Many Singaporean couples defer or even dismiss starting a family because of the high costs of childbirth and that of raising children in Singapore. The Government is working hard to encourage couples to have children by extending supportive measures and benefits such as baby bonuses, assistance schemes and longer paid maternity and paternity leave.
But there is more that every expectant parent can do to ease the stress of impending financial costs so that they can enjoy parenthood as it comes. Being financially ready for this momentous change in life can be the key to enjoying parenthood stress-free.
In Part 2 of the informative series on “Financial Readiness for your Baby’s arrival”, Parents World guides new parents/ parents to-be on how they can better plan their finances to meet the increased expenditure during this period.
#1: Plan Ahead
Financial readiness begins with a well thought out financial plan prepared early on – as soon as one has conceived the baby or if possible, as early as when the couple are planning for a baby. The duration of the financial plan should be for a minimum of 1 year, stretching from conception to childbirth and covering the initial few months post-delivery, usually overlapping the maternity leave period. It can be for a longer duration so as to include childcare and ancillary costs of raising a baby.
Some of the factors to consider while drawing up a financial plan are when does the mum plan to return to work after the child is born, will the child need infant care, will they need to employ confinement nanny or house help and the kind of maternity care they are looking for. The financial plan should list out foreseeable expenses and also factor in possible contingency costs- such as pregnancy complications or an extended period of hospital stay for baby and/ or mum.
#2: Know Your Benefits
This is not the time to shy away from benefits. Make use of every benefit and allowance that is rightfully yours to enhance your income. Some important benefits available for Singaporeans are:
- The MediSave Maternity Package that covers delivery expenses, as well as pre-delivery medical expenses such as consultations and ultrasound, in public and private hospitals.
- The Medisave Grant for Newborns, helps to defray the costs of a child’s healthcare expenses, such as MediShield Life premiums, recommended childhood vaccinations, hospitalisation and approved outpatient treatments.
- The Baby Bonus Scheme comprises the Baby Bonus Cash Gift (BBCG), a cash payout by the Government and a Child Development Account (CDA) – a co-savings scheme for your child, where the Government matches the parents savings. The baby bonus helps parents defray expenses from childbirth to when a child is ready to enter primary school.
#3: Create a Budget
Once you have a financial plan is in place, it is important to break it down into identifiable heads of expenditure and create a budget around it.
From scans and screenings to delivery costs to post-natal services and infant care services; there are different heads of expenditure an expectant parent needs to factor in while preparing their budget.
It is easy to conduct online research to come up with the costs of kid supplies like diaper, stroller, baby bottles and cot. It is equally easy to estimate the maternity costs as per the hospital you choose and maternity clothes etc.
Look at the following:
- Your partner and your regular income
- Benefits that you or your partner will receive from the Government or the employer
- Any other income from investments and property etc.
- Fixed expenses like house rent or mortgage interest, groceries, utilities bills, transportation costs etc.
- Variable expenditure – leisure, travel, entertainment, hobbies, shopping
- Predicted costs of having a baby starting with pregnancy costs to childbirth costs and moving on to costs of raising a baby.
- Savings for a rainy day plus an emergency fund for the pregnancy – post natal period
Do an income – expenditure analysis to come up with heads of expenditure that you can cut down on to create your baby fund. Deal with any debt – bank loans, credit cards as swiftly as possible. Look for any short-term investment plans that can help you save the money and also get additional income in.
#4: Create a Baby Fund
Once you know how much you need to budget for, just separate that amount every month and set it aside. Create a separate bank account for your baby fund or invest short-term. This is to ensure that you do not end up over spending or delaying starting with your financial readiness plan, which will only make it tougher and stressful for you as the D Day draws closer.
#5: Buy Insurance
Despite the planning , there might be a few curveballs thrown at you during this period and to cover those exigencies, insurance can help.
The various insurance plans that you can consider include:
- Life Insurance Plans – Life Insurance protects your family in case of your sudden demise or a debilitating mishap. Term life insurance plans also allow for payout at certain intervals. Various insurance agencies such as NTUC Income, Manulife, AIA and AXA offer both life insurance and term life insurance plans.
- Maternity Insurance – A maternity insurance plan can give you the added financial assurance during this phase. Most Maternity insurance plans cover costs of doctor consultations and scans, delivery expenses, childbirth and post-natal complications. Some plans also extend to the newborn and cover congenital birth defects and initial baby checkups. Maternity Insurance Plans can be offered as an add on to existing Health Insurance on additional premium such as in FWD Insurance or Allianz Care or as a standalone policy such as for Manulife ReadyMummy Plan.
#6: Scour for Deals/ Hands-me-down/ Make your Wish List
Babies grow way too fast. It is only wise to check for thrift stores, pre-loved items for sale or donation and hands-me-down from family and friends for items such as strollers, baby cots, changing table, sterilizers, breast pumps and the like. It will go a long way in saving money for things that you might really need such as hiring a confinement nanny.
If friends and family check what you want at a baby shower or post child-birth, don’t be shy. Instead keep a list handy so as to avoid duplicate and unnecessary gifts. This also prevents wastage and is good for the environment.