“Invest to keep your money growing, but more importantly, focus on building the relationship with your spouse. At the end of the day, it’s about the commitment to the relationship that counts.”
This was shared by Mr Paul See, founder of Priority Wealth Pte Ltd and author of Rise Of The Financial Ruler, at I Love Children’s (ILC) fertility wellness talk, held at Hillion Mall in September. The talk was part of ILC’s Know Your FERTILITY WELLNESS 2018 campaign.
Together with Mr See, guest speaker Evelyn Leow, a stay-at-home-mummy of two, shed some light on how to manage finances when starting a family.
How much should we set aside before starting a family?
Mr See: That’s a very abstract question. There’s no real amount because, it is about the commitment to the relationship. It is not about the money, but the person you choose to spend your life with. You can start early. We have seen youth getting married earlier without savings and they somehow manage. Focus on building the relationship more than accumulating the money.
Evelyn: I agree. You need to work in partnership with your husband. It is very important that he is supportive of you being a stay-at-home-mum. My husband knows that being one is not easy, so sometimes, he helps with the housework when he comes home. I feel blessed that he thinks of these little aspects and allows me to find my own private time.
What is the cost to bring up baby from 0 months to university?
Mr See: Many parents are concerned about the cost of raising children. Babies do not break the budget, parents do.
Make sure your assets and savings are working for you. If you live within your means, you will spend an average of $200,000 - $300,000 raising your child. If you send them for expensive tuition and external classes, the cost can easily go up to 1 million dollars.
Parents spend much of the money on their children, buying them things they never had, so as to give them the new experience. Most of these items are unnecessary; this tendency is higher if it’s your first and only child.
Evelyn: Agreed. Kids grow fast and most of the time, they only get to wear their clothes once before they outgrow them. It is best to get hand-me-downs and pass-them-on to another parent who needs it after your kids have out-used them.
Even for toys - how often does your child play with the same toy? They do not need much to be happy, they just want to spend time and play with you.
How can we save for our children’s tertiary education?
Mr See: Couples should do their budgeting before marriage.
Set aside 10% monthly for education, be it for yourself, your children or your family. If both husband and wife do that, they will have sufficient funds for the children that come along. It does not matter if you have one child or four children; that 10% will last them till university.
Is the Baby Bonus enough?
Mr See: The question to ask is when is enough, enough?
The Baby Bonus is not to help you raise your child but to help defray some costs of raising your child. Parents can also make good use of the Baby Bonus CDA account to help defray some cost in childcare.
Once your child enters primary school, the cost of education drops tremendously. At this juncture, parents should start saving for the future.
How do we manage our finances?
Mr See: Couples should rely their spending on one income. In the case where one parent decides to stay home, spending is still kept within their means. That said, at least 55% of the income is usually spent on daily necessities.
If you use the Financial Ruler, living within your means does not mean spending lesser. It also means that both the husband and wife will have to adopt this idea so both can achieve the same level of understanding about budgeting.
Evelyn: I never thought that I would be a stay-at-home-mum. I was applying for my Masters when my second born, James, came along. I found it more meaningful to be home with them.
When my friends heard that I wanted to be a stay home mum, their first reaction was “How are you going to afford it?” (laughs) It is very important that your husband is supportive of you being at home and you need to work in partnership with him.
Is insurance necessary for children?
Mr See: Hospital and surgical insurance coverage are crucial for your child. Every child born has $3000 in their Medisave. With that money, the child can buy his/her own shield plan. That takes care of the hospitalisation charges.
Another insurance is accident coverage. If possible, get a family plan where the children get free coverage. There are many family friendly products in the market. Some can be as low as $100 - $200 per year, and cover up to a few thousands.
The Financial Ruler recommends using 10% of your income to cover the entire family’s insurance. Hospital, surgical, disability, major illness, accident and death coverage all can be well covered within the budget. Speak to your insurance agent, and let them know of your budget and what you want to be covered for.