Having a new member of the family can be both joyful and challenging, considering that the costs of living, including childcare, has been rising. But instead of constantly worrying, let’s take a look at what first-time parents need to know about childcare and an overview of what financial needs they need to prepare for.
Budgeting Plan = Housing + Childcare
Don’t wait until the baby is born before coming up with a budgeting plan. Parents should start planning financially for their newborn as soon as they find out that they are pregnant. For first-time parents, they should think of how much they’ll be spending on their child’s needs.
And for the working parents, they will have to send the children to childcare or hire a full-time babysitter, and either can cost a lot. On average, childcare centers range from SGD 700 to SGD 2,500, and a full-time babysitter sits around SGD 600 to SGD 1,400 per month, not including lunch costs.
Couples that live in a place that they believe is not fit for a child to grow up in should find a more comfortable home. There are many types of private properties or public housing, also known as HDB flats, with the price range between SGD 2,500 and SGD 5,000 per month for a two-bedroom apartment.
First-time parents should be familiar with these costs for childcare and housing. By knowing how much they’ll spend, they’ll know how much they should earn and saved.
Saving and Being Ready for Spending
Couples might earn well and regularly save individually and together, but is it enough for the costs of children’s needs? They need to consider that in the next 18 years, they will spend on the child’s basic needs, education, healthcare, and extracurricular activities.
A high-yield savings account for child-specific savings is advisable. It should be separate from the household needs, parents’ needs, and lifestyle needs to make it easy to manage. Separating this could be helpful, so that once the children start university life, there will be available funds.
Education Costs
Education is one of the most important but also one of the biggest expenses in raising children. This is why parents should start saving and investing for this as early as possible.
The good news is that the Ministry of Social and Family Development of Singapore offers parents an investment plan for children’s education called CDA (Child Development Account), where the parents can take advantage of the government. The co-matching start grants SGD 4,000, and it applies to more than one child.
Read also: The Key Benefits Of Using Securities API In Modern Finance
Emergency Fund and Insurance
Building emergency funds and getting insurance for your child or children are wise steps. Parents should put six months’ worth of their salary into an emergency fund so that they can still provide for the family’s needs in case of emergencies and financial problems. As for medical insurance, getting one for your child will help you save money. Babies and toddlers are prone to sickness, so medical expenses for serious illnesses can rack up quickly if you do not have one.
Managing Debt
Parents should manage their current debts with a Singapore money lender and maintain their creditworthiness. By settling debts, the money that was once used to pay it can now go to your children’s needs. They should also try to borrow money only when necessary. This way, they’ll avoid getting stuck in a debt trap, have more money for their family. This also maintains their creditworthiness and ensures that they can borrow money during financially difficult times in the future.
Not Relying on Children for Retirement
Most individuals don’t want to have strained finances in their old or senior years. And most parents don’t want to burden their children when that time comes. So while parents are still in the workforce, they should start preparing for retirement. This could mean saving or investing.
For the latter, this could mean stocks, bonds, and mutual funds that can grow over time. This kind of investment could be utilized when the country is facing economic inflation where everything’s prices are high and exceed the family budgeting plan.
Conclusion
Parents are understandably concerned over their children’s financial needs, such as childcare and finances. However, there is no going around it: they have to face these concerns to allay them. That way, they will be able to plan their finances and be confident that both their children and them will enjoy a stable, secure, fruitful, and happy family life. That is what the parents’ real responsibilities are. Best of luck, parents!
