsidies.

If you want to go back to work full time or part time, you will need someone to help look after your child. You may have relatives who can help out. Or you may choose to put your child into infant care or employ a maid.

Check what childcare subsidies you are entitled to. For example, if you employ a maid to help look after your children you are able to a maid levy discount.

Tax relief and subsidies

The tax relief offered for working moms can be substantial savings and financial incentives

Top tips for starting a family
• Plan early.  Planning ahead for future costs can help make the journey of becoming a parent much smoother.
• Live within your means. Providing your child with love and affection means far more to them than the being dressed in the latest fashion.
• Save by buying pre-loved or no-frills items or bulk buying, or getting hand-me-downs.
• Invest in insurance. Make sure you understand your insurance needs and have the right cover for your family.

This article is produced by MoneySENSE, the Ministry of Community, Development, Youth and Sport (MCYS), Life Insurance Association, Singapore (LIA), Central Provident Fund Board (CPF) and the Financial Planning Association of Singapore (FPAS) under the MoneySENSE national financial educational programme.