The Biggest Budgeting Decisions To Make As A New Parent
There will be many new expenses you’ll incur as you welcome the birth of your child, which can often be incredibly stressful. My tip? Focus on a few major decisions with the most impact, and cut yourself the slack for the rest
By Dawn Cher -
I thought I’d finally mastered adulting, and what it means to plan for my own life and future (retirement).
Then I became a parent, and suddenly, I had to make a lot more decisions than I had anticipated. With a lot more expenses, my budget also quickly shot up and it was incredibly stressful trying to save on every single item.
My mental health was on a downward spiral, and I felt overwhelmed all the time. Until one day, when I realised that I’d be better off focusing my energy on a few big decisions, and cut myself some slack for the rest.
These are typically expenses that you will have to pay for every month without fail, hence it is worth taking the time to think through them properly.
Here are some of the key budgeting decisions that will have the biggest impact on you and your family:
If you were blessed with ample breast milk supply, congratulations; you can save on having to spend on formula milk.
But for the rest of us (myself included) who aren’t so lucky, be prepared to spend on at least 50 tins or more.
In my case, I was a low-supply mother and no matter what I did to boost my milk, I could only yield 30ml - 80ml every 3 hours. My daily output of about 250ml was barely enough for my baby, so I had no choice but to supplement their feeds with formula.
Both of my children ended up finishing 1 tin every 10 days, so I needed to buy 3 tins every month for each. This was how much my elder child (who turns 5 this year) has consumed so far:
After 2 months of paying for formula milk, I realised that being savvy on just this one decision – on which formula milk brand to use – could potentially save me hundreds, if not thousands of dollars, over the next few years. That’s why I spent hours at the supermarket studying and comparing between the different brands available. See the results of my work here.
If you choose a brand that costs $30 per tin (like I did), that’s $2,880 over 4 years.
But if you go for the more expensive brands at $60 - $70 per tin, you’ll be paying at least double.
The brand I decided on - NatureOne Dairy - was $30 cheaper per tin vs. the brand that I had initially been feeding him since Day 1 at the hospital. As a result, that single decision has saved me $2,880 over the last 4 years… and my child hasn’t even weaned off formula yet!
You can potentially save even more than I did if you are willing to switch your child to fresh milk after they turn 1, although that comes with some minor inconveniences that you will have to plan around (such as having to warm up the cold milk and dealing with much shorter expiry dates, etc).
But if your objective is to save money (or reduce reliance on formula milk), then switching to fresh milk after the first year will cost you an estimated $2,614 over the full 4 years.
At $2,614 vs. $2,880, the switch to fresh milk could easily save you a couple of hundred bucks more. And if you switched out from drinking a more expensive brand during the first year, that’ll be more than $1,000 saved.
Another significant consumable to think about would be your choice of diapers for your baby.
The cheapest would be cloth diapers, but I have zero patience to wash and dry them (especially when the baby does a major poop), so that was not an option for me.
As different brands provide different quantities in their diaper packs, the trick is to calculate how much it’ll cost you per piece. Here’s the comparison I did for my firstborn.
But not diapers are made the same. I initially made the mistake of going for the cheapest diaper, only to regret it later on when I discovered it caused painful rashes on my baby’s bum. What’s more, I realised cheapest did not translate into cheapest per month, because its lack of absorbency was causing us to change diapers a lot more frequently than we would have liked to.
In the end, after doing my research and testing out 17 different brands, the brand I chose was one which gave me the cheapest cost per day, and without any rashes for my child.
This single decision saved us $0.50 a day, which has translated to about $2,000 saved over the last 4 years!
As you welcome a new life, you’ll want to protect it as well.
This includes financial protection against potential hospitalisations, accidents, childhood viruses like HFMD, and more.
Depending on what insurance policies you take up, you could be spending anywhere from $250 - $1,000 every year per child on just pure-protection plans alone.
Some parents also choose to take up an endowment or investment plan to save towards their child’s future university fees.
Again, taking some time to review and choose the best plans for your family - and your budget - can translate into thousands of dollars saved over the next 21 years (or until your child turns financially independent).
Once your child turns 1, you will likely have to decide which preschool you’d like to send them to.
Preschool fees can differ by a large margin, so your choice here matters.
Monthly school fees can range from as little as $700 to $4,000 a month before subsidies.
In our case, we get a $300 monthly basic subsidy so our child’s childcare costs us slightly under $500 a month.
In contrast, our second option would have cost us $1,200 each month, so making this decision saved us another $8,400 a year, or $33,600 in 4 years!
Another friend of mine, who recently switched her child out of a branded preschool to MOE Kindergarten, ended up paying this:
That single decision alone saved her close to $19,000 in school fees each year.
Of course, if you send your child to extracurricular activities such as sports or music classes, be prepared to set aside more of your budget for them.