Recently, Mrs Budget and I have been talking about our future kids. That’s because people around us are either married with kids or are actively making plans to have their kids soon.
Of course, for Mrs Budget and myself, we are thinking of trying to conceive only 1 or 2 years down the road, or at least 1 or 2 years after we get married.
Mr Budget chanced upon a recent article by Heartland Boy where he detailed the cost of his first born, and the figure actually raised a few reasons for concern for us.
According to his calculation, the total cost of raising his first born amounted to approximately S$41,000. Here’s the calculation by Heartland Boy (all credits belong to Heartland Boy)
S$41,000 seems like a lot of money and hence, we decided to do some budgeting on our side. To do that, we compare Heartland Boy’s figure as well as SG Budget Babe’s figure to come out with a median amount of what we need to budget for our first child.
Here’s our budgeting table:
What we did was to get the various line items and tabulate it. While SG Budget Babe suggested a budget of S$30,000, Heartland Boy end up spending S$41,000.
If we took the median amount between the low and high estimate, we will come out with a budget of S$46,000. Dividing that with 24 months to save for the money required, the savings per month required is S$1,916.67. This is quite a huge amount to save up every month!
Of course, we ask ourselves, spending S$46,000 is a bit of a luxury, and knowing Mrs Budget and myself, we will try to avoid unnecessary luxury.
So, if we were to remove some optional items from the lower estimate figures (prenatal classes, confinement food, misc items), the amount that we need to save up turns out to be S$22,350, a much more palatable budget.
Of course, even if it is at S$22,350, the savings per month required is still at S$931.25, or at S$465.63 per person.
For Mrs Budget and myself, we will most likely be using that as a guideline and be setting aside a baby fund for that. Of course, we do have our current savings now that we can use as our baby fund, and we will have to discuss how we want to do this.
Sometimes I feel like we might be overthinking all these budgeting – because if we have a high savings rate, our monthly bank balance will increase, and indirectly, our baby fund will come from our monthly savings, and we don’t have to overthink it.
So the question really is, is it better to start a separate regular savings plan for 12 – 24 months to be used as our baby fund, with us contributing S$500 monthly each?
Or is it better to just keep everything business as usual, and when the baby comes, we will drawdown from our individual bank accounts? After all, if we have a high cash in hand (baby fund + current bank balance), we can enjoy a higher interest rate from our current high yield account?
Will be good to hear from young couples with prior experiences. 🙂
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