Financial planning strategies for new parents
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Financial planning strategies for new parents

Mar 2023
Nov 2021
parents financial planning for children, education, starting a family

Bringing a beautiful child into this world comes with making so many sacrifices. Some new parents have forgotten what sleep feels like, while others get a shock in the mirror when they see how fatigued they look. The lack of sleep is just one of the struggles we have as we juggle our newly minted parenthood responsibilities.

With the weight of our young family on our shoulders, it is critical that we plan and prioritise our energy and resources to achieve the best outcome for our loved ones. In this article, we focus on how we can strategise on financial planning as a new parent.

Financial milestones as a young parent

Housing costs for a young family

Singapore residents' median gross monthly income, including employer CPF contributions, was $5,070 in 2022, according to figures from the Singapore Ministry of Manpower.

A private home loan as of November 2021 cost around $300 monthly in instalments per $100,000 in loan value, though to be clear, rates have spiked in 2022. In Singapore, fixed home loan rates have gone beyond 3%.

On top of that, there are other expenses that you may incur when you have your own residence.

Here is a list of costs that you will face as part of your housing needs, on a monthly basis (though note that figures are estimates as of November 2021):

Examples of monthly expenses specific to a new residence

Item Monthly expenses
Housing loan per parent, for a $500,000 loan $750
Housing and utilities $426
Furnishing and household maintenance $282
Broadband plans $55
Service and conservancy charges $63.50
Total monthly housing related costs $1,576.50

Estimates as of November 2021

Read more: With rising interest rates, should housing loans be repaid early?

Cost of raising a child in Singapore

The cost of raising a child varies widely, with the total costs from infancy to 21 years of age ranging anywhere from $170,000 to $340,000, and sometimes even reaching $1,000,000. The actual figure is bound to differ, owing to the myriad factors that could influence a family’s expenses — from insurance coverage and holidays, right down to dietary and lifestyle preferences.

One key thing to note is that the cost of raising a child does not necessarily have a fixed pattern to it — it does not increase in a linear way, or remain constant.

We can broadly categorise and estimate the spends based how much it costs to raise an infant, a toddler, and a child in primary, secondary, and tertiary education.

General costs of raising an infant (0 - 2 years old)

The first few years of raising a child can be characterised by childcare costs, enrichment classes, and paediatrician visits, whereas the later years may be dominated by huge expenses such as tuition and university fees.

Monthly expenses for a 0-2 year old child

Item Cost
Diapers $80
Infant formula milk $300
Baby food (after 7 months) $100
Infant care programme (1-18 months) $1,600
Childcare programme (after 18 months) $1,000
Total estimated monthly expenses At least $1,500 to $2,000

One-off expenses for a 0-2 year old child

Item Cost
Confinement nanny (0-1 month) $2,000
Clothes $500
Bathing needs (tub, soaps) $300
Accessories (cot, stroller, play pen, walker) $3,000
Toys $500
Carrier $300
Feeding needs (bottles, pumps, etc) $1,000
Total estimated one-off expenses At least $7,600

The total of these expenses can add up to almost $80,000 for the first two years of raising your child.

Some ways to help alleviate these costs include making lifestyle adjustments as well as receiving the Baby Bonus payouts (up to $11,000 for the first and second child, and $13,000 for subsequent children, as announced in Budget 2023). From early 2024, the Child Development Account (CDA) First Step Grant will also be raised from $3,000 to $5,000, and the government co-matching cap for the CDA is increasing to $4,000 for the first child and $7,000 for the second child.

Still, it is necessary to have long-term savings plans to keep your family financially secure, especially for the later years in life when more significant costs such as tertiary education are included.

Click here to understand how to find suitable savings products. For tips on how you can save more money, refer to this link.

General costs of raising a pre-school child (3 - 6 years old)

Your child’s Terrible Twos might be over, but forking out significant sums of money for them will still carry on.

Estimated expenses for a 3-6 year old child

Schooling needs
Full-day childcare (ages 3-4) $1,000 monthly
Preschool (ages 5-6) $400 monthly
Clothes $300 every 6 months
Bathing needs $50 every 6 months
Toys $500
Meals $200 monthly
Medical needs
Paediatrician visits (until age 4) $150 per visit
Polyclinic visits $30 per visit

On top of the expenses listed above, you might also want to send your child for additional enrichment activities to help them develop their interests, or to let them learn as many skills as possible while they are still growing and developing.

Sports and arts enrichment classes (such as piano, violin, and ballet) can range from $25 to more than $80 per class in Singapore, depending on whether they are group lessons or private lessons. Exam certifications, additional resources (such as ballet attire, or personal musical instruments) would also add to the cost.

From 2024, the Baby Bonus Cash Gift will be paid out over a longer period of time, until the child turns six-and-a-half years old. This is so that parents can receive continuous support until their kid enters primary school. In addition, money in your kid's CDA can be used to directly offset preschool and healthcare expenses.

Primary school education costs (7 - 12 years old)

Monthly cost of primary school fees in Singapore

Citizenship School fees
Singaporean $0
Singapore permanent resident (PR) $205
Foreigner (Asean) $465
Foreigner $775

Source: SingSaver

Monthly expenses

When your child progresses to primary school, you would be able to save on expensive school fees, since primary school fees are completely subsidised for Singaporeans. However, in exchange, expenses would arise in the form of pocket money and transport costs.

Yearly expenses

Some of the yearly expenses you can expect include textbooks, school uniforms (especially if your child changes uniforms frequently), and miscellaneous expenses such as school outings and co-curricular activities.

Secondary school education costs (13 - 16 years old)

Monthly cost of secondary school fees in Singapore

Citizenship School fees
Singaporean $25 - $830
Singapore permanent resident (PR) $400 - $1,000
Foreigner (Asean) $800 - $2,700
Foreigner $1,470 - $1,488

Source: SingSaver

The type of expenses to support a child in secondary school is very similar to that of a primary school child, although the amount for each expense would be larger.

Tuition or enrichment classes, pocket money, and course materials will also be more expensive as your child climbs up the academic ladder.

Post-secondary education costs (17 years old and above)

After secondary school, students will likely enrol in a junior college (JC), a polytechnic, or the Institute of Technical Education (ITE).

Annual cost of post-secondary school fees in Singapore

Citizenship JC Polytechnic ITE - NITEC ITE - Higher NITEC
Singaporean $72 $2,900 - $2,987.50 $446 $626
Singapore permanent resident (PR) $460 $3,117.50 - $6,116.50 $5,634 $7,844
Foreigner $1,040 (Asean)
$1,800 (others)
$5,650.70 - $11,159.50 $15,572 $20,482

Tuition centre costs

The median costs of tuition centres in Singapore are approximately $30 per hour for primary school classes, $40 per hour for secondary school classes, and upwards of $55 per hour for junior college classes. More prestigious tuition centres and private tutors can cost much more due to high demand.

University costs (19 years old and above)

Depending on the type of course and school, total annual school fees for Singaporeans attending a local university in 2021 can cost anywhere from $8,200 to upwards of $44,000. Additional costs would be accrued if your child stays on campus or goes for overseas exchange trips.

Saving and investing for your kid's university education fund

As a young parent, you are likely to face the challenge of being part of the sandwich generation — with your children as well as elderly parents or in-laws as your dependents. Beyond fire-fighting for daily expenses, it is also important that you plan for both your and your child’s longer-term financial needs.

Traditional university savings plans or endowment products may seem attractive due to the low investment risk and how the payouts are structured to meet cash flow needs to pay off university tuition fees, but they typically have early withdrawal penalties and lower returns.

Alternatively, you can get started building a low-cost portfolio of funds from as low as $1,000. From there, you will be given a portfolio based on the risk tolerance of your investment goals. If your financial needs change, there will be no sale charges or termination fees when you redeem your investment.

To get started with Endowus, click here. Our Flagship Portfolios are where you can begin to build your investing journey, and allow your returns to compound over time.

Building a tertiary education fund with CPF

If you do not have much cash to invest, you can also invest your CPF to plan for your kids’ local tertiary education, as Central Provident Fund (CPF) savings can be used to pay for education under the CPF education loan scheme. This can be used to pay for any full-time subsidised undergraduate courses and diploma courses from the polytechnics and other educational institutions.

Similarly, Endowus offers a low-cost, globally diversified portfolio for CPF investments as well.

Sustainable investing for our children

Data from the Centre for Climate Research Singapore indicates that due to climate change, Singapore could see average daily temperatures rising, more intense and frequent rainfall, and rising sea levels. Environmental issues and social inequality can also have a profound impact on the global population, economy and the financial markets.

It can be scary for young parents to know that this is the world that our children may grow up in, so we could do our part in our own simple way — by creating an investment portfolio based on environmental, social, governance (ESG) principles for our children.

This help ensures that our children not only have a pool of money that is working towards their future goals, but that pool is also being used to fund sustainable companies and projects for the future of the world their generation will inherit.

This means that the companies that our children’s portfolios invest in have good corporate governance and are responsible towards the environment and society at large. More than simply avoiding companies that produce destructive weapons or cigarettes, it could also be about channelling money to companies that are involved in environmental initiatives such as green buildings, plant-based “meat”, clean energy and other community environmental projects.

Take that first step, no matter how small

Even though raising children is neither cheap nor easy, we can try to tilt the odds in our favour by starting the process of financial planning earlier rather than later, so that we can benefit from the power of compounding interest.

Perhaps more importantly, we need to instil in our children good values in life so that they can be good custodians of money for the future generations.

Hopefully, this article serves as an important reflection journey for new parents about their hopes and fears, and leaves them feeling more empowered for the future.

Learn about the power of passive investing, and whether you should choose dollar-cost averaging or lump-sum investing.

Next on the Endowus Fin.Lit Academy

Read the next article in the curriculum: Sustainable investing for a better future


This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. It is recommended that you seek financial advice as to the suitability of any investment. Whilst Pte. Ltd. (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

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