Can you afford to stay home with your kids in Singapore?

If money weren’t an issue, I think it’s safe to say many more new mothers would choose to stay home with their kids, at least for a year or two. As the number of dual income households continues to rise, long work hours, traffic congestion and a whole slew of kiddie activities continue to eat away at the amount of time Singaporean parents have to spend with their kids.

Well, time that isn’t spent nagging and inspecting test scores, that is. If you’re about to become a parent and are contemplating taking some time off work, here are some factors to consider.

Calculate what you save

Wait a minute, did you say save? This is some sick joke, right? How does not working help you save money?

While the most immediate concern a stay-at-home parent tends to have is the loss of income, not working might actually save you some money in several areas.

In fact, if your salary is within the moderate range, you might find that the amount you get to take home after deducting these expenses makes continuing to work full-time a big waste of time and effort. Let’s work out the potential costs of continuing to work.

• Commuting: A stay at-home parent will not incur both the monetary and time costs of commuting. Someone who takes a bus and MRT ride to work and back might pay about $4 a day, amounting to $80 a month. Driving to and parking at work, on the other hand, can cost close to $1,000 a month. On the other hand, if you and your spouse drive to work together, your cost savings will be minimal.
• Eating out: If both you and your spouse work, chances are you each eat out during lunch and perhaps even dinner, because who has time to cook after 10 hours at the office, right? If one of you stays home, not only can you and your child enjoy home-cooked meals, there will also be someone to prepare lunch for the entire family, meaning the spouse who continues to work might be able to start packing lunch to take to work. If both parents spend a total of $600 a month having lunch and the occasional post-work dinner, having home-cooked meals every day can save them at least $300 a month.

• Childcare: Unless you’re lucky enough to have parents who are willing and able to take care of your child, you’re going to have to put him or her in childcare during the first few years. The cost of childcare in Singapore ranges from $300 a month to more than $2,000. Ouch!
• Maid: Many mothers in Singapore find it hard to survive without a maid even if they don’t work full-time, so it’s not surprising that a maid is pretty much compulsory for most dual income families with young children. You’re looking at a monthly salary of about $450 to $600. In addition, you’ll need to pay a monthly foreign worker domestic levy which can range from $120 to $265. As if that’s not enough, you also need to factor in the cost of food, toiletries and so on. In all, you should budget at least $1,000 a month for a maid.

As you can see, the amount of money a family with a kid must pay just to enable both spouses to work is considerable. In a scenario where there is absolutely nobody who can look after the child when you’re at work, you’re looking at an outlay of about $2,000 a month.

If your salary is $2,500, after CPF deductions you’re actually taking home a negative amount of money after subtracting the above costs.

Are there consequences to consider once you become a stay at home mum? Find out on the next page.

The cost of quitting your job

Don’t be so quick to quit your job, however, as the costs can be higher than you might think. Other than your present salary, here are some other sacrifices you might find yourself bearing somewhere down the road.

• Future career prospects: Take a few years off and when you return to the workforce, you might find that your peers’ progress has left you in the dust. If you’re on the fast track to career advancement, halting your progress at this stage will be a bigger sacrifice than if you’re working in a dead-end job.
• Increments: Of course, taking time off for a few years means you’ll have missed out on a few years’ worth of annual increments when you return to the workforce. However, if your company is one of those that can go years without offering an annual increment or increases salaries in a manner that barely keeps pace with inflation, you won’t be missing out on that much. When you return to the workforce, any reasonable employer would factor in inflation instead of trying to pay you your last drawn salary. On the other hand, if you’re in an industry where your annual increments are considerable, you might be giving up quite a bit of money by dropping out now.

Making your time off count

If you’ve made up your mind to leave the rat race, that doesn’t mean you’re going to be staring at nothing but dirty diapers for the next few years. For those in need of some time-off to pursue other endeavors or who plain hate their jobs, becoming a stay-at-home parent can free up some time to let you try something new.

Whether you’re thinking of getting another qualification or starting a side business, working it into your schedule with a kid and a full-time job is virtually impossible. But with the job out of the way, you might have a fighting chance.

Work out the cost of raising a child

Before you make plans to bring your child into the world, it’s important to calculate the true cost of raising a child. Gather real figures instead of making vague estimations, which you can later adjust for inflation.

That means calling up the actual hospitals, paediatricians, childcare centres or maid agencies you intend to patronise and getting an idea of all the fees you’ll be paying. Take a walk around the supermarket and Mothercare so you know how much baby food or a pram will cost.

While the base average cost of raising a child in Singapore until the end of secondary school has been estimated to be $276,400, no parent these days wants to be average, even when it comes to how much they spend. Unless you want your kid to grow up with no toys, you might have to increase your projected expenses to the $400,000 to $450,000 estimated by surveyed parents.

What are the factors you would take into account when deciding whether you or your spouse should stay home with the kids? Let us know in the comments!

Source: Moneysmart