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5 Ways Your Budgeting Needs Change When You're Starting a Family

Starting a family is expensive, especially if it means a temporary reduced income while one parent is at home for a while. Two of the largest ongoing expenses when raising a family are childcare and education. Additional monthly costs like baby food, formula, diapers, baby clothes and doctor visits can also add up very quickly (especially if there’s the excitement of expecting the first baby), so expect major dents in your usual budget plan.

Here’s how your budgeting needs can change when planning for a family:

1. Pace yourself and budget for big-ticket items

Be careful with baby-related spending. Babies grow quickly and really won’t remember what you got them at that age, so investing too much $$$ at that age isn’t necessary. Leave expensive outfits for later, buy diapers in bulk, and shop for furniture that can double up as something else to get extra bang for your buck (such as a dresser with a changing table). But there are some must-have items that you’ll need to invest more in, such as a baby crib or bassinet and a car seat if you have a car. Tip: Shop around to compare prices and then decide if you’re better off paying the full amount upfront or through installments.

2. Set up an emergency cash reserve

Minimise your current expenses to be able to set aside an emergency fund of at least six months’ worth of living expenses for the near future. This is important because it accounts for unexpected medical costs not covered by insurance, unexpected purchases, and the need for extra funds in case the maternity or paternity leave goes for longer than expected.


3. Plan ahead for education costs

You’re starting a family, so you’re responsible for raising your children all the way to adulthood (usually all the way till 25 years of age), which usually includes a college degree. You know that Singapore’s cost of living is already very high, and education costs will continue to keep rising too, so keeping enough money aside for tertiary education is important to budget in.

4. Update your life insurance

If you did not have life insurance before, now is the time to get coverage. If you already had a life insurance policy, now is the time to increase the benefit amount to cover your newborn. Life insurances offer a death benefit, which guarantee that your child will receive a certain amount of money to help them through life, should something happen to you or your spouse. The money can be used to cover current and future expenses such as bills, funeral costs, childcare, housing and education. Tip: A good rule of thumb is that your coverage should equal 10 times your yearly income.

5. Start saving up for your retirement

As a parent, you will always put your child’s needs over your own. But saving money and growing it on the side for your future is also very important and must be budgeted from the onset of starting a family. As mentioned above, if you’re supporting your child / children till they turn 25, you have to realistically consider how old you will be before you can finally stop working (for instance, if you start a family at 30, you’ll probably be working till you’re 55). CPF certainly goes a long way, but consider the kind of lifestyle you would like to maintain in your golden years too. It’s never too early to start thinking about a retirement savings plan that will provide you with monthly passive income to be saved up for your future.


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