The Real Cost of Having Children
With Mothers’ Day just around the corner, I thought it would be timely to write on this personal finance topic close to my heart. What is the real cost of having children?
Singapore’s total fertility rate (TFR) fell to a historic low of 1.1 last year, said Minister in the Prime Minister’s Office (PMO) Indranee Rajah on Feb 26 this year. TFR refers to the average number of live-births each woman would have during her reproductive years. The resident TFR has been gradually declining over the past decades and was 1.14 in 2019.
Despite our government’s best effort in providing grants to new parents, many couples are either not having a child or not going for a second or third child. While most would argue that it is the high cost of raising a child that is deterring many couples, I would like to counter that by saying this: it is about how and where you spend your money.
Delivery cost
Let’s delve into the key expenses of raising a child. First of all, the delivery fee, which depends on the hospital and gynecologist you choose, will typically range from $3000 to $9000. This cost can be partly offset by the cash gift from our Singapore government, starting from $8000 for your first and second child.
After your baby is born, should you be able to breastfeed your baby fully, you could potentially be saving a good amount of money on formula milk powder.
Childcare costs
Infant, childcare and kindergarten costs can be affordable, depending on the choices that you make. The fees range from $160 per month for MOE Kindergarten to $1600 per month for some private kindergartens. If you opt for PCF Sparkletots or MOE Kindergarten, you would find the amount in the Child Development Account (CDA) to be more than enough for your use.
You may like to know that from this year, parents who have a second child will get more financial support through their child’s CDA. The Government will double the maximum amount it will match dollar-for-dollar in the CDA from S$3,000 to S$6,000 for Singaporean children who are the second child.
Each child also gets a S$3,000 CDA First Step Grant, which is automatically credited into the CDA. With the enhancements, the maximum government contribution to the CDA in total for the second child will increase to S$9,000.
Entertainment and meals
Once the child starts to take his or her first step, excited parents would look around for an indoor playground to exhaust the child’s energy. For the first six years of the child’s life, many Singaporeans parents who would like to escape from the outdoor heat, would bring their child to the various indoor playgrounds in the shopping malls.
The pandemic has affected the businesses of many of these indoor playgrounds. Thankfully, some managed to pull through and reopen like Super Park at Suntec City. Tickets for a 2-hour play session range from $19.90 to $33.90.
However, do note that indoor playgrounds are totally optional and absolutely not necessary. The outdoor playgrounds in the Singapore parks like Pasir Ris Park, Admiralty Park, West Coast Park and more, are great, if not better, and most importantly, they are free!
As for meals, you can choose between a $15.90 ramen in a mall or $3.50 wanton mee in a hawker centre. A few dollars, or in this case, more than $12, saved for a meal for one pax, goes a very long way, bearing in mind that you would be ordering at least two bowls of ramen and a kids set for two adults and one young child.
Enrichment and tuition
Before a child utters the first word, anxious parents might be signing the child up for some brain training enrichment courses costing up to $80 per hour. As the child grows older, more enrichment lessons were to follow, from phonics, English reading to piano, ballet, basketball, violin, and the list goes on.
After the child enters primary school, many parents’ assigned after-school programme would be tuition. For some, it is tuition for all subjects, English, Maths, Science and Chinese. The fees for the tuition easily adds up to a four-figure amount.
An adage in marketing that’s often forgotten: if you try to target everyone, you target no one. This can apply to tuition too. Start with one subject at a time, for example, Chinese, and slowly but surely cultivate your child’s innate interest in the language. With education technology, learning, just like investing, can now be customised and optimised.
As the Chinese saying goes, the journey of a thousand miles begins with a single step. Parenting, like everything else, can be planned and choices can be made one step at a time to suit your needs and budget.
Giving up that ramen in the mall should not be deemed a sacrifice. Instead, it is a lesson taught to our kids that we need to be nimble and flexible, and our bowl of wanton mee at Old Airport road hawker centre is more nutritious and tastier, yet comes at a lower cost.
It all boils down to our priorities to save up for a bigger future goal. Financial planning starts from young and starts from you. Will be happy to hear your thoughts. Let’s connect here.
