You will build a five-year budget for a child with costs, support and your monthly saving.
Most parents-to-be have a rough sense that a child is expensive and that the government helps. What they rarely have is a single page showing, year by year, what goes out, what comes in, and what is left for their own budget to carry. This exercise builds that page for the first five years. It takes about thirty minutes, and longer if you stop to get real quotes for childcare.
You will need your cost list from lesson 6.1 and the support figures you recorded in lesson 6.2.
Set up a sheet with a column for each year, from before birth to year five, and a row for each cost category: delivery and prenatal, set-up, care, everyday costs, medical, and anything else you listed.
Fill in the figures from lesson 6.1, What a child costs in the first five years. Where care changes during a year, such as infant care starting when a parent returns to work, count only the months it applies. Mark every figure as checked or estimated.
Next, add the income change. Add a row for the change in household income. Include unpaid leave, a move to part-time work, or a parent stopping work, for the months it applies. This is a cost even though no bill arrives, and for many families it is the largest one.
If the change is long, such as a parent staying home for several years, note the CPF contributions that stop with the salary as well. You don't need to put them in the budget, but they belong in the conversation.
Add rows below the costs for each type of support: the cash gift, the CDA government match and grant, childcare subsidies if you haven't already used the after-subsidy fee, and anything else you confirmed.
Count each one in the year it actually arrives, and only if you are confident you qualify. Leave out support that goes somewhere your budget can't spend, such as a MediSave grant paid into the child's MediSave account, or note it separately. Leave tax reliefs out unless you have checked that you pay enough tax to use them. Then subtract the support from the costs to get the net cost for each year.
Here is Mei and Daniel's budget, using the made-up figures from lessons 6.1 and 6.3. The support figures below are invented for the example and are not the current amounts.
Before birth: delivery and set-up S$5,000 Year one: costs S$9,000 plus S$12,000 of unpaid leave; support S$2,000 of cash gift and S$1,000 of CDA match; net S$18,000 Years two to four: costs S$11,900 each; support S$1,000 of cash gift and S$1,000 of CDA match each; net S$9,900 each Year five: costs S$11,900; support S$1,000 of cash gift; net S$10,900
Over five years the costs come to S$68,600 after birth, the support to S$10,000, and the net cost to S$58,600. Including the S$5,000 before birth, the net total is S$63,600.
Some of these costs need saving in advance. Others become part of your monthly budget once the child arrives.
The costs before birth and the income you will lose on leave both arrive before you have time to adjust your budget. Make them a pre-birth goal. Mei and Daniel need S$5,000 for delivery and set-up and S$12,000 to cover Mei's three months of unpaid leave, a total of S$17,000. They plan to start trying for a baby after the wedding is paid for. The S$850 a month they were putting towards the wedding, from lesson 3.4, Build your wedding budget and savings plan, moves to this goal. At S$850 a month, S$17,000 takes 20 months.
The yearly net costs after birth become budget lines. For years two to four, S$9,900 a year is S$825 a month that their spending plan has to carry. Year one is lower in budget terms once the leave is funded from the pre-birth goal: S$18,000 minus the S$12,000 already saved leaves S$6,000, or S$500 a month.
The last step is to enter the child goal and the CDA deposits. Open your goals sheet from lesson 1.4, Build your goals sheet. Add the pre-birth goal with its target, date and monthly figure. Add the CDA deposits from lesson 6.3, Use the CDA match without straining the budget, as their own row, since they are a regular commitment with a deadline. Mei and Daniel's row reads S$1,000 a year, about S$83.33 a month, for four years.
If the new monthly figures don't fit alongside your other goals, don't trim the child budget to make them fit on paper. Module 8 deals with goals that compete.
A finished budget shows costs by year and category, the income change, the support netted off in the year it arrives, and a net figure for each year. Your goals sheet has the pre-birth goal and the CDA deposits. The activity is to complete yours.
Complete the five-year child budget and add the pre-birth goal and CDA deposits to your goals sheet.
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