When you start planning for a family or have a little one on the way, your priorities change. You start thinking about things that never crossed your mind prior to this important phase in your life.
A bigger home and car, daycare, preschools and primary schools, healthcare… these are only a few of the matters that may run through your mind.
With all these new and exciting considerations on the horizon, you will most certainly also need to re-think your finances. In this context, financial planning becomes important – and we at theAsianparent know this.
This is why theAsianparent Insights team spoke to Singaporean parents to find out exactly what they think about financial planning for kids and how they implement it.
Based on data collected from over 500 parents, The Kids Bright Future Report 2015 reflects the financial planning behaviour of parents in Singapore. These insights are great for savvy parents and parents-to-be looking to improve long-term systematic investment planning for their children.
Overall, nearly half of parents surveyed were astute financial planners, with 49% holding both a savings accounts and an education plan for their children. While 88% of Singaporean parents open savings accounts for their children, only 47% invest in an educational plan for them.
When do most parents start thinking about financial planning?
The study revealed that parents care most about financial planning when their kids are between 0-1 years of age. This concern tapers off when their kids turn eight. A whopping 67% of saving accounts opened and educational plans signed happen before the child turns one year old!
The 2-3 years age-group is also important as 24% of parents create a savings bank account and 21% opt for an educational fund during this time.
Factors to consider when choosing a savings account
Regarding savings accounts, 71% of parents found good interest rates to be the key factor in their decision. This was followed by:
- No monthly service charge (57%)
- No minimum initial deposit (47%)
- Free gift/promotional offer (43%)
- Ease of opening an account (39%)
But, how much do parents really save with these plans? Almost half of the parents surveyed save less than $100 a month. 29% save between $101-200 per month. Very few parents save $201 and above.
Factors to consider when choosing an educational plan
When choosing an education plan, 81% cited guaranteed maturity benefit as the key decider. Other factors to consider include:
- Good interest rates (70%)
- Duration of plan (52%)
- Low premium (42%)
- Cash benefits (31%)
These factors lead to OCBC and POSB as the top two preferred banks for parents for both opening savings accounts and educational plans for their kids. DBS came in third for a savings account while Prudential came in third for an educational plan.
For more information on educational plans, 74% of parents turn to financial advisors/insurance agents, followed by:
- Family and friends’ recommendations (42%)
- Online reviews (25%)
- Brochures (19%)
We hope you have found these insights useful. Armed with this knowledge, you now know where you stand among financially savvy parents in Singapore, and can better plan for your family’s future financially.
Share with us what you do for your kids’ financial futures by posting a comment below!