30 November 2010, by Dannie Cho
“First came courtship, then came marriage. Then comes a baby carriage.”
Okay, it’s supposed to be first comes love, but people don’t do that Romeo & Juliet thing where you see each other one time and just fall in love. There’s courtship – the first of many expenses together.
Then there’s marriage. And trust me, we’ve been there before. You spend a bomb for the wedding dinner, hoping against hope that your guests will be generous enough and leave you enough to at least cover expenses. And then there’s the house, typically a HDB flat where you sign a 30-year loan. 30 YEARS!!! You use the calculator on HDB’s website and figure out, “Sure… we could probably afford that flat in the better location. It’ll be tough, but we can do it.” Then you realise how much renovations cost. And how difficult it is to secure loans that give you a longer repayment period during this most cash-strapped period of your time. And hey, since you’re not staying with your parents anymore, you start paying for your own utilities, Service & Conservancy charges, groceries, etc, etc.
It’s no wonder that at the point of marriage, many couples feel that they are not financially ready to have children.
And that’s fine. I totally agree with that. If you need to hold down 3 jobs to meet your loan repayments, then starting a family is a bad idea. The thing is, most couples don’t realise that they actually have enough to start a family with.
What most couples do, is that they consider the amount of money they have left over in their bank account at the end of every month. Then, they mentally compare that with the costs of milk powder, diapers, domestic help, schools, tuition fees, doctors’ fees, etc. It’s almost as if they expect having a child to be a one-off expense!
It doesn’t work that way. Really.
There’s the conception stage, which actually saves you some money, since you don’t have to buy contraceptives any more. If, like Yi Lin and I, you have problems conceiving, then you would probably need to pay a bit more. But hey, the Singapore Government co-funds your efforts. And most of your payments can be done by Medisave, which is money that belongs to you that you seldom are allowed to use. (When the Government allows you to use it, better use!). Our IVF treatment was supposed to cost approximately $10,000, but we are paying only about $1,000 in cash, because of Medisave and Government funding.
Then, there’s the delivery stage. Again, use your Medisave! It cannot cover the total amount, but it does help. And there’s a Baby Bonus too.
Finally, you’ve got your baby. And baby changes diapers maybe 5 to 10 times for every one time you change your own underwear. And baby’s milk costs $40 per tin, as compared to your milk, which costs $2 per litre. But you know what? At this point of your lives, your personal expenses are going to be at an all-time low. Baby needs to be fed every 2 hours. Would you still be chilling out at fancy restaurants with friends? Would you still be spending the whole day shopping? Would you really, really need that new Macbook Pro, given that you don’t really have time to do anything with it anyway? The way I look at it, most couples’ expenses should balance out quite easily. Oh, and don’t forget – the Government gives you money again! More information on the various grants and subsidies can be found here.
Now, I realise that there will be skeptics. After all, I’m not a parent yet, so what do I know about the costs of caring for baby? It’s a very reasonable question, and I have a very reasonable answer.
The costs of caring for baby will vary according to what you want to spend on. In that sense, the more money you have, the better off you are. And the two most simple ways of making sure you have money (Buying 4D does not count!) are:
1) Start a regular savings plan early
2) Consult with a professional
A person who starts saving early in life will have more money that a person who starts late. It’s simply a function of Geometric Progression (if you are mathematically inclined) or Compound Interest (if you are financially inclined). It’s not too late to start if you are not doing this yet. You may not be able to pay for delivery, but you should be able to afford to send your child to university when the time comes.
Lastly, I wanted to say that Yi Lin and I have been very blessed to find an excellent financial advisor. We knew that Tina was the person we wanted to help us look after our finances about 4 years ago. At that time, we had started off with some small insurance plans for her. Then we told her that we would not be giving her any new business for awhile because we were going to just save all our money for 2 years, then spend all of it traveling. After a stunned silence when she considered our announcement, she brought out a notepad, and started helping us to plan a budget for our trip, thereby instilling in us the discipline to save consistently. Without the travel budget she worked out for us, I daresay we would not have had enough to travel with yet!
So, do yourselves a favour. Get a professional to run through your finances. Know what you can do to increase your wealth, and getting to that point where you can afford to have a baby will be so much easier!