Insurance & Costs of having and raising a child

Just wish to highlight this forum letter which states why it is so expensive to have a child. I myself had a child last year and yes, the costs are mounting.....which is why I really need to make sure my investment plans bear fruit!

Dec 9, 2010
The cost of having a child

MONDAY'S editorial ('Birth rates: Slow down to speed up?') was an interesting read. I strongly believe there are many Singaporeans who 'really love being parents'. However, sometimes, love is just not enough.

I am a customer service trainer who gave birth to a lovely Tiger boy in September. Having my first child has made me understand why the birth rate in Singapore hovers stubbornly at below the replacement level, despite the many incentives given by the Government.

Even while I was pregnant, I was considering having a second child, as I am already in my early 30s. However, the costs that added up from the time of our wedding through to post-natal and infant care have got me thinking again.

My project manager husband and I married in May last year, and got our Housing Board flat in December. Having worked for around 10 years each, we had accumulated a bit of savings to pay for our wedding and flat renovation.

Then I got pregnant.

The monthly checks at the gynaecologist came up easily to $1,500, of which only $450 was claimable through Medisave. When I gave birth, I stayed in a four-bedded ward in a private hospital and had to pay $4,000 in cash, after Medisave.

During my maternity leave, I had help from a confinement woman for the first month. I paid her $2,200. For the remaining three months of maternity leave, I took care of my child alone.

I sourced for help to take care of my child upon returning to work and eventually decided to place him in a nursery with infant-care facilities. This works out to $850 a month. Within a year, the baby bonuses and Children Development Account top-ups would have been fully utilised.

And I have not mentioned costs like maternity and baby clothes, diapers, vaccinations and all the other necessities that come with having a child.

As it is a personal decision to have a child, I am not lamenting these costs.

However, it would be good if we could move towards the 'French way' - one of the possibilities the editorial notes - with free nursery schools and generous tax allowances. This would definitely help ease the financial burden of families who wish to have more children.

Lee Meng Fern (Madam)

The cost of raising a kid is the highest from 0 to 7 years old. Most of the expenses are very high.
Besides, the couple has to struggle with their careers since 30-35 years old are typically in the mid-management phase(meaning doing all the Sh** work from technical work to management work).

The mother only describes the expenses. Actually, the main headache is the required effort and time since the babies are typically very dependent.

whoa! prenatal checks a month is so much?! Now i wouldnt even dare to dream of starting a family!

bluesurfer Wrote:whoa! prenatal checks a month is so much?! Now i wouldnt even dare to dream of starting a family!

Compared to the total cost of parenting, the prenatal expenses are a drop in the bucket.

Remember that you have to pay until the day your child draws his/her first paycheck. That is typically age 20 for children graduating from polytechnics, later if they go to university. So pregnancy is only 9 months out of the 20+ years of financial liability.

I estimated the numbers before on the old Wallstraits forum. Let's try again:

0-3 years:
$200/mth food
$50/mth clothes
$50/mth toys & entertainment
$50/mth miscellaneous
Total: $350/mth * 12 mths * 3 years = $12,600

4-6 years:
$200/mth food
$200/mth nursery/kindergarten
$50/mth clothes
$50/mth toys & entertainment
$50/mth miscellaneous
Total: $550/mth * 12 mths * 3 years = $19,800

7-12 years:
$200/mth food
$200/mth school fees & pocket money
$100/mth transport
$50/mth clothes
$50/mth toys & entertainment
$50/mth miscellaneous
Total: $650/mth * 12 mths * 6 years = $46,800

13-16 years:
$300/mth food
$300/mth school fees & pocket money
$100/mth transport
$50/mth clothes
$50/mth toys & entertainment
$50/mth miscellaneous
Total: $850/mth * 12 mths * 3 years = $30,600

17-19 years:
$300/mth food
$800/mth school fees
$400/mth pocket money
$150/mth transport
$100/mth miscellaneous
Total: $1,750/mth * 12 mths * 3 years = $63,000

I think most people would agree that these estimates are on the low side as it assumes that no money is spent in pregnancy, there is no maid and that the child attends a local polytechnic. There is also no budget for enrichment classes like ballet or music, nor for after-school tuition. And yet it totals about $170k. Over 20 years most people would have no problem earning this money. Saving $170k for such expenses is a different matter.

Those who want to have a maid to help bring up the child during age 0-3 have to budget an extra $800-$1,000 per month as they have to pay for the maid levy, the maid's wages and also the maid's food. That's about $10k per year or $30k total for the first 3 years.

Tuition during the school-going years can easily total $200/mth during primary school and $400/mth during secondary school. That comes to:

$200/mth * 12 mths * 6 years + $400/mth * 12 mths * 4 years = $23,600

Those who wish to send the child to an overseas university will have to budget an extra $200,000 or so. The more expensive universities will cost about $300,000 or more. And that is in today's dollars. In 20 years' time the cost could easily be 50% more.

So those who wish to have a maid to help out during age 0-3, provide tuition during age 7-16 and send the child to a top overseas university should expect to put aside a total of $170k + $30k + $24k + $300k = $524k in today's dollars. By the time the child actually goes to university the fees may have gone up 50% and it may actually be $674k in future dollars.

This is not to say that people shouldn't have children, just that they should be aware of what the children will cost to bring up, and they might want to consider scaling down what they intend to provide for each child.

Have fun saving!

(09-12-2010, 02:49 PM)d.o.g. Wrote: Those who wish to send the child to an overseas university will have to budget an extra $200,000 or so. The more expensive universities will cost about $300,000 or more. And that is in today's dollars. In 20 years' time the cost could easily be 50% more.

I have mention to a fren the need to save up about 100k for a local uni education by the time his child reaches 20 years old. He replied why must i? The child can bank loan the amount for uni education and after child graduate, he is suppose to pay off the loans+interest since he is considered financially independent by then.

(09-12-2010, 06:28 PM)Bibi Wrote:

(09-12-2010, 02:49 PM)d.o.g. Wrote: Those who wish to send the child to an overseas university will have to budget an extra $200,000 or so. The more expensive universities will cost about $300,000 or more. And that is in today's dollars. In 20 years' time the cost could easily be 50% more.

I have mention to a fren the need to save up about 100k for a local uni education by the time his child reaches 20 years old. He replied why must i? The child can bank loan the amount for uni education and after child graduate, he is suppose to pay off the loans+interest since he is considered financially independent by then.

Local Uni education isn't 100K...40K is a more accurate value assuming you are not in medicine or law.

Going through it now.

The monthly vaccinations costs quite abit. And milk power and diaper add up to few hundred each month as well.

Nick Wrote:Local Uni education isn't 100K...40K is a more accurate value assuming you are not in medicine or law.

$40k would only pay for the fees. There is still the matter of food, transport, clothes etc. These can add up to $500-$1,000 per month. For 3 years that is another $18k - $36k.

Bibi Wrote:I have mention to a fren the need to save up about 100k for a local uni education by the time his child reaches 20 years old. He replied why must i? The child can bank loan the amount for uni education and after child graduate, he is suppose to pay off the loans+interest since he is considered financially independent by then.

This is not wrong. It all depends on where the parents decide their responsibility stops: when the child BEGINS tertiary education, or after the child FINISHES tertiary education? In other words, as a parent, do you pay until the child can BORROW money, or do you pay until the child can EARN money?

If you decide on the former, then of course children are a lot cheaper since university is their problem, not yours. If you decide on the latter, then you have to budget for university somehow. Or maybe you decide on the latter until you have too many children, then the former becomes the only choice...

(09-12-2010, 10:00 PM)d.o.g. Wrote: This is not wrong. It all depends on where the parents decide their responsibility stops: when the child BEGINS tertiary education, or after the child FINISHES tertiary education? In other words, as a parent, do you pay until the child can BORROW money, or do you pay until the child can EARN money?

If you decide on the former, then of course children are a lot cheaper since university is their problem, not yours. If you decide on the latter, then you have to budget for university somehow. Or maybe you decide on the latter until you have too many children, then the former becomes the only choice...

I belong to the latter category, and that was why I knew how compounding interest rate worked for the BANKS.

In a way, I received exposure to what bank interest rate can do to one. Perhaps that the reason why i can constraint my spending habits much lesser than most of my peers.

Delayed gratifications. Now that's something not easy for the Y generation.

Work hard, save hard, invest wisely. Sounds easy.. But in reality, most pol couldn't differentiate needs and wants most of time.

Cheers.

40k is todays $ right? So 20 years later it's 100++k assuming 6% inflation for education? or did I make a wrong calculation?

(09-12-2010, 06:50 PM)Nick Wrote:

(09-12-2010, 06:28 PM)Bibi Wrote:

(09-12-2010, 02:49 PM)d.o.g. Wrote: Those who wish to send the child to an overseas university will have to budget an extra $200,000 or so. The more expensive universities will cost about $300,000 or more. And that is in today's dollars. In 20 years' time the cost could easily be 50% more.

I have mention to a fren the need to save up about 100k for a local uni education by the time his child reaches 20 years old. He replied why must i? The child can bank loan the amount for uni education and after child graduate, he is suppose to pay off the loans+interest since he is considered financially independent by then.

Local Uni education isn't 100K...40K is a more accurate value assuming you are not in medicine or law.