How can young couples budget for a child without compromising their lifestyles? According to Mr Paul See, Principal Consultant of Priority Wealth Pte Ltd, planning for a baby does not mean setting aside huge chunks of money at one go, but devoting a little money each month to the family fund.
Just like the story of the tortoise and the hare, it’s far better to move steadily and continuously towards your financial goal than make a dash for the finishing line. Sure, running faster makes get you ahead for a short while. But if you grow complacent like the hare and stop moving altogether, you may find it harder to catch up in the end, pointed out Mr See.
Mr See was speaking on the topic of “Financial Freedom with Children” at the second Maybe Baby “Hot Date” @ the Movies, held on 25 September at Cathay Cineleisure Orchard. Part of a series of Maybe Baby events that encourages couples to learn more about parenthood while spending quality time together, the talk-cum-movie attracted about 140 couples.
Mr Paul See, Financial Consultant, Priority Wealth Pte Ltd
Mr See observed that in Singapore, many couples wait until they have achieved the 5 ‘C’s in life, before they consider getting married, leaving the sixth ‘C’ – Children – until much later.
“It’s important not just to chase after the 5 ‘C’s, but the sixth ‘C’ – Children - as well. Because a family without children will not be complete,” he noted.
While the government has introduced a slew of incentives, such as the Baby Bonus Scheme, Parenthood Tax Rebate, Qualifying Child Relief and Working Mother’s Child Relief, to encourage couples to have more children, ultimately, the responsibility of managing one’s finances lies with the individual.
Besides tapping on the government’s tax reliefs and rebates, he urged couples to plan their budget wisely, saving up consistently rather than occasionally in order to ensure that they have enough money in the long run – for both their children and themselves.
As a start, Mr See pointed out that couples should make it a point to set aside portions of their available income for specific uses. These include:
55% of income for essential net funds (20% necessary expenses + 35% serviceable debt)
20% of income for safety net funds (10% milestone money + 10% financial freedom, aka retirement funds)
25% of income for edu-fun net funds (5% charity + 10% education funds + 10% fun money)
Taking down pointers by Mr Paul See.
“Compartmentalising your income can help you spend within your means, achieve your financial goals and still have some fun,” he said.
In addition, couples should aim to set aside an emergency fund that covers at least three to six months’ of household expenses. Should a spouse lose his or her job, this emergency fund will help take care of the expenses, while he or she hunts for a new job.
For couples looking to start a family, Mr See has some helpful money saving tips for parents-to-be:
Shop cheaper online
Buy in bulk
Rent, instead of buying
Get tips and scout for bargains on mummy forums
Check out thrift stores for good buys
For a quick and surefire way to save money on a daily basis, he recommends couples to “jot down your expenses diligently”. This small action can make you more aware of how you spend your money, and help you cut back on unnecessary expenses.
Couple Lionel Koung, 36 and Bernice Wong, 32, picked up useful financial planning tips from the talk. The couple, who has two daughters, aged 6 and 3, admitted they were not quite prepared financially when they were expecting their firstborn.
“We did not really have much savings for a baby back then, because our first daughter came as a surprise to us. Luckily, our parents chipped in. My mother-in-law also helped take care for me during confinement so we didn’t have to spend money to engage a confinement nanny,” recalled Bernice.
Then came their second daughter. This time round, Lionel and Bernice were a lot more savvy. They put aside savings for the baby and accepted hand-me-downs from friends and relatives to save money on baby clothes.
Like many people, Lionel had been following his parents’ advice to put his money in the bank (despite the low interest rates). As Mr See pointed out, this would have been great advice 30 years ago when the bank interest rate in Singapore was an astonishing 16%. With interest rates at less than half percent now, couples need to look for faster ways to grow their money to counter inflation rates.
“I have insurance (policies), but I have not gone into investment because I wasn’t sure about the risks involved. After the talk, I think I will probably give my insurance agent a call to find out more about some of the investment options,” said Lionel.
Newlyweds Yap Kean Fai, 35 and Tan Lay Hoon, 32 are planning for a baby and found the advice on how to budget for a baby to be very practical. “Initially we felt a little concerned about the high costs of having a child, but the talk has given us some direction as to how to save up for a baby,” shared Kean Fai.
Lay Hoon also felt more reassured now that she knows what to look out for when planning for the family’s future. “People usually think of having children first. Then they start thinking about the cost of having children. The talk made me realise that we need to have a plan for having children to ensure that we have enough for them and our retirement.”
On the seminar…
Michelle: I'd thus included children as one of my 6 ‘C’s now! Awesome!
Sheena: …Fruitful for me as well as my partner to think and start planning for baby. Thanks again!
Royston: …Useful in giving a detailed preview of the financial implications of starting a family.
Counting money to win a prize!
Couples who participated in the "Counting Money" game and won prizes.
The fun continues at the next Maybe Baby Hot Date @ the Movies on Saturday, 23 October, Cathay Orchard from 2.30pm to 6pm. Talk: The Pursuit of Parenthyood and Movie: Life As We Know It. For more information, click here: www.facebook.com/event.php?eid=151718818201414&index=1