If you are looking to have a family soon, early financial planning is extremely important, especially when it comes to the family’s finances. Those who are about to start a family or are currently young parents often feel the pressure as they have to juggle finances between aging parents, themselves, and their children.
While it may seem as though having a family is a daunting task, we hope that some of the financial advice shared below will be able to ease your worries and keep you on track when doing financial planning for your family.
Financial planning and parents
Saving before starting a family is extremely important, as Singapore’s cost of living is constantly on the rise and money does not come easy. In short, you need to ask your future spouse if they have saved up money.
However if you are already married, then having aging parents and children at the same time requires serious financial planning for the future. Your finances may take a sudden hit should something happen to either the parents or the Children.
Financial Planning for Children and Parents
Whether you have a family or not in the future, one should always start saving from an early age for rainy days or their retirement. When saving for the future whilst keeping in mind your family’s finances, you should always look ahead and put aside money for events in the future that will definitely see your savings taking a huge dip.
Here are some good examples of financial planning: –
Child/children: Child’s education, food and health care, etc.
Self: Retrenchment, saving for future purchases, getting married (if you are not already married), illnesses, accidents as well as hospitalisation, saving for the downpayment for a house.
Parents: The elderly ones getting diagnosed with long-term medical illnesses.
Financial plan is important because a child’s education is a killer in Singapore
According to 2018 data, the estimated cost in bringing up a child is approximately S$670,000. Whilst schools are heavily subsidised by the government, most Singaporean parents begin to struggle when they start sending their children for tuition, and eventually when they start attending university – it being a local or overseas university plays a huge role in the determining factor as to how much your child will need when pursuing a tertiary education.
Retrenchments or redundancies are very real
On the other hand, there are sudden life events that require you to have an emergency fund to tide you through them. 6 months of salary is commonly advised by financial advisers in the event of retrenchment. Retrenchment is one of them – you may be employed one moment, and the next you may not be due to unforeseen circumstances. When this happens, it is important to have savings to tide you through whilst seeking a new job.
Accidents, illnesses and hospitalisation may kill you more than the sickness does
Other situations include accidents, sudden injuries or illnesses which mostly probably require immediate treatment. Healthcare in Singapore is not cheap, and will require a substantial amount of funds to fund it.
Deferred Gratification is important – Hold back your enjoyment
Having a family is a huge responsibility, which means you may have to give up certain luxuries from before to ensure that your family leads a more comfortable life. Living simply will aid enormously in your journey to save – you can start by deciding on that kopi instead of a cup of Starbucks! Try not to spend future money on your credit cards and pay them up every month. Use credit card as a convenience as opposed to a source of funding.
Financial Plan equals maintaining self discipline
The lack of self discipline is the major cause of bad credit score. Bad habits such as over spending on cards, not paying up your outstanding balances in full and having too many cards, and spending on too many things that you deemed as needed, but rather it was never needed in the first place, it was merely what you wanted. So control your urges, spend more time to upgrade yourself, try to earn more, be more productive, start a business or study, you will find yourself not only knowing more, but also curbing your spending.
You may read up more on credit repayments and what credit facilities are available to ensure that you are abreast with the latest information in order to better plan for your family.
Paul Ho, CEO and Founder of iCompareLoan says, “If you have not started a family, it is most likely you do not need to talk to us yet, but you can leave us a message to speak with our panel of financial advisors, they will be able to help you plan better. You can also start by using a planning software called Upplan.sg to plan your financial needs.’
He added, “At iCompareLoan, we are more than happy to have a call with your first to give you some pointers, so that you do not end up buying tons of useless insurance that an advisor will be very happy to sell you, above all there are also some very expensive packages that does more to help the advisors than the person doing the financial planning, those you need to be aware of, we can give you some pointers.”