Financial Checklist for New Parents: Here's How Much You Need to Prepare For Your Baby's First Year

Starting a family and having children changes not only your lifestyle, but it also affects your budget. So, how much do you really need to prepare for your baby’s arrival and his first year of life? Here’s a handy financial checklist for new parents to get your finances in order.

While having a child is definitely the most priceless joy you will ever have, making sure that your family has a comfortable life and enough resources come with a price.

Most people plan for things like formula, diapers and child care, but there are other financial areas where new parents need to make changes as well. Proper planning with aspects like budgeting, life insurance and savings can help you avoid accumulating debt and ensure that your child has enough to live comfortably. 

Financial checklist for new parents

Aside from completing the nursery and having the hospital bag ready, there’s still so much to prepare before your baby’s arrival. Parents come up with a checklist of items and tasks they need to do before the baby comes. But most of the time, they leave out one very important part – making sure their finances are in order. 

Because not only do you need to ensure you have enough money for the expenses when your child comes, but you have to constantly prepare for his future several years down the line.

Having enough savings will put you and your baby off to a good start. But aside from that, here are some other things that you need to prepare for your child’s future:

• Set up a will

New parents should take some time to think about who they would want as a guardian to raise their child if both parents were to pass away unexpectedly.

You should also ensure that this individual is trustworthy and responsible enough to handle whatever money you leave behind for your child’s upbringing. 

If you doubt the guardian’s ability to handle finances well, you can also appoint a financial guardian who will specifically take care of money matters and assets for your child. 

• Have a savings plan named after your child

If you haven’t already started, start up a fund for your child’s future needs.

If you don’t know where to start, your top priorities should be healthcare and education. You never know what complications may arise in the future, so it’s always best to have some money saved for an emergency.

• Make sure that your child has health insurance

After your baby is born, call up your insurance provider within 30 days to add your child to your insurance policy.

Most insurance providers are required to cover a newborn for only the first 30 to 31 days of life under the parent’s policy.

• Assess your income situation

Take a look at the current income situation and discuss how that may change once the baby comes along.

Will you be extending your maternity leave to spend more time with your baby, or will you be hiring a babysitter once you finish your maternity leave? Do you intend to breastfeed or formula-feed your child?

Try to do a rough calculation of how much you’ll be spending on diapers, formula and other important necessities each month to see if this amount fits comfortably into your budget.

All you need to know about new baby expenses

Most likely, you have begun planning for your baby’s arrival months before he or she arrives. This is a wonderful idea because baby supplies are not cheap. In general, babies are expensive to care for. The good news is that some of these expenses will decrease as your child grows.

As you examine your economic position, you should also be aware of how much a baby costs on average per month, as well as any unforeseen baby costs, so that you can save for your baby’s first year.

The following are the many expenses you should consider for your child’s first year of life:

 Pregnancy-Related Cost

• Prenatal checkups

Most people have their first check-up after 8 weeks. Gynaecologists currently charge between $150 and $250 per visit. You must also consider the expense of supplements. The total cost of your first two sessions could range between $500 and $700.

If you are a Singaporean citizen, you should go to a public hospital to save money. Prenatal check-ups are free of charge at these facilities.

Miscarriage risks are greatly reduced once you enter the second trimester at 13 weeks. At this point, many gynaecologists offer their patients a pregnancy package. This will imply agreeing to utilise the gynaecologist’s services until your child’s delivery.

On the bright side, bundles are significantly less expensive. Consultation fees for subsequent appointments are no longer charged. You pay a one-time fee that covers all charges, including repeat visits. The typical package costs between $1,500 and $2,000.

If you are still unsure about changing your gynaecologist in the future, you can continue to pay per visit. This would cost you between $2000 to $2500 for pre-natal check-ups at a private facility and approximately $500 at a public clinic.

• Delivery

Second, the majority of your expenses will be incurred with the delivery of your child. The cost of delivery will vary based on whether issues arise, the sort of facility chosen for birth, and the manner of delivery.

Normal Delivery

Normal birth costs between $3000 and $6000 at a public hospital for an A-class ward. However, if you do not want to spend such a huge sum on a short stay, you can choose among B2, B1, and C Class wards.

Normal delivery in a private hospital will be substantially more expensive. The typical price ranges from $6000 to $11,000. This cost will vary depending on the type of ward you choose, just as it does in public hospitals.

Caesarean Delivery

Caesarean delivery is significantly more expensive than regular delivery. For this style of birth, your gynaecologist will charge you significantly more. It’s also worth noting that this is a major surgery, which means a lengthier hospital stay and, thus, higher healthcare expenditures.

Caesarean delivery costs between $6000 and $10,000 in a public hospital. A private hospital’s hospital fees might range from $9000 to $17,000.

It should be noted that the method of delivery is not always up to you. While you may prefer a natural birth, you may be compelled to have an emergency caesarean owing to unexpected difficulties. Emergency treatments are significantly more expensive than elective caesareans.

The following is a general breakdown of the costs associated with hospitals and types of delivery:

Source: MOH

How much to save for a baby’s first year?

The real ‘fun’ begins now that the pregnancy is finished. Not only will we realise that 24 hours a day is insufficient to care for our infant, get our work done, and yet have enough personal time to exercise and rest, but we will also realise that budgeting has just become much more difficult.

Consumables: We will find ourselves spending money on diapers, formula milk, baby wipes, baby detergent, baby food, and baby creams on a regular basis. Depending on how quickly our infant consumes these products, we should budget between $2,000 and $3,000 each year. 

* Calculation assumes baby is breastfed for the first 6 months

Non-Consumables: Aside from that, we need a budget for non-consumable products such as prams, baby carriers, cribs, clothes, and toys. The price can vary greatly depending on whether we buy brand new or receive hand-me-downs from family and friends. It’s reasonable to set aside $2,000 per year for these expenses.

In total, we estimate that parents should budget around $5,000 per year on consumables (milk, food, diapers) and non-consumable things for their child (clothes, toys). This equates to around $400 per month.

• Medical Bills

Your baby’s health, growth, and development are critical and must be regularly watched during their first year. For your baby’s first year, monthly check-ups and vaccines will cost an average of $1800. However, if your kid becomes ill, your costs could potentially soar depending on the paediatrician’s and hospital’s fees.

• Childcare Expenses

The other major expense for most working parents at this age will be infant/childcare arrangements. Based on our calculations, we will assume that both parents work and will need to hire help to care for their children rather than relying on grandparents.

If parents pick full-day childcare at an Anchor Operator, the annual cost will be around $8,640. When this is combined with the costs of consumables and non-consumables, parents can anticipate spending approximately $13,640 per year for their child’s first four years.

 Unexpected baby costs

Unscheduled Doctor’s Visits

When you’re pregnant, you’ll go to the doctor’s office on a weekly, semi-monthly, or monthly basis, depending on how far along you are in your pregnancy. In some circumstances, such as sudden bleeding or severe pain, you may need to see the doctor more frequently.

While the average cost of prenatal care for 9 months is S$6,393, extra visits could cost an additional S$500 per public hospital visit or S$2,000-S$2,500 for a private OB-GYN facility. You may also be told that you need to obtain a genetic illness test, which can cost between S$643 and S$1,336.

You should alter whatever budgeting recommendations you follow to meet your situation in order to help cover unforeseen medical costs. For example, if you follow the 50-30-20 rule, you may wish to lower your discretionary expenditure (ie, non-essential things like dining out) from 30% to 25% and boost your monthly savings to 25% to account for medical costs.

It is possible that your delivery will not be completely covered

You should also prepare for any unforeseen charges that may arise throughout the course of your delivery. MediShield Life and your private health insurance, for example, do not cover simple deliveries. Instead, you can use the Medisave Maternity Package (MMP) to receive a subsidy of up to S$3,000 for a vaginal delivery or S$4,250 for a C-section.

While living in a B2 or C Ward might greatly lower your out-of-pocket costs thanks to the MMP, you may be in for a shock if you wish to deliver your baby in an A-Ward or private hospital, where hospital expenditures can exceed S$12,000.

Furthermore, while MediShield Life covers 24 pregnancy and childbirth-related complications, the hospitalisation and child delivery coverage limits of up to S$700 per day for normal ward hospitalisation and up to S$1,200 per day for ICU hospitalisation may be insufficient depending on the hospital and Ward you will be staying in.

Avail of maternity insurance

Maternity insurance can help you protect against issues that aren’t covered by MediShield Life or your own health insurance plan. This coverage will pay out for pregnancy difficulties, a variety of congenital disorders, and the death of you or your child.

Furthermore, certain maternity insurance policies, such as Great Eastern’s Flexi Maternity, provide coverage for you and your infant for up to three years after your kid is born.

While it will not pay for typical pregnancy expenditures, it is a smart backup plan to avoid huge hospital bills resulting from pregnancy difficulties. Just make sure you properly study the insurance terms to understand what situations are not covered.

Baby showers can go into the hundreds of dollars

While baby showers are a fun way to celebrate your pregnancy, they can rapidly become a costly and stressful affair.

For example, you might want to rent a location, which might cost up to S$154.62 per hour on average. Many venues offer the option to cater your party, but if they do not, you may be charged an additional S$15-S$50 per person. Finally, a speciality cake can cost S$52 on average to feed a group of ten.

If you want to save money on the baby shower, compare vendors, incorporate do-it-yourself décor, and restrict the number of visitors.

You may also find inexpensive baby shower decorations on Shopee or Lazada, where you can get balloons for as little as S$2.69 for a set of 6-8 balloons and sets of balloons, banners, lanterns, cake toppers, and other decorations for less than S$25.

If you’re watching your budget right now, you could even throw a small event at your home or a friend’s home and ask visitors to bring food for a “potluck” instead.

Here are related articles on money management that you might like:

5 common savings mistakes to avoid

How to tackle rising University costs

How much do you need to retire comfortably?

Simple tasks may be outsourced as a result of sleep deprivation.

Another unanticipated expense is the physical and mental strain that having a baby will place on you. Pregnant women receive only 5 hours of sleep every night on average. This lack of sleep can result in a lack of attention, health issues, and a loss of work productivity, which can cost hundreds, if not thousands, of dollars in medical expenses, lost income, and other costs.

Doing everyday duties can be challenging when you’re sleep-deprived. You may need to outsource some activities to relieve stress and discomfort.

For example, you may find that you must outsource your washing, which can cost up to S$22.50 for a 5kg load. You might also lack the energy to prepare, which means you’ll wind up paying for takeout, which can cost at least S$15 every meal.

While these fees can put a strain on your budget, they are minor in comparison to other unexpected charges and provide an opportunity to indulge yourself while you prepare for your baby.

Make Informed Budgeting Decisions to Prepare for These Costs

It is an incredibly exciting occasion to welcome your child into the world. However, if costs climb, you may find yourself in a bind. Even after your child is born, you should expect to pay roughly S$1,500 every month.

Before you tap into your funds, design a budget that works for you and set aside a specific amount (say, 5-10% of your income) for unforeseen bills. You should also aim to invest time and money in self-care during your pregnancy within this budget.

Finally, Singapore provides subsidies and awards to expectant and new parents. As a result, you should determine if you qualify for benefits such as the Baby Bonus and Child Care Basic Subsidy to receive thousands of dollars in extra income. Also check out the Singapore is Made For Families programme to see the privileges you can avail of. 

Having children is an expensive venture. However, as many parents can confirm, there is no price that can be placed on the joys of watching your child grow up.

With updates from Matt Doctor