Navigating Through the Financial Responsibilities of a First-Time Parent
If you are expecting your first child soon, it is undoubtedly one of the greatest joys and celebrations in life. Kids are a bundle of joy, bringing lots of fun and laughter into your family. However, parenthood also comes with additional financial responsibilities. From pregnancy to childbirth, and all the way till your children are finally in university, the costs of raising a child can be extremely high.
As a parent, we all want what’s best for our child, whether it’s for them to be in the pink of health, have a stellar education as well as the ability to pursue their aspirations, no matter what they may be.
It can be daunting to balance the rigours of parenthood and the financial responsibilities at the same time. This article will share four initial tools you can employ to help you navigate through the financial responsibilities of parenthood.
- Make use of parenthood schemes
The MediSave Maternity Package and Medisave Grant for Newborns are two great parenthood schemes offered by the government to help with the cost of maternity and new-born care.
With the MediSave Maternity Package, expecting mothers can tap into their MediSave to pay for any delivery charges, as well as pre-delivery expenses in either public or private hospitals.
After your baby is born, a Medisave account will be created for them with a $4,000 MediSave grant deposited inside. The amount can be used for healthcare expenses such as vaccinations, hospitalisation, or any outpatient treatments.
Making use of such schemes offered by the government can help to defray the cost of giving birth as well as new-born care. This can help you to rely less on cash, allowing you more liquidity for any emergencies.
- Maximise your Child Development Account (CDA) with dollar-for-dollar matching
The second tool that you can use is the Child Development Account that is part of the baby bonus scheme by the Ministry of Social and Family Development. CDA is a special savings account supported by the government for new-born babies. Parents who sign up for the baby bonus scheme, will automatically open a CDA account for their child.
You will receive an initial amount of S$3000 into the CDA. Thereafter, the government will match every dollar you deposit into the CDA. You can maximize the CDA with a dollar-for-dollar matching for every dollar that you deposit. This is subject to a cap of S$3,000 for the first and second child and up to a maximum of S$15,000 for the fifth baby onwards.
You may find out more about CDA here.
- Savings plans and endowment policies
Since the CDA is only available for up to 12 years, you will need another savings plan to cover for your child’s expenses after.
Look out for savings and endowment plans in the market that can maximize your protection while accumulating wealth for your long-term financial goals. These plans can help you support your child through secondary and tertiary education.
AXA Early Saver Plus is an endowment plan that you may wish to consider. It is an affordable, flexible endowment plan with guaranteed returns of up to 1.57% per annum. Speak to one of our AXA financial consultants if you need help exploring savings plans for your child.
- Purchase life insurance for extra protection
Life insurance plans pay out for death, terminal illness, and/or total and permanent disability (TPD). It helps to make sure that your dependents, including your child, will get a pay-out if you are diagnosed with the aforementioned cases. Purchasing such a plan gives you peace of mind, knowing that your child will still be taken care of. The amount can potentially make up for the loss of income if the unfortunate occurs, or if you become unable to work.
An example of a life insurance plan is AXA Life Treasure. It is a flexible and robust whole life plan with premium payment options to suit your budget. There is also a wide range of riders to choose from, which means your protection needs are taken care of under a single plan.
With so many different tools available, choosing the right ones for you can help you to both navigate the financial cost of parenthood, as well as helping you to secure your child’s financial future.
Disclaimer:
This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of AXA Insurance Pte Ltd and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, or offer to sell, or solicit any offer to purchase any
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