After having a kid, there are so many things that do change. The kids are going to alter what you made a priority & responsibilities too. Kids similarly will make you change the manner in which you manage your cash. Most people out there usually make plans for such things as formula, daycare, and diapers as opposed to their earlier lives. However, there are so many areas where one needs to make some adjustments as far as financial management is concerned right from budgeting up to life insurance & savings. One needs to do their plan carefully in order to avoid piling up baby debts. Below are ten ways in which your budget is going to change after having kids.
Costs for childcare
Daycare cost is normally expensive. It is going to vary based on your place of residence. In case you plan to continue to working even after having your kid, you should take into account for the childcare costs. In case you want one of you to remain at home as the other one is working, you will be required to make some adjustments to your budget in order to cater for the income loss from your partner. After having two kids, you might be unable to make enough money that justifies the cost of working till you get back to class. To combat with the aging population in Singapore, the Government are doing ways to encourage more couples to increase the fertility rate. Government supports the child care cost in Singapore by initiating child care cost support and subsidies.
Costs for healthcare
You should plan for the additional costs of healthcare other than just relying on your own MediShield and Medisave for your children. Most plans are going to cover your kid well. However, kids are normally prone to some childhood illnesses & it is therefore necessary to budget for the additional cash meant for visits to the doctor as well as medication. In case there are some allergies, you might at long last pay more on the formula or you might be required to cater for the extra services or the therapies in case some complications arise.
In most cases the most affordable alternative is simply adding your kid to the health insurance policy that you are under. You only have thirty days from that day when the kid was born for doing this where you are going to have everything ranging from your kid’s birth covered. For the first 1 or 2 kids, it generally implies that the monthly premium cost is going to minimize that amount which you bring home as your pay. One can make a rough estimate to their new paycheck utilizing an online calculator in order to make the necessary changes to their budget.
Setting aside funds for college
After having a kid, you are required to start setting aside cash that is going to cover the college expenses. Getting yourself out of debt might be a priority for some time; however, saving for your college expenses using a 529 plan or a similar tool might be helpful to your kid in order to enable them begin on a good start without piling up much debt. The more one saves, & the earlier they do so, the more one is going to save.
Life insurance requirements
After starting a family it’s crucial for one to possess a life insurance. Both of you should have the life insurance policy put in place in order to help in covering any costs just in case one person dies. It does not matter whether you are working or not, what is essential is having a life insurance policy which is going to help you defray any extra costs for childcare. One can similarly find a good policy which they can use to partially cover their college costs.
There are several tax benefits after you get a kid. It is possible to claim one more person on these taxes. One might similarly claim part of the childcare costs & utilize the Parenthood Tax Rebate (PTR). Once you get a kid, you might prefer to adjust the withheld amount on the check. Utilize the withholding calculator in order to determine whether you can adjust the amount that you have currently withheld or converse with your accountant.
Make some changes to the flexible spending account
In case your job gives you the flexible spending account, it is possible to take advantage of that. One might have extra money being withheld in order to cover the daycare expenses. Both of you can do this at your place of work, & it is going to make some of these expenses to come out pretax. On top of that, one might increase this amount in the flexible spending account for health in order to cover for the extra medical expenses.
Once you get a kid, you are going to eventually require more room. When your kids reach the age of going to school, you might need to relocate in order to ensure that they are schooling in a very good school that often implies relocating to an expensive location. Take your time to account for the housing extra costs such as personal loan from Easy Credit Singapore or HDB Housing Loan & determine the amount that you can manage to spend on your new house.
Ongoing changes in lifestyle
There might be extra costs & changes in lifestyle which you should account for. Things such as going on vacation or the time you normally spend on your hobbies are going to change. Some of these expenses simply translate to more money since you already have an extra person for instance purchasing an additional ticket for the plane once you are on vacation or purchases extra food once you are out there eating. The initial year the changes are going to be less, though it’s just crucial that you make some good plans for them.
Your budget might change a little bit as you are planning for extra monthly costs such as food for the kids, formula & diapers. Some other categories might be required to increase too, for instance clothing or the costs of entertainment. As the kids grow old, you might decide to enroll the kids in classes & sports that might cost extra money & you are going to budget for this also. Taking your time to begin planning for such things now is going to make it simple to change as the kids get older.