Is $340,000 Enough to Raise a child in Singapore?
Given a quarter million dollars, how would you spend it? Would you spend it on a shopping spree vacation in Milan or invest it in a child?
This figure accounts for the medical fees incurred during pregnancy and delivery, infant care, childcare, enrichment activities, education costs from preschool to university level, basic food and shopping (not including inflation).
Other factors that increase or reduce the cost include
- the type of schools (local or international) your child goes to,
- whether you intend to pay for your child’s university education,
- the number of overseas holidays you take per year,
- the insurance or education plans you invest for your child and
- the types of enrichment activities (golf or ballet) you send your child to.
Our calculation also does not take into account domestic help, rent, furniture and medical treatment for your children. That can easily add an additional $200,000 per child.
So, how much should you put away to achieve this financial goal? Parents like marketing manager J Lim, 33, says she typically spends $600 per month on her 20-month old son and puts away $500 monthly into his education fund. She hopes that the fund will accumulate at least $108,000 by the time he turns 18 and in need of the money for his university education.
Is she “stressed” about the daunting task of accumulating such a large sum for his future? Yes, she said adding that “one (child) is manageable financially, but I do not have the confidence with two kids.” Lim hopes to give her son a sibling but is concerned with the cost of raising two offspring.
And she is not alone in her sentiment. theAsianparent readers Kaijin Kaye and Shabela Allapitchay share their dreams to have more than 3 children when they first got married, but have since gotten a reality check.
Kaye, who has one child, confesses that she "can't quite save any funds at the moment." Allapitchay is resigned to having only two kids after the birth of her son, now 5, and her 8-month old baby: “everything has gone up and going up – school fees, milk, diapers...we are spending at least $500 per month [on the kids] and struggling to save...my hubby and I cut our own expenses to save for the kids.”
Joy Bea Lee, whose only child is in Primary 2 says she intends to keep it this way, and plans to increase her finances with investment and business and ultimately move to a more conducive country to live.
A mother of three, Pearlyn Bulner "plans to downgrade our home and have saving plans that mature when they hit university. Meanwhile, be spendthrift and buy what we need, not what we want; and I teach [the children] to be thrifty too."
It’s not just the money
While finance is a huge concern, many parents concur that it is not the only factor stopping them from having more kids. The cost of raising a child usually requires two-income earners to meet the financial goal. This means both parents have to work, leaving the child in the hands of a domestic helper, grandparents or at a childcare centre.
Apart from financial pressures, these working parents also face ambivalent feelings of work-life imbalance, demands of the education system and strains within relationships.
Andy Ang, a reader and father of 2, said that "in Singapore, family planning goes beyond financial planning. Helping them with studies, academically in Singapore, is a big effort. So much so that young couples are frightened about having kids as they see [other] families struggling at night with their children's homework. Having life and education insurance helps, so that the surviving parent does not need to struggle so much, but family and friends support is also important."
Stay-at-home mom, Nooraishah Sabtu Syak Azman, is happy with her 3 children and does not intend to have any more. With her husband as the sole breadwinner, she admits that it is challenging for the family.
“We try to help them with their education as far as it goes and not send them to any tuition until we see that there is a necessity. With no tuition, we can save up the money for future usage/preparations,” she says, adding that her circle of friends is a big help in sharing thoughts and ideas and exchanging exam papers.
Another big problem, according to reader and parent Naz Spice, is the fact that most parents are working and do not have much time to spend with their kids.
Other parents in our community, like Fenny Loniah Bartlett, said that they are stopping at one child because they “would like to maintain certain living standards like travelling, good food and such.”
(read more about financial aid on page 2)
Big Brother coming to the aid
To battle the national declining birth rate, the government is working overtime to encourage its citizens to procreate. It implemented the Baby Bonus Scheme, which entitles families to receive a cash gift of up to $6000 for each child they have, and set up the Children Development Account (CDA) as an incentive.
When couples put savings into the CDA account, the government will match the amount up to $6000 each for the first and second child, $12,000 each for the third and fourth child and $18,000 each for the fifth and any subsequent children.
Also, in the Singapore Budget 2011, the government announced that it will introduce a new Child Development Credit Scheme for all Singaporean children under six years old. This means that over 220,000 Singaporean children will receive up to $400 credits in their CDA accounts which can be used to pay for pre-school, childcare and medical expenses. And in April this year, the government adjusted the childcare and preschool subsidies to benefit more families.
But is that enough to encourage parents to have more children?
While some parents are hesitant to have their second child, other parents are not fazed by the daunting cost of raising children in Singapore. For Felicia*, who has 4 children under 5 years old, it is a case of “the more the merrier!”
“My husband wants 2 more!” she says. “The only thing stopping us from having more is the limited time we have to spend with each child,” quips the 36-year-old mother. “We don’t need a lot of money for the children. They don’t need a lot of gifts, just big spaces of green to run around in.”
The spunky mom, who recently quit her job to open an accessory shop in Downtown East so she has more control of the time spent with her children, reveals that she has a lot of fun with her children. She does not have the support from both sets of grandparents but has 2 maids to help her with the household chores and kids.
How much is enough?
That begs the question: how much money is enough? We asked financial expert Munish Sherwani, Director of Easter Insurance Agency Pte Ltd and Life Planner with Great Eastern. Money is definitely something you can work around, he said, adding that the word "enough" is relative - what's enough for one, may not be enough for another.
For him, the cost of raising his two girls, 7 and 10 is in the time and effort he puts in. But he recognizes the importance of saving for the future where education is concerned.
He recommends putting aside money in an education endowment plan which is like a forced savings for some family. "If you keep money in the bank, you may be tempted to withdraw. But if it is in an endowment plan, and you have to pay interest on the withdrawn sum, you may think twice before doing so."
So,is chasing after the pot of education gold worth the time you spent away from your children or will your children fare just as well, if not better with you by their side throughout their growing up years? That, is the million dollar question!
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