As you celebrate your child’s birth and hold him or her in your arms, you may be aware of the new challenges that come along, especially on money matters. From purchasing baby equipment and gear, to managing the expenses that come with a growing family, finances can become overwhelming for new moms – and dads.
As we celebrate Mother’s Day, it’s a good time to reflect on the importance of financial planning for new moms. As a mom of three myself, I understand the financial challenges that come with raising a child in Singapore. But with early planning and some foresight, it is possible to ensure your family’s financial security while enjoying motherhood.
Budgeting Your Expenses
One of the most important steps when it comes to managing your finances as a new mom is to create a budget. This involves understanding your household income and expenses, and prioritising your spending. Here are some tips on how to start creating and working within a budget:
- Understand your expenses: Take some time to review your household expenses and identify areas where you can cut back. For example, you might be able to save money by switching electricity providers, cutting out under-used subscriptions, buying groceries in bulk or taking advantage of discounts and promotions.
- Prioritise your spending: As a new mom, there will be so many new things to buy! You should aim to prioritise your spending and focus on the essentials, such as allocating for funds for baby’s feeding, diapers, and bedding. Make a list of your essential expenses and allocate your funds accordingly.
- Use a budgeting app or tool: There are many budgeting apps and tools available to help you manage your finances more effectively. Otherwise, you can also check out MoneyOwl’s Budgeting spreadsheet, which is done up in Excel format so you can track and better manage your budget.
Saving for a Rainy Day Fund
With a child, unexpected expenses can arise anytime. As we exited the Covid-19 pandemic and ceased wearing masks and practicing social distancing, you may have noticed an increase in infections among kids and adults alike1. Furthermore, the threat of retrenchments and job loss continues to loom. The number of retrenchments in Singapore in the fourth quarter of 2022 doubled to 2,990 from the previous quarter.
For such situations, we recommend having savings of at least six months’ worth of expenses as an emergency fund. While it may appear daunting, if you set a realistic savings goal and stick with a budget consistently, you can achieve it over time.
For such a rainy day fund, you should try to find an instrument which gives you higher rates, of low risk, and accessible on short notice for emergencies. You can consider MoneyOwl’s WiseSaver, a fund which invests in Singapore Dollar bank deposits which earn higher returns, and you can withdraw your funds within 2 business days. The 5-day moving average yield of WiseSaver as of 5 May 2023 is 3.88% per annum, which is higher than a regular savings deposit.
Planning for Your Child’s Future
With a new addition to the family, you’ll also need to consider your child’s future as part of your financial planning for the long term. Whether it’s saving for their tertiary education or planning for their future financial well-being, the earlier you start, the better prepared you’ll be. Starting early will also allow you to reap the most from the magic of compounding.
When it comes to saving for your child’s tertiary education, you can choose between buying an endowment plan which gives certainty of returns, or invest in a broadly diversified low-cost fund such as MoneyOwl’s Dimensional Portfolios. These portfolios rely on scientific financial insights and based on an investment strategy grounded in Nobel Prize-winning economic theory to grow your money reliably, making them a great option for parents looking to save for their child’s education.
At MoneyOwl, you can also choose to open a joint investment account with your child. If your child is below 18 years old, you retain the main ownership of the account with rights to make decisions on buy and sell transactions. When your child comes of age, you can encourage them to co-contribute to the account and learn about savings and investing. In the longer term you can view such accounts as a form of legacy planning, as if one account holder passes on, the ownership of the asset will go to the surviving account holder.
Another way to secure your child’s financial future is to consider purchasing suitable insurance for him or her. All Singaporean and PR babies are covered with MediShield Life from birth, which is sized to cover most of the bills for B2/C wards in public hospitals. You can enhance your child’s hospital and surgical coverage by purchasing an Integrated Shield Plan and a rider to include private hospitals or higher ward classes and to help cover part of the co-payment.
If you have sufficient budget, you may also want to secure critical illness coverage for your children while they are young and in good health. This helps lock in their insurability for life, which means that the insurer will not throw in any exclusion in coverage if they are subsequently diagnosed with medical conditions. It can be paired with affordable term plans to keep premiums low.
Finally, you can also consider buying a personal accident plan for your child. Such plans tend to be affordable and cover injuries from accidents, food poisoning and infectious diseases such as dengue and hand-foot-mouth disease – scenarios which may not require your child to be warded. For more information, you may book an appointment with one of our friendly Client Advisers.
Taking Care of Yourself
As a new mom, it’s easy to focus solely on your child’s needs and forget about your own future and retirement. However, it’s important to plan ahead and consider your own financial well-being.
Whether you intend to continue pursuing your career or decide to take a short break to look after your child in their early years, you should consider how these will affect your long-term financial well-being.
If you intend to be a full-time working mum, you’ll be happy to know that working mums in Singapore are given a wide range of financial support from the paid maternity leave to Working Mother’s Child Relief. On the other hand, if you intend to take a pause in your career to take on childcare responsibilities, you can consider askin g your spouse to top up your CPF account for tax relief and so you can continue growing your retirement funds.
If you are contemplating among the different options and their trade-offs, you can consider completing MoneyOwl’s Comprehensive Financial Planning Report which can give you a holistic view of your finances so that you can do proper planning for the mid to long-term. By taking steps to manage your finances, plan for emergencies, and save for your child’s future and your own retirement, you can feel more secure and confident in your financial future. From now till 30 June 2023, we are offering a free Comprehensive Financial Planning report <MDAY23> to the first 300 customers as a tribute to all mothers. You may add on a consultation session with our dedicated salaried Client Advisers at $49 to do a deep dive into your financial plan. T&Cs apply.
As we conclude this article on financial tips for new mums, let’s take a moment to celebrate the amazing work that mums do every day. From feeding and changing diapers to providing emotional support and being the family’s Siri (“Mummy, where is my <insert item>”), being a mom is no easy feat.
This Mother’s Day, let’s celebrate the joys and challenges of motherhood and remind ourselves that it’s okay to put ourselves first sometimes. After all, as they say on airplanes, “Put on your own oxygen mask first before assisting others.” By taking care of ourselves, we can be better equipped to take care of our loved ones.
* Terms and Conditions: Promotion is valid from now till 30 June 2023 for the first 300 eligible clients. Clients may choose to opt for a consultation session with our dedicated, salaried Client Adviser at $49. MoneyOwl reserves the right to amend these terms and conditions from time to time. MoneyOwl is an NTUC social enterprise which enables everyday Singaporeans to make wise financial decisions to live their best possible lives. This advertisement has not been reviewed by the Monetary Authority of Singapore.
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