8 Ways for Singaporeans to Afford Having a Baby

Our Managing Director Rohith Murthy gives practical money saving tips for Singaporeans who want to start a family.

It was 5pm on Wednesday, 12th of August, 2015. As I walked out of the office to book myself a Uber, I noticed few messages on my phone.

One message read in Romanian, "Ro, a venit Radha!", which translated to "Rohith, we just welcomed Radha." Radha, my baby girl whose name means “success” in Sanskrit, finally came into the world.

As a new parent, holding baby Radha in my arms was the most fulfilling moment in my life. But there is a huge responsibility that comes with immense joy.

While I sat on the 12-hour flight to Romania, I had plenty of time to write a list of things I need to take care for my baby from Day 1. In hindsight, I should have come up with this list while my wife and I were planning to have a child.

Six months later, I am back in Singapore with my family. I’ve observed that many Singaporeans hesitate about having children because of the financial responsibility that comes with it. But with careful planning, you don’t need to let money worries get in the way of starting a family.

Below is a copy of that list I wrote on the plane. Whilst not exhaustive, I hope you will find it useful when you and your partner talk about growing your family.

1. Create a Baby Fund

Ideally, the planning should begin as soon as you and your partner decide you want a baby. But life doesn’t always go as planned. For some Singaporeans, pregnancies come as a (hopefully pleasant) surprise.

Either way, start preparing your finances as soon as possible. Sit down and create a budget that allows you to save a portion of your income in a Baby Fund, so you have cash at hand for doctor’s visits, daily expenses, and other emergencies.

Your Baby Fund should include 3-6 months’ of essential household expenses, including your mortgage, utilities, and groceries. If you want to stay longer than your paid maternity or paternity leave allows, your Baby Fund should also include savings to replace the income for the number of months you want to stay home. For example, if you don’t want to miss a moment of your baby’s first year, save one year worth of your income.

Work through your budget to determine the changes you need to fill your Baby Fund. Are there ways you can cut back on spending? Do you need to earn extra money on the side?

Have a look at our articles on saving money and making money for some ideas.

2. Don’t Forget Your Benefits

We Singaporeans are very fortunate to receive government assistance to defray the costs of raising children. See if you qualify for these government benefits, and take full advantage of them:

Baby Bonus

The S$2,000 cash gift is given at the 15th and 18th month to provide parents with extra financial support.

Government-Paid Maternity Leave

All working mothers, including self-employed mothers, get 16 weeks of Government-Paid Maternity Leave at the birth of your child. Your employer should pay for 8 weeks of your maternity leave while the government pays for the next 8 weeks.

Government-Paid Maternity Benefit Scheme

Short-term workers who don’t qualify for Government-Paid Maternity Leave can receive cash benefits if they have been employed for at least 90 days in the 12 months before the birth of your child.

Government-Paid Paternity Leave

All working fathers, including self-employed fathers, receive 1 week of Government-Paid Paternity Leave. This is mandatory, and your employer can also grant you an additional 1 week of paternity leave.

Shared Parental Leave

To get even more quality time with the new household favourite, you can take advantage of the Shared Parental Leave. This scheme grants working fathers to 1 week of their wife’s maternity paid leave, with wage reimbursements capped at S$2,500.

Assistance Schemes for Single Parents

Raising a child by yourself is not easy, but assistance schemes for unwed, divorced, or widowed parents are available. Upon your baby’s birth, he or she will receive a MediSave account with S$3,000 grant to cover critical medical expenses. 

3. Take Care of Your Debts Now

If you have debts, you might be struggling to pay them off. Or you can be doing fine right now but are worried how you’ll fare in case of an emergency.

Either way, don’t wait until the baby arrives to take care of your debt. Now is a good time to pay it off. Take a look at our Debt Management articles for advice on how to pay off your loans and save money in the process.

4. If Needed, Compare Private Insurance Plans

Radha was born overseas, which means she isn’t covered by MediShield. I had to purchase a private insurance policy to keep her protected from Day 1.

A normal visit to the doctor can easily cost you $100 to $200 each time. If you are looking to purchase private insurance, compare the market and shortlist a plan that covers your baby for doctor visits, check-ups, and vaccination. After careful consideration, I went with a medical insurance policy with hospitalisation coverage of up to S$3 million per year, and vaccination coverage of up to S$500 per year.

5. Protect Yourself with Life Insurance

Your life and income must be protected more than ever before: As much as this is an occasion to rejoice, Life Insurance is something you must think and get yourself immediately. Choose a Term Life insurance where you get a fixed payout amount in the event of death or critical illness or permanent disability during the policy tenure (say 20 years).

6. Get a Cashback Credit Card

Your groceries expenses will increase. Get yourself a cashback credit card like the Citi Cash Back Card that gives you maximum cashback every time you shop at your favourite supermarket. 

Make sure to check the fine print before applying for a credit card. Cards that offer higher cash rebate tend to have a high minimum spend and caps to the rebates you receive. If your grocery spend already meets the minimum amount, it's fine to get these types of cards.

Meanwhile, cards with smaller cashback tend to be more relaxed and require no minimum spend. Consider these credit cards if your spending varies from month to month, or if you don't spend enough to meet minimum cashback requirements of other cards.

7. Ask Family and Friends for Baby Accessories as Gifts

It’s tempting to buy baby accessories like strollers, changing tables, and other furniture. But these things cost money, and many of them will be quite useless in a year.

Be critical about the baby accessories that are worth buying. For the nice-to-haves, create a wish-list and share it with your friends so they can gift you these during the baby shower and help you save money.

8. It’s All Right to Get Help From Your Your Parents

If you and your partner do not have a flat of your own to stay in, there is no shame in living with your parents. In fact, this might help you save few thousand dollars you may have to end up paying as housing rent or for a mortgage. Don't underestimate the help you will get from your parents in the first few months.

Every parent I've met tell me I can forget about a good night's sleep with a fussy newborn. But what actually kept me me sleepless was my worries about baby Radha’s well-being and future.

With a financial plan in place, you can spend less time worrying and more time enjoying the most wonderful gift in your life--your child.

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By Rohith Murthy

Rohith leads Singapore’s SingSaver.com.sg, a financial comparison site aimed at helping consumers in Singapore save money and time by finding the right financial products.