The birth rate is Singapore has been on the decline, but that’s not breaking news. The reasons for not having a child are plenty. Whether it is struggling to find financial stability or placing greater priority on career growth, there are a myriad of reasons why people forego having children. However, the most underlying theme for all of these reasons is money. Having a child is expensive anywhere, but it can be especially costly in cities like Singapore. So how much does it actually cost to raise a child in Singapore? We break down the expenses below.
What is the Total Cost of Raising a Child?
Not including healthcare, new housing or additional insurance costs, the first 21 years of your child’s life can cost an average family approximately S$435,707. Thus, when comparing two identical families, the family who chooses not to have a child will save an average of S$20,747 per year for what would have been the first 21 years of the child’s life. Even with the government’s Baby Bonus Scheme of S$8,000 per child, this sum still amounts to over S$428,000 over the course of childhood.
It is possible that a couple can spend modestly and save money on having a child. For instance, if they qualify for the maximum government subsidies, has familial help while at work and doesn’t contribute to university tuition to see total costs decline to less than S$100,000. However, considering all the things we did not include in our calculations, that figure can still easily surpass our approximation. Lastly, if the couple doesn’t upgrade their home, they can save an average of S$150,000 from that alone.
This is not to say that you will be better off financially if you choose to not have kids. A child can bring value to a family that is simply not quantifiable. Rather, this article can be used as a hypothetical breakdown for curious couples who want know whether they can afford to give a child the life they imagined for them. As with most hypothetical scenarios, these costs are aggregates of the status quo and will not reflect everyone’s individual situation. Your cost of raising your child may be more or less than the costs calculated above.
To get our calculations, we used publicly available data to examine the top non-negotiable expenses every parent must consider to ensure a healthy and happy life for their child. These costs included childbirth, education, housing, food, clothing and travel.
For healthcare, we included prenatal expenses and basic delivery costs. We kept the S$3,000 prenatal expenses standard but adjusted the delivery fee to reflect the lowest possible bill at a subsidised B2 or C ward to a private hospital ward. The estimated bill at KK Women’s and Children’s Hospital was around S$1,500 for a B1 ward normal delivery with no complications. On the upper end of the spectrum, we found that the average out of pocket costs for private hospital delivery was around S$4,909 for a normal delivery. Healthcare is tricky to calculate as there are many factors that can change pricing, including fees for different doctors, type of delivery, complications and whether or not the family chooses to get maternity insurance.
For education costs, we looked at school and university tuition and fees, enrichment classes and infant/child care programmes. Our low-end figure assumes that the couple would receive the maximum subsidy for early childcare, the child gets into university on a full-ride scholarship and the child does enrichment classes at a community centre. On the other hand, our high-end figure looks at no-expense spared education, consisting of multiple private enrichment classes per week, a medical degree path and no subsidies (i.e. the household earns more than the qualified amount).
Housing and outside help were calculated in a similar manner. Our low-end housing cost estimate assumes that the couple would not move to a bigger flat. Due to constraints, we ommitted calculating fringe costs associated with home purchases such as interest rate payments, grants and loans. Similarly, outside help such as nannies and FDWs remained at zero at the low-end because in the best financial scenario, the couple would utilise the help of their parents while they were at work. On the upper end, we kept the costs the same as for the median expenditure because our assumption for this study was that the couple is already living together and would only need to pay the extra amount to upgrade to a bigger home.
Travel, food and clothing were calculated based on the lowest possible expenditure (taking the spending on the bottom quintile of the population) and the highest possible expenditure (upper quintile). We used a basic calculation to estimate the total expenditure over the first 18 years of a child’s life by finding the expenditure per person in the average 3.4 person household. With that figure, we found the annual expenditure for that person and then multiplied it by 18. This is an overly simplified estimate as children usually take up less resources than parents—clothing can be cheaper and food can be shared. Given data limitations, we were also unable to account for household economies of scale, in which families are able to reduce the marginal cost of additional children by purchasing food in bulk, for example.
Having a child also lends itself to indirect costs. These range from everything like higher insurance premiums, new insurance obligations (e.g. life insurance), utility bills to lost wages if a parent chooses to stop working to take care of the child. These costs are harder to calculate but are necessary to consider when deciding whether or not you can afford a child. We did not include these in our study as they were outside our scope of calculation.
Images: 123RF.com, Unsplash
Text: Anastassia Evlanova / ValueChampion