We meet two young couples - the Lohs who are expecting their first child (Part 1) and the Lis who are parents of 16 month old Sean (Part 2) and quiz them on their financial habits to find out how they are managing their finances. We also highlight some of the subsidies, reliefs and rebates that young parents are entitled to and how to maximise them.
Couple 1: The Loh Family – mum and dad-to-be
The couple is expecting their first child, a honeymoon baby, in June 2011
Name: Tim and Mandy Loh, both 31
Occupations: Mandy is an External Relations Manager and Tim is a Technical Marketing Executive.
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QUESTION 1:
Did you have any financial plans in place for starting a family when you got married?
Tim:
Nope. We did not plan on having kids so soon after the wedding.
I Love Children says:
Even if you don't have plans to start a family, start saving 10 to 20 percent of your disposable income. Before children are born, couples should assess their financial health and work out a financial plan that supports their current living expenses and provides for their future (eg. savings, insurance coverage, investments, family fund, emergency fund, etc). Financial planners are a good source of reliable information and advice if you need assistance in planning.
QUESTION 2:
Were you aware of Government grants and subsidies that you could take advantage of in preparation for parenthood?
Tim:
We only found out two months ago that we are going to be parents. While we are aware of some of the financial incentives offered to parents-to-be and new parents, we are not too sure of the details yet. In any case, we are trying to save as much money as we can currently.
I Love Children says:
There are various financial aids handed out by the Government in support of parenthood. There could be a considerable amount of paperwork to prove that you are eligible for each handout so start reading up early to avoid last minute rush to submit necessary documents. Here are some of aids available to Singaporean children and their parents.
i. Medisave Maternity Package: Withdraw up to $450 for pre-delivery and delivery procedures for all children.
ii. Baby Bonus: Starting from $4,000 per child, this is a cash gift that is payable in four installments over 18 months. In addition, the Government will match dollar for dollar the amount of savings parents contribute to the child's CDA. This is up to a maximum of $6,000 to $18,000, depending on the child's birth order.
iii. Tax Reliefs:
- Working Mother's Child Relief (WMCR): Working mothers can claim up to $50,000 per child in tax relief. The claimable amount for each child is between 15 to 25 percent of their earned income, depending on the child order.
- Parenthood Tax Rebate (PTR): Can be used to offset the income tax payable between spouses. The amount claimable for each child ranges from $5,000 to $20,000, depending on child order.
- Grandparent Caregiver Relief (GCR): Working mothers whose children aged 12 and below are cared for by their grandparents can claim GCR of up to $3,000.
iv. Others:
- Centre-based Infant Care and Childcare Subsidies: Enjoy subsidies of up to $600 a month for infant care and $300 a month for childcare.
- Foreign Domestic Work Levy Concession: There is a $95 levy concession if you have a child below 12 years old living with you.
QUESTION 3:
What were your thoughts on your financial situation after you found out that a baby was on the way?
Tim:
Initially, we were very concerned especially since we did not know how much money was required to support a child. Furthermore, we had just spent on big items like our wedding and honeymoon not long before we found out that Mandy was pregnant. After researching and speaking to friends who are parents, we began to realise that the medical expenses are not as high as we expected. We could also tap on our Medisave for a large portion of the costs.
Currently, we feel that we have enough to start a family but definitely have not figured out 100 percent of what is required to bring up a child to the quality of life that we desire. We are confident that with time and God's blessings we will be just fine.
I Love Children says:
There is no avoiding the fact that having a baby costs money. Rather than freak out at the thought of overwhelming expenses looming over your head the moment the pregnancy test shows a positive result, couples should learn to take things one step at a time. A baby takes 21 years to grow into an independent adult so your costs are spread out. With a sound financial and savings plan in place, you will be able to provide for your children.
QUESTION 4:
How did your spending habits change after you knew that you were expecting a baby?
Tim:
We are definitely more prudent with spending. Making sacrifices for the family has just become very real now that the baby is on the way.
I Love Children says:
The thought of being the sole providers for one or more little human beings can be a sobering realization. But you don't have to do it alone. Accept hand-me-downs. Instead of letting friends and family members buy your child yet another toy, invite them to chip in for big ticket items that the child really needs, such as a cot, car seat or stroller. Don't overspend on baby items and look for cheaper alternatives such as secondhand items that are still in good condition. Be open to renting temporary items such as maternity wear - you'll be surprised that it's not as yucky as it sounds.
QUESTION 5:
What financial plans or measures do you have in place for your child?
Tim:
We are actively saving up and setting aside money for the 'family fund'.
I Love Children says:
Bringing up a child is a life-long process so it is important to plan for the long-term. Parents should take advantage of compound interest and save early for their child's tertiary education. It is also prudent to create an emergency fund of three to six months of your salary.
