By Tan Yi Lin
This is a continuation from Part 1 where we met the Lohs who are expecting their first child. Here in Part 2, we meet the Lis who are proud parents to 16 month old Sean, and how they are managing their finances now that they have a little baby.
Couple 2: The Li Family – new mum and dad
Parents of 16 month old Sean
Name: Debra Li, 31 and husband, 37
Occupations: Debra is a Quality Assurance Specialist and her husband is a banker.
Did you have any financial plans in place for starting a family when you got married?
We started a joint account shortly before we got married and contributed an agreed amount to it every month. We never specifically stated it was for starting a family but for a long-term family fund of sorts. No one touches it without expressed permission from the other.
Maybe Baby says:
Having already put aside a sum of money every month, you should now plan to gradually increase by 10 percent over the years as your monthly income increases.
Were you aware of Government grants and subsidies that you could take advantage of in preparation for parenthood?
We read up on available Government grants for new babies just before I was set to deliver. We definitely took advantage of it. We used part of the money from our Child Development Account (CDA) to bank our son's cord blood when he was born, costing about $5,000.
We certainly appreciate Government handouts because every cent helps. But raising a child takes way more than money. I hope new parents recognise this fact.
Maybe Baby says:
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. The amount in the account can be used to pay fees for approved child care centres and kindergartens, to purchase MediShield, to pay medical expenses, etc. Details can be found at https://www.babybonus.gov.sg
What were your thoughts on your financial situation after you found out that a baby was on the way?
The reality of having a baby really forced us to have a good hard look at our finances. We definitely spent quite a bit during the pregnancy for gynaecologist visits, maternity clothes and preparing for the baby’s arrival. It was what came AFTER the pregnancy that we were concerned about, the years of bringing up our child till we pack him off to university. I wouldn’t say we were overly worried about our finances but we definitely recognised that raising a child is a huge financial commitment.
While it is important to save, don’t be overly worried about finances as they are actually spread out across 2 decades. For example, education costs can be broken down to different stages: preschool education, primary school, etc. While your child needs to be properly schooled, he does not need to attend a preschool that costs you $1200 a month! The key to it is to be as much involved as you can in your child’s life, for example to let him learn through playing with you, through little excursions to the supermarket to touch and feel the fruits there, to go with you to the Botanical Gardens to learn about plants, sand etc.
How did your spending habits change after you knew that you were expecting a baby?
I have never been much of a spendthrift so I don’t think that has changed much. We are very practical about the things we buy. We try to buy decent quality clothes and toys that last. We do our homework and scout around for good deals. We also have no qualms about accepting hand-me-downs when offered. I think new parents tend to go overboard with buying adorable baby items but don’t realise that babies will outgrow them very fast.
These days, we definitely have less time to shop for ourselves which is a good thing.
Parents to be could start reviewing their daily expenses or reigning in their penchant for large purchases in light of the impending lifestyle change. Consider giving up that daily $6 frappuccino or replace it with a less expensive drink. Tempted to get the latest Sony Playstation or a brand new Apple MacBook? You will most probably not have the time or energy to check out new games or surf the Web at leisure.
What financial plans or measures do you have in place for your child?
We feel it is important to instill some money sense in our son when he is still young. We started a joint bank account for him – all his angpow money from birth goes here. As for long-term plans, we upped our contributions to our ‘family fund’ and increased insurance coverage for ourselves to ensure our son will be well-taken care of should anything happen to either or both of us. It’s morbid to think about it but it would be irresponsible not to either.
While you may be concerned about your child's future, don't forget to provide for your own. Having enough life and health insurance is essential and don't put off saving for retirement. Besides setting aside part of your monthly salary as savings, learn how to grow your money through investments. Some of these investments can also be easily liquidated for cash in the event of a family emergency.