Research by ECA International indicates that Singapore is the 9th most expensive country to live in Asia. Worldwide, Singapore comes at number 20. These results have grave implications, especially for young couples that want a child. They give a clear idea of what to consider while raising a child in Singapore.
With the cost of carrying a pregnancy to term and birth coming to at least $8,000, raising the baby is even costlier. A study estimates that it would cost at least SGD 340,000 to raise a child from infancy to 21 years of age. Therefore, it is crucial that would-be parents take serious account of their financial status before embarking on child-raising. Below are a few financial steps to take before making that baby decision.
#1 Review Your Current Financial Situation
Effective planning begins with understanding the current situation in which one is in. For would-be parents, it is always advisable to understand everyday financial situations before deciding to get pregnant.
Specifically, this step involves evaluating the monthly earnings against expenditures. It is crucial, to be honest, and genuine about how much each party earns. Further, it is also essential to factor in all avenues that take money away like taxes or utilities.
#2 Understand the Terms of Maternity Leave
For working couples, it will be crucial to find out if the organisation gives maternity leaves. Further, couples must find out whether the leaves are paid for or otherwise. Understanding this will help the would-be parents to gauge their financial situation during pregnancy and birth.
Further, knowing the terms of the leave earlier puts the couples in the best psychological position to deal with eventualities. This is very important because once the woman delivers, the family will automatically rely on one breadwinner.
As a result, the per capita income will also substantially go down. Again, this knowledge will help in making expenditure decisions and easy raising a child in Singapore.
Naturally, after having established the financial situation of the family, it is time to save. In particular, couples can go for any savings plan as there are so freely available out there. Alternatively, it could be advisable to consult a financial expert on how to best save.
Luckily, the government in Singapore has elaborate savings plans in place for couples planning for a baby. Under the Ministry of Social and Family Development (MSF), the government has the Child Development Account (CDA).
Interestingly, the CDA program comes with ample baby bonuses that can help a couple to get through the period. The program provides for educational and healthcare expenses at Baby Bonus Approved Institutions.
#4 Understand Government Grants & Subsidies
In addition to the Baby Bonus grant from the government, other subsidies could abet child-raising costs.
Notably, the government has in place the Medisave Grant & Medishield Life. The grants began operating in January 2015. Specifically, the Medisave Grant of SGD$4,000 purposes to help parents cover healthcare expenses for their baby.
On the other hand, the Medishield Life program covers basic health insurance. It is important to note that this program is mandatory. Therefore, would-be parents must consider such programs to help them better allocate their finances.
Basically, parents will need to open a Medisave account for their newborn, which will coordinate the two programs.
#5 Plan for Childcare
The government might have the grants and subsidies in place but having one’s own childcare plan is essential. A childcare plan will include an account for basic needs and even a savings plan for tuition. This will help one have peace of mind.
#6 Disability Insurance
It is also clear that the government in Singapore provides comprehensive care for working mothers. However, it is prudent to have in place disability insurance for the unknown eventuality. The importance of insurance is to stay ahead of events.
Alternatively, one could keep an emergency account for such purposes. Such an account will serve the short period from pregnancy to the early days and months of birth.
Under this program, couples are at liberty to decide how much money they can save. It is important to note that such savings must come from disposable income.
#7 Prepare Your Will
For first time parents, it is important to begin preparations for a will the moment a child comes into the world. A will is the surest protection for your baby in the case that you are not available due to circumstances like death. In particular, the will sets out how third parties can handle your property and finances on your child’s behalf.