Having a child is not cheap in Singapore. But the good news is, the Singapore government has implemented several policies to incentivise more couples to have children.
If that’s you, here’s how you can maximise your benefits.
Baby Bonus Cash Gift
Every child will be entitled to a $5,000 First Step Grant upon successful enrolment into the Baby Bonus scheme.
After you have registered your child’s birth at MSF’s website here, the cash usually gets deposited into your bank account within 10 working days.
Child Development Account
You will need to open a Child Development Account once your child is born, at any of the local banks (POSB, OCBC or UOB).
Next, make full use of the government’s co-matching scheme for voluntary CDA top-ups. The maximum limit for each child is shown in the table above, and the best thing to do will be to deposit fresh funds up to the limit.
For your first child, you’d want to top up $4,000 into the CDA as early as you can, so that your child ends up with a total of $8,000 in the account.
For your second child onwards, you will need to fork out more of your own savings to execute this move, as the Baby Bonus Cash Gift will be insufficient to meet the maximum co-matching limits.
The sooner you can top up to the maximum limit, the earlier you get the funds from the government, which means you’ll have more time to compound the money.
Of course, if you need the funds at any time, you can also withdraw from the CDA to pay for childcare fees and other approved expenses (see the full list here).
Considering how prevailing CDA interest rates are currently around 2% p.a., leaving that to compound over time can be a fairly attractive way to grow the money. However, this will not be enough to beat inflation, so if you are investment-savvy and intend to invest for your child, you could also use the CDA funds to pay for approved childcare expenses while investing the equivalent amount (or higher) separately to save for your child’s future.
For my first child born in 2018, we received $18,000 in total from the government. Today, any parent having their first child from now onwards can claim $24,000, which is effectively more than 30% of what we got.
If you are smart about it, start investing that earlier and watch the money grow.
Dawn Cher is a mother of two boys and the founder of financial blog SG Budget Babe. Work aside, she is proudest about having lost 20kg in a year, becoming lighter than her pre-pregnancy days. She believes in fairytales (don’t tell her otherwise!).