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Thinking of having your first child but concerned about the costs of raising children?

Do not let financial considerations stop you from enjoying one of the greatest joys life has to offer- starting a family and parenthood!


Managing the costs of having a child
With a new addition to the family, you and your spouse may need to adjust your budget and also your financial plans. Consider taking out health insurance for your child as well as life insurance to provide for your family in the event something unexpected happens. Read on to find out about the various Government help schemes for parents here.


Paying for your children’s education
Most, if not all, parents want to provide tertiary education for their children. But the cost of this can be hefty – it includes not just the school or tuition fees but also their living expenses. It can be daunting if you do not prepare or plan ahead.


Some suggestions to help you get started:

  • Work out how much your children’s tuition fees and living costs will be, taking into account current prices and the projected inflation rate. If you are hoping to provide an overseas education for them, you will have to consider the impact of currency exchange rates as well as the projected inflation rate in the country of destination too.
  • Take stock of the funds you have currently set aside for their tertiary education as well as the projected values of your investments by the time they enter school.
  • If there is a shortfall between the projected funds you will have available and the expected costs of your child’s education, take steps to meet this shortfall. You might need to put aside more in savings or investments to achieve this. By starting earlier, your savings will benefit from the power of compounding and have more time to grow. If you are investing, i.e. buying financial products for investment, a longer time frame allows you more time to ride out any short-term fluctuations in investment values.
  • Do consider the range of financial products and investments available in the market. Many products such as endowment policies claim to help you save for your child’s education. But all investments carry risk (for example, they may not achieve the desired returns or may lose you money), so always remember to buy only the products you fully understand and have a level of risk you are comfortable with.
  • Monitor your investment portfolio regularly: review the current and projected values and see if their growth is on track to meet your requirements. Adjust accordingly and don’t forget to diversify your investments. If you are nearing the time you need the money, you may want to move your investments into more conservative assets to preserve their value.

Loan options
There are loan options to fund your child’s tertiary education. For example, there is the Tuition Fee Loan Scheme for approved institutions, where the loan is interest-free during the period of study. There is also the CPF Education Scheme which allows you to borrow from your CPF Ordinary Account to pay for your child’s local tertiary education at the approved institutions, subject to the withdrawal cap. Your child will be required to repay the amount withdrawn, plus accrued interest which you would otherwise have earned on your CPF savings. Read more on the CPF Board website.


Tertiary institutions may also provide subsidies, grants and scholarships for students. There is a range of government scholarships available too.


It takes time and effort to plan ahead for your new family’s finances, but it’s well worth it if it ensures a family’s well-being in the long run.


The above information is prepared in collaboration with the Central Provident Fund Board and Ministry of Social and Family Development .

This article is brought to you by MoneySENSE. Check out www.moneysense.gov.sg for more information on personal finance matters.

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