Expecting a new child is exciting, but it also means bigger responsibilities. Raising a child in Singapore could amount to S$670,000, an infographic by SmartParents showed. With such potential high costs, it is never too early to start planning your family’s finances.
Here are some steps you can take to prepare for the road ahead.
1. Adjust your current budget to accommodate your newborn
You’ll have so many more things to spend on once your baby arrives — clothes, diapers, pre-school, doctor’s visits, and so on. Before that time comes, why not take some time to review your monthly expenses and find ways you can cut your spending. Here is how you can get started:
- Use an expense tracker app like Planner Bee to manage your banking, savings and investments. You can also set goals and track your progress through the app
- Stop buying takeaway coffees and make your own instead
- Walk or cycle to work if possible
- Pack your own lunch to the office
- Opt for thrift shopping
- Cancel your gym memberships and work out at home instead
2. Plan for your child’s expenses
To offset some of your child’s healthcare expenses, MediSave Grant for Newborns automatically puts S$4,000 into your child’s Central Provident Fund (CPF) MediSave account once his or her birth is registered. You can use this amount on fees involving hospitalisations, child vaccinations, MediShield Life premiums, and approved outpatient treatments.
The Baby Bonus Scheme is also available to qualifying Singapore citizens. It was recently enhanced in 2021 to offer couples greater support and assurance. You can apply for this scheme online starting two months before the estimated delivery date.
Check here for your child’s eligibility.
3. Review your CPF nomination
In Singapore, CPF savings form a major part of a resident’s assets. With a new family member arriving, you should review your CPF nominations to make sure you have allocated your CPF savings to the right people.
After your child’s birth, you may wish to consider making a new CPF nomination to put your child in as a nominee. Learn more about estate planning here.
4. Update your will
If you have an existing will, it may be time to review your estate documents to protect your newborn’s future. It is always good to decide what you want for your child early on and the amount of assets you want to hand down.
Updating a will may seem premature to many, but it ensures your estate will be transferred in a timely and clear manner when you die. A will is legally binding and prevents any misinterpretation of your wishes. This reduces the stress on your loved ones during such a difficult period.
5. Purchase a maternity insurance plan during pregnancy
Maternity insurance is a prenatal insurance policy plan that can be purchased during one’s pregnancy. It covers unexpected pregnancy complications that could affect either the mother or the child.
Any successful claims are usually issued as one-time payouts, which can help to offset medical expenses that are a result of pregnancy complications.
Insurers do not return any premiums if the policyholder does not make any claims.
Depending on your needs, you can purchase maternity insurance as a standalone plan or as part of a package. A standalone plan only covers pregnancy-related conditions. Purchasing a package means you buy an additional insurance plan on top of your maternity insurance.
6. Update your life insurance policy
You will require more coverage from your life insurance policy as your expenses will increase. You may also want to set aside money for your child’s university education.
Set a meeting with your financial advisor to work out the amount of coverage you will need. You can also use our Insurance Needs Calculator to help you figure out the total insurance coverage you need, and whether you are adequately insured.
If you feel that you need to change your life insurance policy, you can look at the list of policies we have compiled here.
Getting everything in order
Having a baby is a huge financial commitment. It will change the way you spend and save your money. Planning early is a prudent move and helps you to determine the amount you will need to raise your child.