Top 10 Tips to Financially Prepare to Start a Family

Starting a family and raising young children in Singapore can certainly be very different to doing so back home in Australia. The access to helpers and babysitters who can live in your house or visit regularly to allow you to return to work sooner, high costs of both day-care and early childhood education and for many a lack of family members nearby to drop by and help you out. An important element when it comes to starting a family is ensuring that you’re financially prepared to do so.

A recent survey by finder.com.au of 2,013 Australian parents with children under the age of 12 revealed some alarming statistics about new parents. 49% of those surveyed wish they’d had more savings before their first child arrived, 12% wish they’d purchased a property before their child was born and 9% wish they’d had greater job security. While many will remain less prepared than they would like to be when their little one arrives, there is certainly more that parents-to-be can be doing to get themselves financially ready.

To put this into perspective, the average child will cost over $250,000 before they even get to college, and many studies reveal that the cost of raising a child from birth to 18 is in excess of $1,000,000. Let’s now explore what we can be doing to prepare for this.

This week I’ve outlined my top 10 tips for those couples thinking about starting a family or already on the pathway to doing so. Whether you’re an Australian expat living and working in Singapore or elsewhere around the world, or back home in Australia, many of these tips will be equally as applicable and important for you.

1. Review your health insurance plan 

Many health insurance providers will have waiting periods of 10 – 12 months when it comes to maternity leave for obvious reasons. If you’re considering starting a family and are not already on the journey, it’s important to review whether your health insurance includes maternity leave and consider exactly what is and isn’t covered, as they can differ substantially. If you’re living in Australia and relying on the public healthcare system, it’s also important to consider what this means as it will generally not provide you with your choice of doctor, and a shared room may be your only option. There is no one-size-fits-approach to health insurance, but it’s important to ensure that you’re fully aware of what is and isn’t covered in your policy.

2. Review your life and other personal insurances

The arrival of a child in your life will typically change most views when it comes to the importance of life insurance. All of a sudden, you need to ensure that your child would be cared for in the unexpected event of your passing, a long-term disability or being diagnosed with an unfortunate illness. This includes ensuring that their education and everyday living needs would be taken care of. If you’re starting a family or have recently done so, this is an excellent time to review your insurance policies and go through a needs analysis with your financial planner.

3. Save, save, save! 

If you’re looking to start a family, start saving as much as you can to boost your emergency fund. Typically, a sensible rule of thumb for your emergency fund is 3 months’ worth of expenses, however with the arrival of a child, you may want to consider boosting this to 4 – 6 months’ depending on your own circumstances. Having extra cash in the bank before the arrival of your child can also provide some peace of mind when it comes to the actual birth process, ensuring that if there are any unforeseen events that you have sufficient resources to cover the unexpected costs.

4. Check out your employee benefits 

Singapore, in many cases, is generally not as generous as Australia when it comes to maternity leave, but this can vary between employers. It’s important that you check out both your employee benefits as well as any government assistance that may be available for you. This is important for both partners to be clear on how much paid leave you have available, and how you will manage as a family unit when your baby arrives.

5. Start creating your budget 

For most people creating a budget is not an enjoyable task, but it is very important and can be incredibly valuable when it comes to your financial preparation for starting your family. Start considering the costs of nappies, food, child care costs and other items that are soon going to form part of your daily expenses. It’s also important to create a ‘pre-baby budget’ including the costs of setting up the nursery and ensuring that you’re ready for the arrival of your little one.

6. Temporary & permanent guardianship 

This is a tip for once your baby arrives, but an incredibly important one for those Australian expats living and working in Singapore, so I’ve included it in my top 10 here. It’s important that you nominate both a Temporary and Permanent Guardian, particularly if the Permanent Guardian is back at home in Australia. The Temporary Guardian can look after your child while they wait on the Permanent Guardian to arrive in Singapore in the unexpected event of your passing.

7. Review your superannuation strategy

If your husband or wife is considering taking time off work, particularly if they’re going to cease working in Australia for an extended period, you can start to consider the low-income benefits that the Australian Government provides when it comes to superannuation contributions. These include spouse contributions, co-contributions from the Australian Government and other benefits. This is particularly valuable for those living and working in Australia currently. Speak to your financial planner about what superannuation contributions are available to you, particularly if you’re looking to start or have recently started a family.

8. Start thinking about your family finances

If you’re currently in a relationship and you’re sharing your finances, and saving your money together, it’s important to start discussing and planning how you will continue to manage this once your baby arrives. This is particularly important if one member of the family plans on taking any unpaid leave from work to raise your child, as this may mean that they’re unable to contribute to the joint investment and bank accounts for an extended period of time. While many may think this to be an obvious assumption, by discussing it early it avoids any tension or negative surprises down the track.

9. Check out the expat forums for your baby gear 

The expat community, particularly the Australian expats in Singapore, is incredibly valuable network and you may just find that you can acquire most of your baby gear for much cheaper than buying it brand new. This can also be an excellent source of information for new families when it comes to day-care, groceries or anything else for that matter. Start connecting to the Australian expat community in your area and you’d be amazed at what a valuable tool this will be.

10. Enjoy the journey and rest assured your finances are in order

For many, having a child will be one of the most rewarding and memorable experiences of their life. By following these top tips, and seeking the right advice, you can rest assured that your personal finances are strong and you can focus on enjoying the journey of becoming a parent.

To your financial success!

Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3

Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.

To learn more about how we may be able to help you, please contact us:

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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.

*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.