Financial planning strategies for new parents
Endowus Insights

Financial planning strategies for new parents

July 30, 2022
November 10, 2021

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

According to the Ministry of Manpower figures, the median gross monthly income in 2021 was $4,680.

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 an list of costs that you would have had to incur as part of your housing needs on a monthly basis (though note that figures are estimates as of Nov 2021):

table of expenses for a new residence
Estimates as of Nov 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 total costs from infancy to 21 years of age ranging from anywhere between around $170,000 to $340,000 or even $1,000,000. The actual figure is bound to differ, owing to the myriad of factors that could influence a family’s expenses — from insurance coverage and holidays, right down to dietary 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 on the cost of raising 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.

table of monthly expenses for a 0-2 year old
table of one off expenses for a 0-2 year old

The total of these expenses can add up to almost $80,000 for the first two years of raising your child. Lifestyle adjustments as parents and Baby Bonus payouts (up to $8,000 for the 1st and 2nd child) can help, but making long term savings plans are still necessary to keep your family financially secure, especially for the later years in life when more significant costs such as tertiary education are included.

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

table of expenses for a 3-6 year old

Your child’s Terrible Twos might be over, but forking out significant sums of money for them will still carry on. 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 help 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 per class, to more than $80 per class, depending on whether they are group lessons or private lessons. Exam certifications, additional resources (e.g., ballet attire, personal instruments) would also add to the cost.

Primary school education costs (7 - 12 years old)

table of monthly school fees for primary school
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/tertiary school education costs (13 - 16 years old)

table of monthly school fees for secondary school
Source: SingSaver

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

table of Annual cost of post-secondary school fees in Singapore

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

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.

Tertiary education 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 having your children as well as elderly parents/in-laws as dependents. Beyond fire-fighting for day to day expenses, it is also important for you to plan for both your and your child’s longer term financial needs.

Traditional university savings plans or endowment products may seem attractive due to low investment risk and how payouts are structured to meet cash flow needs to pay off the 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.

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, since CPF can be used to pay for education under the CPF education 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. 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.


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.  

Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance.

Please note that the above information does not purport to be all-inclusive or to contain all the information that you may need in order to make an informed decision. The information contained herein is not intended, and should not be construed, as legal, tax, regulatory, accounting or financial advice.

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