Some parents think it costs $2k a month to raise a child

Source: Straits Times
Article Date: 02 Feb 2025
Author: Tan Ooi Boon

Overseas education has long been viewed by many parents as a luxury, especially when Singapore’s own universities are already ranked among the world’s best.

Some couples put themselves under undue financial stress because they set the unfeasibly high target of providing $2,000 or so a month in outlays for each of their children.

They believe that over $500,000 is needed to raise each child from birth to age 21, or $1 million for two children, a sum that is surely out of reach for the average household.

No wonder a recent survey by insurer Singlife found that more than 40 per cent of people in Singapore believe having a child will delay their retirement age by 14 to 15 years.

As a result, about 50 per cent of those without children even said that they would avoid becoming parents, while 80 per cent of those with at least one child said they would not plan to have more.

Even if you go by legal benchmarks of child maintenance for divorcing spouses, the award of $2,000 or more a month for each child is usually made only if the parent earns more than $15,000 a month.

Even so, awards are made to ensure that the children are least disrupted from their accustomed lifestyles and this means that parents who earn, say $6,000, are seldom asked to set aside a third of their income just for their children’s expenses.

While college-going children are expected to need more support from their parents, allocating more than $50 a day for a school-going child is certainly a luxury deemed extravagant for the average parent.

Parents should not neglect their needs

Some parents might like to boast that they do not put a dollar tag on their love for their children, but spending beyond their means can certainly land them in dire financial straits.

In perhaps the starkest reminder of over-indulgence, a retired and divorced couple ended up in the High Court in 2024 to fight over the reduction of $600 in monthly maintenance because spending over $600,000 for their children’s overseas education left them cash-strapped.

To make matters worse, their son and daughter were not in touch with their parents, leaving the judge to rebuke them for vanishing when they were needed most.

In another case, a retired couple had to sell their only investment property, which they had bought to earn rental income for their retirement, because they were also cash-strapped after paying for their son’s overseas education.

Overseas education has long been viewed by many parents as a luxury, especially when our own universities are already ranked among the best in the world.

It is reasonable for even the best parents to make plans based on their affordability, such as saving enough to pay for their children’s studies in tertiary institutions here only.

After all, the children have to do their part too – if they aspire to study overseas, they should work harder to earn scholarships to pay for it themselves.

What parents should do

Even as parents save and provide for their children, they should take note of their own needs, such as by saving more for themselves and cutting down on non-essential family spending.

For instance, it is not necessary to take the family on an overseas holiday every year if it means reducing your own savings or, worse, using your credit cards to fund it.

If you have not done your sums to provide for a good retirement, you can very well run out of money just a few years after you stop working.

At the very least, pay closer attention to how the Central Provident Fund can help, because those who set aside $426,000 as their retirement sum when they hit 55 now can receive about $3,300 a month after 65.

If you and your spouse have such retirement plans, both of you can enjoy a very decent retirement income of more than $6,000 a month.

The lesson here is this: It is always better to be the one with the money because you can still choose to splurge on your children or grandchildren if you have planned well for your retirement.