Starting a family is a life-changing decision
As parents, children are a long-term investment. To some, it's to guard against old age and to have someone to depend on and provide for them when they are old and weak. This however, comes with required outflow at the start and the expected returns are reaped when the kids become independent working adults. It is undeniable that the cost of raising children in Singapore is a tidy sum. The cost of living increases every year and our demands as modern-day parents also grow with time.
The Singaporean family's typical financial set-up
With a dual income household and both parents at work, childcare options are taken into consideration when it comes to financial planning.The cost of childcare becomes a prevailing concern and some key questions remain: Who is the best person I can trust to care for my child? Would it be a family member? Should we engage a Foreign Domestic Worker? How about sending baby to the infant care/child care? If one parent decides to be a stay-home parent (be it dad or mum), the household contribution is halved instantly. In this case, is there a way for a family to manage expenses, with the idea that they are saving by opting out of external childcare options?
The costs of raising a child in Singapore
How much do we really need to raise a child in Singapore? How exorbitant a sum has it become that has stopped couples in their tracks when it comes to family planning or thinking of having more kids? Some expert analysts have calculated that it takes anywhere from $100,000 - $500,000 until your child turns 21. Recently, the magic number sits at around $340,000 for the same period. Now, when you place that sum in front of any hopeful parent, it is sure to be greeted with gasps unless you were born with a silver spoon or have a bank account that would make the majority envious. Do you really know what the key cost contributors in these numbers are? Better yet, how do you maximize the Baby Bonus scheme and leverage your child's Child Development Account (CDA) baby bonus to use it effectively?
What exactly are the top 3 areas that contribute to the cost of bringing up a child in Singapore?
The top 3 areas that parents spend on children
As a new parent, do you feel that diapers and milk powder alone are going to wipe out your savings? Well, frankly, there are even bigger ticket items that await. Consider these during your financial planning:
#1. Child care
The Early Childhood Development Agency (ECDA) has a useful portal to help parents search for their ideal child care centre or preschools, based on budgets and locations. It also offers tips on how to prepare your child for school. For infant care, according to The Straits Times in 2013, the average monthly fee for the full-day care of babies aged between two and 18 months rose by 14 per cent from $1,152 in 2007 to $1,318 last October. For children above 18 months, they typically start off at 3- hour playgroups or half-day/full-day child care. Fees can range from $150 to $2,500 per month, before the waiver with subsidies for working mums. When hiring family caregivers, most couples would give an allowance for expenses, such as food, and for the time taken to care for their child while they are at work. Meanwhile, the rising cost of hiring Foreign Domestic Workers plus their monthly salaries, insurance, levy, agency fees, costs of lodging, food, and other expenses all add up to a substantial cost.
When our little ones are unwell, medical fees come into play, depending on the level of seriousness. Typically, pediatrician rates start from $100; other possible numbers to add to that bill include the cost of medication and, for some, the fees for a specialist's attention or hospital stays. You can consider your neighbourhood family doctor instead. Look for healthcare providers who are on the list of approved institutions (Ministry of Social and Family Development); that you can use your CDA funds to pay and this allows families to take advantage of CDA's benefits.
Education is the best investment for a child's future, and parents take this seriously by immersing their child in enrichment programmes or enrolling them in fun classes to socialise and build confidence. Others choose to put their child in a full-day preschool to better spend their days learning in a multitude of ways. No doubt, the cost of education is expensive and more so at a younger age. Right brain classes? Music lessons? These are optional costs that you will need to discuss with your partner if the family is able to afford them.
Now that you understand what the key expenses of raising a child in Singapore are, find out how you can stretch your CDA dollars and be a smart parent!
Savvy parenting: how to stretch your CDA dollars
And now for the good news! You can maximise the Baby Bonus Scheme and leverage your child's Child Development Account (CDA) effectively to help lighten your load.
With the Baby Bonus Scheme implemented by the Government, children born on or after 26 Aug 2012, will receive a Cash Gift of:
With payouts into your account within the first 12 months from the birth of your baby, the load of new parents are lightened with the costs of bringing up a child in Singapore reduced.
Following the recent National Day Rally announcement, PM Lee Hsien Loong shared that babies born from 1 Jan 2015 will enjoy the enhanced Baby Bonus Scheme which is as follows:
The CDA is part of the Government's Baby Bonus initiative which encourages parents to save for their children. For children born on or after 17 Aug 2008, families are entitled to receive Government-matching deposits in their Child Development Account (CDA) up to:
You can use the CDA funds at Baby Bonus Approved Institutions to pay for:
With the increased financial commitments of a new family, OCBC understands it all to play a proactive partner in your parenting journey, which led to the development of the OCBC CDA account.
Exclusive benefits of being an OCBC CDA holder help you further reduce those expenses while you save:
Moreover, on the family protection front, OCBC also takes care of pregnant mums by offering $108 CDA cash gift with the MaxMaternity Care pregnancy protection plan, for sign ups within 2015. Some benefits of MaxMaternity Care:
If you take up selected life insurance plans, a $100 CDA cash gift is yours while you grow your savings alongside insurance coverage. For peace of mind, insurance for the family should start early.
OCBC offers 40% off premiums for ShieldWise, a personal accident protection which protects not just your child but also you as a parent.
Parents, do remember that being savvy and smart is the key to enjoying the advantages of raising a family in Singapore. Every subsidy and dollar saved helps manage the stress and costs of bringing up a child. With the Baby Bonus scheme and OCBC CDA, things can be better if we live within our means and choices. Happy parenting!
Visit Baby Bonus Online and choose OCBC Child Development Account.
By The Asian Parent | This article was first published in sg.theasianparent.com on 22 September 2015
Below are the accompanying terms and conditions, as well as important notes pertaining to OCBC and their products.
Please refer to the Terms and Conditions Governing OCBC CDA, as well as Terms and Conditions Governing Deposit Accounts (both available at ocbc.com/cda).
Monthly Savings Account: For full terms and conditions, please refer to ocbc.com/msa.
SG50 MaxMaternity Care Promotion: : For full terms and conditions, visit ocbc.com/maxmaternitycare.
Protection & Endowment Plans Promotion: This is a one-time promotional offer for each OCBC CDA holder. The promotion applies to selected Endowment and Protection plans in annual premium payment mode, submitted and incepted between 13 July 2015 and 31 December 2015 (both dates inclusive). To qualify, the Endowment plans with premium amount between S$3,600 to S$7,999 per annum must be submitted and incepted between 13 July 2015 and 31 December 2015 (both dates inclusive). Endowment plans with premium amount between S$8,000 to S$11,999 per annum must be submitted and incepted between 1 September 2015 to 31 December 2015 (both dates inclusive). The promotion for Endowment plans is subject to the other promotion terms and conditions being met and may not be combined with other offers and promotions. To qualify, the Protection plans must have minimum premium amount of S$1,200 per annum. The cash reward cannot be credited into any account other than your OCBC CDA, or exchanged for other items. OCBC Bank reserves the right to waive/vary/amend any of these terms and conditions without notice. For full terms and conditions, visit ocbc.com/cda.
ShieldWise Promotion: The promotion of 40% discount is only valid when you purchase the adult plan plus child plan plus child rider altogether. For full terms and conditions, visit ocbc.com/cda.
365 Credit Card: For full terms and conditions, please refer to ocbc.com/365card. The annual fee for the OCBC 365 Credit Card is S$192.60 (first two years free). The effective interest rate is 25.92% per annum and is subject to compounding if the monthly charges are not repaid in full.
^Terms and conditions apply.
Child Development Account savings are matched dollar-for-dollar up to the cap for Government matching contributions visit www.babybonus.gov.sg for details.
Insurance policies will be underwritten by The Great Eastern Life Assurance Company or The Overseas Assurance Corporation Limited, each a wholly-owned subsidiary of Great Eastern Holdings Limited and a member of the OCBC Group, and are not bank deposits or obligations of, or guaranteed by OCBC Bank. You may wish to seek advice from a financial adviser before committing to buy a policy. If you choose not to seek advice from a financial adviser, you should consider if the policy is suitable for you. It is usually detrimental to replace an existing accident and health plan with a new one. A penalty may be imposed for early plan termination and the new plan may cost more or have less benefit at the same cost. This document is not an offer to buy an insurance product or service. It is also not meant to provide any insurance or financial advice. Buying health insurance products that are not suitable for you may impact your ability to finance your future healthcare needs. If you decide that the policy is not suitable after purchasing it, you may terminate the policy in accordance with the free look provision, if any, and the insurer may recover from you any expense incurred by the insurer in underwriting the policy. Other terms and conditions apply. The insurance plans are protected under the Policy Owners Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg).
Deposit Insurance Scheme: Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$50,000 in aggregate per depositor per Scheme member by law.