Are you and your partner thinking of having children, but not entirely sure how your financial plans would change with a new addition to the family?
You’re not alone! Planning every detail of your life journey is challenging, more so with a child involved because there are so many things to consider.
That said, here are four changes in you and your partner’s lives that you’ll need to consider.
1. Retirement Age
Having a child means supporting them till they are old enough to start working and earning. Knowing this, you’ll need to be realistic about the age you actually can stop working, which may be a little later than you initially planned. For example, if you have a child when you’re 35, you’ll probably need to keep earning money till you’re 60 if they start working full-time at 25. However, if you start planning now, you can research on the financial and insurance instruments available that may help you build up your wealth. With careful planning, you could possibly kick back and relax at a slightly earlier age.
2. Family Income
You or your partner might plan to stop working and take care of your child after birth. This would make a huge difference in your family income, savings and expenditure – less disposable income for spending! In any case, always build a contingency fund of about six to 12 months of your combined income. This would ensure sufficient buffer in case one of you decides to stop working for a period of time after your child is born.
3. Your Child's Education
When you’re planning for your child’s education, you’ll need to carefully take into account prevailing inflation rates in Singapore. This is because a large portion of your child’s education fund will be spent on their university studies so the amount of money you need might be significantly different from the figure you just Googled the other day. If you’re thinking about it now, take this opportunity to plan the right steps on just how to build that education fund for your child.
4. Assurance for the future
The future might seem uncertain, but you would definitely want the best for your child. Getting the right insurance policies would protect your child financially in the long run. For example, whole life insurance policies insure your children for their entire lives (once the required premiums are paid) and also some come with annual cash returns (until the policy is terminated). If you’re able to afford the premiums for such a policy, it can give your child yearly returns all the way through to their retirement. A conversation with me regarding this will definitely help shed some light on the ideal plan for you and your family!
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