Wednesday, 19 September 2018

9 Financial Must-Dos When You're Having A Baby

How much should a couple have before having a baby?

While expenses differ between families (and your preferences), it is always a good idea to start saving up early while you're trying for a baby, or the moment you find out you're expecting, so that money will be the least of your worries after your baby is born because you'll have so much more to worry about when that time comes!

My husband and I wanted to make sure we were adequately prepared, so we embarked on a journey and planned out what we wanted to get ready for before our baby arrives. Here's what we did, and what I would recommend for new parents looking to to get their finances in order before your baby arrives:

1. Review your insurance policies

The first thing my husband and I did when we found out I was pregnant, was to get our family's insurance policies in order. With higher expenses ahead, we made sure we were well covered for any unexpected incidents in life through our term and hospitalisation policies, as well as that of our parents.

Also consider if you need or wish to get maternity insurance. You can check out my comparison table here, where I studied 8 different policies while evaluating for my own pregnancy. Aviva is among the cheapest with one of the most extensive coverage - covering 10 pregnancy complications and 23 congenital conditions - and is the first insurer to offer developmental delay and stem cell transplant surgery on their maternity plan. I also like that there is no health check-up required for your baby if you purchase a whole life insurance plan for them within 90 days of their birth.

Review who your dependents are and make sure you look at their insurance coverage as well, and speak to a trusted financial advisor if you need guidance. Seek a second opinion if you need to. Make sure you do NOT end up overpaying for insurance at this point, but you gotta make sure all your basic safety nets are well covered!

2. Anticipate and save up for pregnancy + delivery costs

During your pregnancy, you'll need to pay for gynae consultations, nutritional supplements, scans and various blood tests, so be prepared! On average, depending on the gynae you pick, you can expect to pay between $150 - $380 per visit. Some gynaes also offer packages in your fourth month onwards to help offset the consultation fees, so ask if that's an option.

Delivery costs will largely depend on whether you go to a public or private hospital, as well as the method of birth. I'd say to prepare for emergency situations during labour, and to save up for a C-section operation even if you're opting to go natural, because you'll never know what could happen!

Cord blood banking is another potential cost you'd want to consider, which range from $5000 - $8000 for private storage.

In some cases, babies are born premature or might have to stay for an extended period of time in the NICU for jaundice or other treatments. Make sure you get a rough estimation of those costs, and save up accordingly.

My husband and I projected $20,000 for the pregnancy and delivery, so that's how much we made sure to set aside.

3. Plan for post-delivery costs

Will you be hiring a confinement lady? If so, add another $3000 to your budget, and perhaps another $800 more for groceries.  If not, will you be catering confinement food? That can cost another $1000. What about post-natal massages and herb baths? Prepare another $2000.

4. Plan for newborn hospitalisation and personal accident insurance

Get this settled within your baby's first 30 - 60 days of birth especially if you're already on a maternity insurance plan. The last thing you'll want to deal with is a newborn who needs medical treatment but you're left stark naked without any coverage. Other plans for your baby could include any of these top 5, which are commonly recommended and I've explained what they each cover here.

We are also intending to get a personal accident plan for our child as it is generally super affordable, and for less than $1 a day, the policy will cover stuff like insect bites, food poisoning, HFMD, dengue fever, Zika, measles and other infectious diseases.

5. Come up with your newborn essentials list and budget for it.

A baby crib, clothes, wash cloths, swaddle blankets, mittens, socks, plenty of diapers (newborns go through 8 a day), breastmilk bags, breast pads, nursing bras, breast pumps, formula milk, a car seat, etc... Have you gotten all of those prepared? To find the best deals and discounts, I like going to baby fairs and shopping online on sites like Qoo10 for group buys. Carousell is another great place to find new stuff that other mummies have stocked up extra on and no longer need. I've also consolidated a list of my favourite Taobao baby essentials here!

6. Plan for childcare

Who will take care of your baby while you're out, or when you return to work after your maternity leave is over? Will you be hiring a domestic helper, or will the grandparents be able to help?

7. Choose a paediatrician and check that it is within your insurance coverage

Your newborn's first visit will probably come sooner than you expect, so make sure you've already shortlisted a paediatrician in advance to save yourself the trouble and headache when the time comes. Also check with your insurance agent on how paediatrician fees will fall under your insurance network, and what can or cannot be covered.

8. Start tracking your expenses now (if you haven't already done so)

Use a tracking app like Seedly, or pick from any of the free mobile apps that you like! It is crucial that you start tracking your expenses now so you can see where your money is going to and how much you're spending, pre-baby. That way, when you continue this habit after baby has been born, it'll be easier for you to compare and figure out how much to set aside regularly now that you have an additional life to care for.

Another helpful list which I took from Aviva's website here

9. Build up your emergency fund!

As you can see, all of the above costs money, so you should probably start saving for it as soon as you can / find out you're expecting!

My husband and I projected about $20k for pregnancy and delivery, and another $20k in the first year after baby is born. As such, we put aside a buffer fund of $50k to ensure we won't be caught off-guard if anything happens.

Of course, that doesn't mean that you need to save $50k before you have a baby! Every couple and family has different needs, so do go through the above 9 steps to determine what you need and how much it'll cost you. Divide the total sum by 12 and start putting that amount aside every month. As a rough gauge, while there are many ways for you to cut down on expenses (just don't forget the insurance!), I would say $30k for a couple going the private gynae and delivery route would be a safe amount to budget. That works out to be $2500 a month to save up, or about $1000+ per person (you and your spouse).

So start early, and you'll be glad you did!

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Monday, 17 September 2018

Reader's Story: I'm the Sandwiched Generation. This is what I did to turn things around.

What should you do if you're sandwiched between your parents, your children, and your own retirement?

I've been getting this question a lot lately, thanks to the viral video that NTUC Income launched two weeks ago, and will follow up soon with what I think are some steps readers can take. However, before that, I recently came across a 
sharing from a reader who managed to turn things around by being proactive and getting her finances in order. She has agreed to share her story and I hope this encourages all of you to show that not all is lost:

Image credits


I am an only child, with two surviving parents and a toddler daughter. I may still want to give her a sibling later on. I worry about them as well as my husband and my in-laws (my husband has siblings, but they're not financially well-off to be able to definitely foot the bills with us should anything happen).

My mother (early 60s):
  • Has insurance, but simply not enough savings for retirement. Most of her savings went into helping my dad stem his scary spending. Even till today, my dad still dips into my mom's savings from time to time. 
  • She doesn't have any CPF, including in her Medisave. 

My dad (mid 60s):
  • My dad paid for my university education in full from his CPF account, and gave me a $400 allowance every month back then.
  • Has no insurance.
  • Zero savings, except for his CPF retirement account which has a healthy $100k inside. 
  • He also has a almost fully-paid private property which he collects a monthly rental of $2000 on.
I was my parents retirement plan.

To turn things around, I needed to make sure I have insurance for all my dependents, and then come up with a plan to fund my parents retirement through passive rental income on their properties. This was what I did.

Step 1: Bought a resale flat with my mom. 
Back in the late 2000s, in order to unlock the asset value of my dad's property, I needed to get another place. The HDB rules hadn't kicked in then, and as my dad's property was entirely under his own name, my mom and I partnered to buy our own resale flat. My mother wasn't able to take a loan, so I paid for the flat entirely.

Step 2: Applied for my own 5-room BTO flat with my husband and got our keys recently.
In the early 2010s, I started thinking about how I could make sure both my parents could retire and still have their own passive income to cover their living expenses, if not more. So my husband and I rushed to get our HDB BTO flat. This way, I could give my mom the resale flat for her to earn rental from, whereas my dad can continue to earn rental from his private apartment.

We received the keys to our new BTO flat recently and moved my parents in with us. This enabled them to help care for my daughter, and be able to fully rent out both their respective properties to maximise rental income.

Step 3: My parents stopped working and now enjoy a combined income of over $4000 a month from rental.
This was only possible with prior planning and careful execution every step of the way. Now that I had sorted out a steady income stream for my parents', I still have to think about the "what ifs" and plan ahead.

Image credits

Step 4: Getting insurance for my dependents.
It is important to me that whoever can be insured, is. This was the aftermath once I had revamped my family's insurance portfolio with our agents.

My mom has:
  • Life insurance + savings plan (which she bought many years ago from her sister) 
  • Personal accident insurance
  • Private hospitalisation plan
My dad has: 
  • no private insurance, as he is a heart patient and was rejected from various insurers
  • Medishield Life is what we can only rely on
My daughter has:
  • Private hospitalisation plan
  • Personal accident insurance
My husband has:
  • Life insurance 
  • Personal accident insurance
  • Private hospitalisation plan
I got for myself:
  • $50k life insurance
  • Investment-linked plan
  • 2 endowment plans (15 and 25 years respectively)
  • Personal accident plan
  • Private hospitalisation plan
  • A pure investment plan (as I am not good and have no time to invest)
  • Increased my coverage by adding a $100k term plan after our daughter was born

Step 5: Getting myself insured.
As my family's only stable breadwinner (my husband's job is erratic and there are times when he does not have income, due to fluctuating demand), it was crucial for me to make sure that I don't have to worry about my parents or my daughter if I should suddenly pass on.

In total, we spend about 10% of our annual income on insurance for protection, and another 10% for my investments. Some say this is excessive, but if I could and knew how to invest well, my investments portion could be further reduced, but at this stage of my life and given circumstances, I have opted to outsource it to a trusted financial advisor (yes, I'm aware I'm paying a fee which I could eliminate if I do direct). This is my choice and preference right now.

TLDR Takeaways

  • Take care of your downside by outsourcing as many big-ticket financial risks as you can to the insurers, within your affordability. Get a trusted agent to do the planning for you, if needed.
  • If possible, come up with a plan to generate passive income for your parents' retirement. This will really help offset your burden if you constantly have an inflow of cash throughout their golden years.
  • Protect or boost your earned income. Work on your career progression. Get a stable job, build up side income, or generate your own passive income through investments.

I was very heartened to read of this reader's story and glad that she was willing to share it here, to show that not all is necessarily lost even if we feel like we're terribly sandwiched between generations. And even if your parents had failed to plan in the past, that doesn't mean we still cannot take steps today to try and prevent our greatest financial fears from coming true. 

As long as we plan well and ahead, there might still be a way out. Hopefully this inspires you as much as it inspired me!

With love,
Budget Babe