4 major financial decisions to make for a growing family
Is your child asking you about getting a little brother or sister? If you’re thinking about adding another bundle of joy to the family, know that it’ll bring you immense happiness, but could also make life more stressful for you. According to the 2016 Prudential Relationship Index report, money and children are among the biggest sources of arguments among couples. Plan your finances ahead of making major life decisions so they don’t strain your relationship with your spouse and so you have enough savings to deal with the many expenses later, such as childcare services, employing a helper or going on family vacations.
Purchase a property for the family
A home is probably the most expensive purchase you’ll ever make in your life, and you may feel wary about committing to such a large financial responsibility. Once you decide to have more children, however, stability will become a priority. The good news is, while property prices do fluctuate, a home of your own will likely create equity for you in the long run.
Prepare for your children’s education
Aside from raising young children to adulthood, most parents also support them in the early years of their adult life, which include tertiary education. A global survey by HSBC found that Singaporean parents spend an average of S$96,000 on their children's education, from primary school to the undergraduate level. And, the cost of education is expected to rise, particularly for higher education — a 2016 study by the Economist Intelligence Unit projected that the cost of a four-year degree will increase from just over half of an individual’s average yearly income in 2015 to a whopping 70.2 percent in 2030. With more children on the way, making plans to ensure that your children’s university fees are covered will be a necessity.
Get life insurance
We all want the best for our family, and with more children on the way, the first thing that comes to mind might be ways to increase your income to better provide for them. But making sure that you and your family are protected from uncertainties is just as important, if not more.
A 2017 report by the Ministry of Social and Family Development shows that over 65 percent of families with at least one child below the age of 21 are dual-income families, which means an unexpected life event where even just one — let alone both — parent loses the ability to work is bound to negatively impact the family’s finances. Life insurance offers a safety net for your family in the event that you’re no longer around or able to take care of them and is an important decision parents must make.
Start saving up for retirement
With a growing family, too often many parents will prioritise their children’s needs before their own. As well as getting prepared with all of the aforementioned, it’s important not to forget about your own retirement. According to the 2017 Melbourne Mercer Global Pension Index, Singapore has the best pension system in Asia but the Central Provident Fund will only get you so far. You need to consider the lifestyle you want to maintain after you retire — money for food, transport and health care only covers the very basics of needs. What if you enjoy travelling and want to achieve your lifelong dream of seeing the world after you retire? Will you have paid off your mortgage by then? It’s never too early to start thinking about your retirement savings plan — one that will provide you with monthly passive income — so you can live the way you want to in your golden years.
The information in this article does not necessarily reflect the views of Prudential Assurance Company Singapore Pte. Ltd. Certain information in this article may be taken from external sources, which we consider reliable. We do not represent that this information is accurate or complete and should not be relied upon as such.
This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Prudential Singapore Financial Consultant before making a commitment to purchase a policy.