Planning your finances when having and raising children

Starting a family requires planning. With a clear idea of what it involves and the schemes available to ease new parents' financial load, you will be ready to embrace one of life's greatest joys.

You will never hear a parent lamenting, "I wish I didn't have any children. It's so expensive!" Yet, it is not uncommon for the financial responsibilities of raising a child to be one of the main sources of trepidation for those mulling to start a family.

Concerns over the cost of having a child should not stop you and your spouse from experiencing one of the greatest joys in life. Yes, you will need to set aside extra savings when a tot (or a few) joins you, but it is all doable with planning and the discipline to make sound financial decisions.

Before you start a family, you and your spouse should:

Plan and prioritise

Review your financial situation and financial plans. Draw up a fresh budget for the household to prioritise your spending so as to accommodate new expenses for your baby — doctor's visits for mummy and baby, baby's daily necessities and perhaps even fun activities for your little one, etc. Revise your financial plan to cater for your child's longer term needs such as tertiary education.

Do your research

Talk to professionals, your friends and family members to have an idea of what it would cost to pay for your child's needs. Don't let the information alarm you but see it as a way to help you prepare for what's to come.

You should also read up the various government help schemes available, including the Enhanced Baby Bonus, Enhanced MediSave Grant for Newborns and subsidies for centre-based infant and child care.

If need be, you can also use your MediSave to pay for:

• Pre-delivery expenses such as pre-natal consultations, ultrasound scans, tests and medications, as well as delivery expenses. The MediSave maternity package covers these expenses — up to withdrawal limits — for all your children, incurred at both public and private healthcare institutions.

• Help with conceiving. MediSave can be used to pay for Assisted Conception Procedures. Assisted Reproduction Technology treatment, such as in-vitro fertilisation (IVF) and intra-uterine insemination (IUI), is also available at public hospitals and is co-funded — up to 75 per cent — by the government.

What to expect when you are expecting

Here are a few things to note when you are expecting:

Maternity packages and consultation charges

Consultation and delivery charges vary. You may want to consider pre-natal packages offered by some gynaecologists that cover regular consultancy charges and basic medication. Read the details of the maternity packages carefully to find out what is not included.

Delivery charges

The cost of delivery packages also varies depending on the type of delivery, choice of hospital and the length of stay. Broadly, delivery by C-section costs more; and private hospital stays are more expensive.

Do you already have maternity benefits?

If you have a health insurance policy, find out if it covers pre- and post- delivery visits to the doctor. Some health insurance plans include extended maternity benefits. The benefits may include delivery, complications and neonatal cover.

Remember to:

• Find out what is the waiting period before such benefits kick-in

• Weigh the benefits versus the excess cost you need to bear

• Make sure you understand the policy exclusions, if any

• Read the terms and conditions carefully

Buy life insurance

Newborns who are registered as Singapore Citizens at birth are automatically insured under MediShield Life. Think about life insurance to help provide for your family should something unexpected happen to you.

Paying for your child’s changing needs

Having a child changes your world. You may need to cut back on your personal expenses and set aside more money for your child’s needs as she or he grows.

From birth to 18 months

You will need to pay for your baby’s basic needs such as:

• Milk, nappies and food

• A place to sleep, e.g. cot or mattress

• Clothing

• Healthcare

Start saving up during the pregnancy to buy these items.

Later on, you may need to buy other items such as a baby stroller and car seat. What it costs will depend on whether you buy new or branded items, or make use of hand-me-downs. On top of these, you may need infant care or nanny care.

Some tips to help you manage costs at this age:

• Plan a budget. Cut down some expenses by asking your family and friends for hand-me-downs. Children grow quickly! So, items like clothes, toys, car seats and bathtubs are rarely worn out.

• Identify needs and wants. Even if you wish to give your children the best, remember that they outgrow items like clothes and shoes pretty quickly.

• Get help with childcare. Involve grandparents or other family members in childcare.

• Find out about any government help you can get.

From toddler to teens

University may seem far away when your children are toddlers. But it is never too early to start saving for their school fees and university education. The earlier you begin, the more time you have for your money to compound and grow.

Some tips to help you manage costs at this age:

• Start saving up now. The sooner, the more, the better.

• Readjust your budget. Include the costs of bringing up your teen. A budget will help you manage your household income and expenses as you save.

• Update your own financial plan. This will help you work towards goals like paying for your child’s university education.

• Buy health insurance for your children if you want more than what MediShield Life provides.

Staying at home?

If you or your spouse decides to stop work or to work part-time, you will need to adjust your budget to deal with the loss of income.

• Cut back on your spending patterns and make some lifestyle changes.

• Maintain your life insurance policy for protection purposes.

• Add on more cover if you have another child. But make sure you can afford the extra premiums first.

Be careful not to cut back on your savings for retirement or healthcare insurance. You need to take care of yourself as well.

Getting help

There are a range of government schemes to help you defray the cost of having and raising your child.

These include:

• MediShield Life coverage from birth

• Baby Bonus Scheme

• Tax reliefs and rebate for parents

• Subsidies for infant and childcare

• Foreign domestic worker levy concession

Paying for university

Saving for a child's university education should be one of your priorities as a parent. The cost can be hefty. Apart from school or tuition fees, you have to factor in living expenses if you are planning to send your child overseas. The cost can be daunting if you do not prepare or plan ahead.