Preparing for parenthood isn’t just about buying baby clothes and milk bottles. It involves quite a fair bit of financial preparation. This guide will lay out the most important financial responsibilities from pregnancy to baby’s initial years, including:
- Estimating medical costs
- Planning leave from your employment
- Budgeting for the new baby
1. Preparing health insurance and anticipating costs. Having a baby is rather expensive in Singapore. You should forecast your expected costs fairly early in the pregnancy.
2. Plan for maternity and paternity leave. How much time you and your partner get off work and whether you will be drawing pay during that period can significantly impact your household finances in the coming year. Understand your company’s policies and government reliefs (baby bonus packages) to get an accurate picture of how your maternity leave will affect your finances.
3. Draft your pre-baby budget. Once you know what you’ll be spending on out-of-pocket medical costs, understand how your income will be impacted in the coming months and have a shopping list ready for your new baby. Babies come with plenty of expenses and some of these expenses are unforeseen, so set a limit on both necessary and optional buys and consider buying second-hand items or better still, get hand me downs, to keep spending under control.
4. Plan your post-delivery budget. Recurring costs such as diapers, child care and extra food will change your household expenses for years to come.
5. Choose a paediatrician within your insurance plan. Your baby may require trips to a paediatrician from time to time. Do ensure that your insurance plan covers such visits.
6. Start or check your emergency fund. If you don’t already have a “rainy day fund,” now’s the time to anticipate some emergencies. Kids are accident prone, and with the cost of raising a child, there is no telling if you’ll have the disposable income to pay for any unexpected expenses. Having at least three to six months’ worth of living expenses covered is a great place to start.
Within baby’s first 30 days
7. Buy insurance. In most cases, insurance companies require the child to be older than a certain number of days before they are willing to insure him or her. Once you can do so, please purchase a comprehensive insurance policy for your new baby.
8. Begin planning for child care. Finding the right daycare or nanny can take weeks. Get started long before your maternity leave is over. You’ll need time to visit day care centres or interview nannies.
Beyond the first month
You’ll be in this parenting role for years to come, so planning for the future is crucial. Estate planning is a big part of providing for your children, but it isn’t the only important forward-focused task to check off your list.
9. Adjust your beneficiaries. Assuming you already have life insurance for yourself or the main breadwinner in your household you may want to add your child as a beneficiary. However, keep in mind that you’ll need to make adjustments elsewhere to ensure when and how your child will have access to the money. A will or trust can accomplish this.
10. Disability insurance. You’re far more likely to need disability insurance than life insurance. Make sure you have the right amount of coverage. Remember that your monthly living expenses have gone up since the new addition.
11. Write or adjust your will. Tragic things happen and you want to ensure your child is taken care of in the event that one or both parents die. Designate a guardian so the courts don’t have to. Your will is only one part of estate planning, but it’s a good place to begin.
12. Keep funding your retirement. When a child arrives, it’s easy to forget your personal goals and long-term plans in light of this huge responsibility. Stay on top of your retirement plans so your child doesn’t have to support you in old age.
13. Save for his or her education. Sending a child to school in Singapore can be costly. Especially with all the enrichment classes bundled in. However, you can make it more manageable by starting to save early.