Having a baby is one of the most amazing experiences in life but until the little bundle of joy arrives, new parents always underestimate what they've got themselves into. Not only that, they are surprised at how much it actually costs to nourish and nurture this little bundle. Here are some money matters you may want to know before baby comes.
Making a baby is not all fun. It will cost you.Making a baby is not just about you, your spouse and the fun bits. There are some not-so-fun stuff to look into too. No. 1 on the list is finance because once the pregnancy is confirmed the bills will start rolling in. Pregnancy check ups at a private hospital may cost an average of RM200 per visit, adding up to RM2,500 or more during the entire pregnancy. A natural delivery at a private hospital in Klang Valley may set you back another RM3,000, while a caesarean delivery can cost about RM6,000, including a three-day-two-night stay in the hospital. Later, your baby will need vaccinations and medical care which may amount to about RM2,5001. So it may be wise to set aside a percentage of your monthly salary (eg. 20%) towards your baby fund before making one.
You may be so sleep deprived that you forget the important things.The first few months will be grueling.You may have to wake up every two hours at night, console an inconsolable baby, think up 1001 creative ideas to distract your baby - stuff that make parents realize their superhuman abilities. But in the midst of the craziness, it is easy to forget the important stuff - like buying an insurance policy for you and your spouse (if you don't already have one). That's because your baby will still need money to survive, should something happen to you or your spouse. You may also want to draw up a will, specifically, to designate a guardian to ensure your child is cared for, if anything happens to you2.
Don't buy all-new stuff because baby will outgrow them in a blinkChances are, you may have many friends, relatives who are willing to pass on their pre-loved baby stuff like strollers, cribs and clothes. You (and baby) won't be using these things for long, so if you accept hand-me-downs you may save a bundle and channel your money to where it is truly needed.
Baby costs even more as he/she growsEven though he or she is a small human being, a baby costs a lot to feed, keep clean and healthy. A baby costs an average of RM1,500 per month if you include daycare, baby food and milk for a child3. As your baby grows, he/she will require even more financing to pay for education, toys, gadgets, classes, clothes and others. To prepare for large costs in the future, such as tertiary education, a plan like HSBC Amanah Takaful's Takaful Education Plan4 is a good idea. The baby fund you started during pregnancy can now be used to fund the education plan. You can also encourage grandparents to contribute to this fund instead of buying extravagant gifts.
You may want to reconsider your living spaceEven though a baby is a small bundle, he/she takes up a lot of space. You may want to consider a larger space if you plan on having more children or owning a house, if you are renting. Based on the recent #mynewnormal survey, respondents were equally divided on this issue. Half preferred to rent saying that it would be better to rent a nice house than to buy a place they can't show off. They would prefer to buy their ideal house later when they have the money. The other 50% felt that paying rent is a waste of money and that they would buy a house within their budget5. Which side are you? Taking into consideration your growing family, home ownership provides more stability compared to renting, with no risk of your landlord kicking you out6. And lastly, of course, you will be building up equity, which you can't do with a rented house7.
Memories don't have to cost a fortuneHaving fun with your child does not necessarily mean having to buy high-end toys or a trip to expensive theme parks. For a start, think of ways to enjoy each others' company - like going for a hike, baking a cake together, teaching him/her your favourite childhood games or holding a concert at home. There are so many cost-effective ways to have a roaring good time. All you need is creativity and willingness to work at it.
Let HSBC help you manage your finances and prepare for this new phase of life. Walk in to any of our branches for a chat or reach us at www.hsbc.com.my or www.hsbcamanah.com.my