childcare Archives | MoneyDigest.sg

Singapore Parents Spend More Money on Children’s Needs than Retirement

Starting a family requires careful planning. With a clear idea of what it entails and the schemes available to help ease new parents’ financial load, you will be able to embrace one of life’s greatest blessings.

As you allocate your budget, you must consider both your childcare expenses and your retirement fund. Prioritizing these two is easier said than done. A 2021 study by AIA Singapore revealed that young families in Singapore have deprioritized planning for their retirement to give way for the monthly expenses on their children.

The participants of the study (i.e., parents) were found to be spending 2.5 times more money on their children’s monthly expenses, rather than taking charge of their own retirement planning. These Singapore parents spend almost 20% of their income on their children’s needs and allocate less than 7% on their retirement fund. Furthermore, 70% shared that they intend to either increase or maintain the amount of income allocated to their children’s expenses. The increase of allocation to the children’s expenses is affected by the higher childcare costs amidst the pandemic.

Apart from this, the pandemic also affected their savings. One in three Singaporeans’ savings was negatively impacted in 2020, with a median amount of between S$251 to S$500 set aside monthly for retirement. It is challenging to find a balance between all the primary categories of your budget, but you must not overlook the importance of retirement planning.

“Retirement planning is an essential part of securing our longer-term financial security, not just for parents, but for the entire family, so everyone can look forward to a brighter future with peace of mind,” said Melita Teo. Melita Teo is AIA Singapore’s Chief Customer and Digital Officer.

As parents, you want to support your children by giving them the best opportunities to secure their future. Hence, you must consider creating a retirement plan to help navigate your seamless transition to the golden years. With this retirement plan, you will not need to fully rely on your children.

Start by reviewing your financial situation and financial plans. Establish a fresh budget for your household that will accommodate both your childcare costs and your retirement fund.

Talk to professionals, your trusted friends, and family members to have an idea of what it costs to pay for your child’s needs and your personal retirement needs.

Image Credits: pixabay.com

Research on various government schemes such as Enhanced Baby Bonus, Enhanced MediSave Grant for Newborns, and other subsidies for center-based infant and childcare. Newborns who are registered as Singapore Citizens at birth are automatically insured under MediShield Life. These schemes and benefits can help free up some of your expenses to boost not only your childcare budget, but also your retirement fund.

Sources: 1, 2, & 3

Surefire Ways To Save Money As A First Time Parent

Congratulations on becoming a new parent! Welcoming another human being into this world can change your life in many ways. Most of these changes are for the better. While, some changes are challenges too.

I am referring to the hefty price tag attached to child-bearing and child-rearing. You have to spend about S$8,000 to S$18,000 a year for that.

You read that right! You will be spending five figures on groceries, clothes, toys, diapers, hospital visits, and daycare. With a growing list of expenses, you must rethink how to manage your financial life after having a baby. Here are some tips to help you out:

SHAKING THINGS UP

You and your partner have had a working budget for years. And this household budget seem to work fine. However, you have to reset your budget once the baby comes. Your pooled incomes, savings, and investments shall cover your child’s expenses.

Begin by saving for the delivery by taking up Medisave’s Maternity Package. Using Medisave for childbirth can help offset the cost of your hefty delivery. Roughly, you can claim about S$450 per day on hospital stay, S$900 on prenatal expenses, and S$750 to over S$2000 on surgical procedure.

For instance, you wife had a Cesarean delivery and was hospitalized for two days, you will be able to claim about S$900 on prenatal expenses, S$900 on hospital stay, and S$2,150 on surgical procedure. This sums to about S$3950 worth of claims.

FILLING THE PIGGY BANK

It comes as no surprise that education will take a huge toll in your expenses for the years to come. Thus, setting up an education fund for your beloved can help you in the long run. While taking up an education loan is always an option, the cost of schooling gets higher each year. You must start saving money along with the arrival of your little one.

A scenario close to my heart is the effects of my uncle’s death. My uncle is the breadwinner and his son has not yet finished his schooling. As he continue his secondary education, he finds it difficult to fuel his financial resources. If only my uncle set up an education fund beforehand!

Saving up for your child’s education can cushion potential financial bumps. This way, your child will not have to compromise his or her education.

SETTING UP A CAPSULE WARDROBE

Along with the trends of minimalism and sustainable living comes the existence of the capsule wardrobe. A capsule wardrobe enables to the owner to keep key pieces that he or she can mix and match in the years to come. The only challenge when it comes to toddler is that they grow up so fast!

Matching outfits or assorted clothing can be adorable to look at! However, your infant does not need twenty sets of outfits! He or she will grow out of these clothes faster than you can post about it on Instagram. Thus, you must limit your child’s wardrobe. Allow a set of basic items with interchangeable colors and patterns to full your drawer. You do not want to spend on designer clothing that your child will surely ruin with stains and other mishaps!

Image Credits: pixabay.com

Here are just some ways to save money as a first time parent. Make it a habit to check children’s websites and forums for ways to create your own baby food or to conduct your own reading class. Nothing is impossible with a little determination from a parent!

Sources: 1 & 2

Financial Checklist For Expectant Parents

The late Janet Reno once said: “I have learned that raising children is the single most difficult thing in the world to do. It takes hard work, love, luck, and a lot of energy. It is the most rewarding experience that you can ever have.”

Creating and nurturing a baby in Singapore is no walk in the park! Encountering sleepless nights, medical scares, and embarrassing moments are unavoidable. One is never completely prepared for what is about to come. However, you can start planning for your future by considering this financial checklist.

#1: DRAFT YOUR PRENATAL BUDGET

You are about to bring life into this exciting and challenging world. Tackle each day with ease by knowing how much you will be spending in the next couple of months. There are many lifestyle adjustments that come with having a baby. Include the food expenses, medical costs, insurance contributions, and so on.

Be honest with yourself when shopping for baby items. Do you really need a trendy stroller with an LCD control panel? Set a tangible line between what is necessary and what is forgivable. For instance, you can save on the disposable diapers by converting to the cloth diapers. Or, you may revamp an old drawer into a changing table. Use your creativity when maximizing your dollars and spend within your bounds.

#2: DETERMINE THE AMOUNT OF YOUR RESERVE

Becoming a preschool teacher made me realize that significant things can happen when you leave a toddler for several seconds. I am not exaggerating. One student may be chewing on the toys while you are trying to get groom the other. I can still recall when I was curious about the air conditioner and ended up with several cuts on my fingers. Being prepared for your baby’s potential accidents is a must!

I recommend that you take a look at your financial reservoir (or emergency fund). Having at least six months’ worth of living expenses covered is a good start point.

#3: UNDERSTAND THE HEALTH INSURANCE’S SCOPE

It is no secret that having a baby in Singapore is expensive, even if you have health insurance. Navigate your attention into the prenatal care, labor, and newborn costs. You need to understand which expenses your insurance will pay for you. There are diverse maternity insurance packages available on the market now! One is the OCBC MaxMaternity Care. It is the first maternity insurance plan that covers its clients as early as 13 weeks into their pregnancy. They will cover your costs for specific types of pregnancy complications.

Aside from understanding the scope of your policy, you must include your baby in your primary health insurance. You can typically change your records within 30 to 60 days after delivery. Do it as soon as possible as you do not want to be caught with an ill newborn and no coverage!

#4: IDENTIFY YOUR CHILDCARE ARRANGEMENTS

We are lucky to be blessed with childcare options ranging from a conservative preschool to an eclectic day care centre. If both you and your spouse are working full-time, recognize that a large number of your monthly costs will go to childcare (i.e., sometimes even more than your rent). This is why you must weigh your options and alternatives. By alternatives, I am pertaining to the relatives that can aid you along the way.

It is an acceptable idea for Asian families to ask for help from their parents. The grandparents-to-be may be available for two days a week. This could help you lessen the financial load. If you wish to hire a nanny, be sure to check the government fees and regulations surrounding it.

Image Credits: pixabay.com

The cost of having a baby does not stop when he or she goes to school! So, consider formulating a long-term financial plan beyond the first few years.

Sources:1,2,3 &4

Is Childcare Only For Rich Singaporeans?

As an early childhood teacher from an internationally acclaimed school, I am exposed to the childcare industry. My mere exposure made me wonder why childcare is so expensive! For starters, the issue made the headlines last year due to the huge price gap between the different childcare services across Singapore.

The average price was S$1,004 and the median was S$856. This means that there are centers that charge more than S$2,000. It is ridiculous how this amount is near to the country’s minimum wage. With these overwhelming prices, here are some factors that you must consider before paying for childcare services:

1. VISIT YOUR OPTIONS

Ask credible resources about the available childcare services in your area. For instance, an affordable option is NTUC First Campus (NFC). NFC is dedicated to provide quality and affordable education services for working parents. The institution’s fees range from about S$1,300 to S$1,900.

Image Credits: ntucfirstcampus.com

On the other hand, premium childcare centers endorse specific methodologies such as Montessori. Research on these methods to determine whether they are in lined with your beliefs. Another option is hiring a live-in nanny. A nanny can help you out with other tasks such as cleaning the room and cooking dinner. Save money by hiring a caregiver nearby.

2. COMPARE THE COSTS

As with everything else, you should shop around. Compare the costs of hiring a nanny and enrolling in a daycare center. Have a sense of the monthly fees and requirements. Also, remember to include any government fees and childcare benefits from your company.

3. UNDERSTAND YOUR ECONOMIC SITUATION

Look at your budget and focus on two things. Firstly, figure out your current spending habits. Lastly, eliminate the unnecessary expenses. Are you ready?

Start by creating a list of the things that you spend on. A free software like Mint can help you with the compilation of information. Afterwards, you must go through your non-essential spending. Eliminate or minimize your coffee runs, restaurant visits, shopping sprees, and petrol costs.

Alter your budget according to your predicted childcare spending according to your careful examination.

Sources: 1, 2, 3, 4 & 5

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