Wednesday, March 06, 2013

Cost of raising a child

Here is an estimate made by Ryuu Shun Hayashi 

Food - approx $400 a month.
Transport - approx $200 a month.
School fees - approx $500 a month (from primary which is cheaper than this to uni which is much more expensive than this).
Housing - approx $200 a month if two children share a room, in terms
of cost difference between 4 room and 3 room flat divided by number of years.
Miscellaneous - medicine, clothes, computers, interests, lost income due to child sick leave etc - approx $500 a month.

Total cost - $1,800 a month ish.

$21,600 a year.

For the 25 years that they'll be under your care, that costs $540,000 per child. I estimate I cost my parents about $400,000 in total so far, costs were lower previously. And I never took tuition classes, but still ended up near the top tier of the A levels. Tuition isn't necessary - you can do a lot better than it for free by simply bringing your children to the library often when they're young, and inculcate a reading habit. There's no better way to teach a child than to teach a child how to learn by himself/herself. I used to give my mom quite the headache by reading 32 books every week - weekend trips to Queenstown community library and all that.

But to be safe you'll need to budget S$600,000 to take care of a child if born today - and this is WITHOUT budget for tuition classes.

If only one parent works, and earns about $3k (or if both work and earned a combined amount of 3k), that's 36k a year. Deduct expenses, the most frugal people can save about 20k a year under these conditions. It takes 30 years to fund one child by one parent. Don't forget you still need to spend on the wedding and on the HDB flat, and you'll need money to take care of your retiring parents as well (or rather, you should need money to take care of them - please don't be an ingrate to them), as well as save for your own retirement. That puts the maximum practical number of children for a couple with one working PMET parent (or 2 blue collar workers) as exactly 1. The maximum practical number with two working PMET parents is 2.

Is it any wonder that few people have more children than 2? Until the income divide is fixed by the State, there will be no increase in birth rate. It is simply impossible to come up with enough funds to safeguard everything even with prudent investment on current pay to support more than 2 children. The only way you can have more, is to cut back on something else - risk your own retirement and put yourself at the mercy of your children or stop taking care of your parents - and neither is a good option.


hhw said...

I do not agree with the author's estimates. I estimate that the cost to be half of this amount at $300,000, assuming a local university education.

I speak from experience of being a parent of four children, the youngest already 17 years old.

However, even this figure is a burden for families with lower income.

Nevertheless, I do not think this is the main reason for many families deciding to have one one child or even no children.

I feel that the three main reasons for this decision.

Firstly, it is simply not emotionally fulfilling. Most already feel that the Singapore is a stressful place to be in. Why would you want to bring another into this world to suffer?

Secondly, it does not make economic sense. There is expected to be only a very small chance of any economic return. Observing around, one most often sees the situation where children do not support their parents economically and emotionally once they have grown up. Thus, it is not high costs per see but bad return on investment.

Thirdly, some people used to want children as an extension of themselves in terms of culture and believes. The more traditional expression of this used to be the need to "pass on the family line". Nowadays, influences outside the family (like the internet, friends etc) that children very often have very little cultural and values in common with their parents. Thus, even this need cannot be met by having children.

Why have children?

yujuan said...

The best way is for young couples to procreate either one or two children, too obsessed with the costs would scare the daylights out of them, putting them off having even one child.
Our mother was very productive, and had a tough time bringing us up.
When her youngest son married, she told her tales on how she struggled with the costs of rearing her brood.
This son was quite alarmed and put the baby making machine on hold till the wife was in her mid thirties, then hesitantly had one child. When economic conditions improved, the wife tried for another child, but her machine suddenly stopped functioning for no reasons, and now quietly blamed her mother in law for her scare tactics.
Motto, go ahead and make babies, you can't predict the future.

veronika said...

Children are not investments.

Having them is the result of two people who share same values and love for one another.

Do not have children if ever the thought is to have them take care of the parents. Yes, filial piety is an asian value but its not suppose to be an investment.

Costing everything that we do in life is only for accountants. My typing a comment here is also a cost to me and to anyone who spends time reading it. Life becomes nothing more than measurements in monetary values.

Children is the result of love.

Renu Choudhary said...

We have two daughters and our costs in the first year never came anywhere near this figure. Baby paraphernalia is used so little as infants grow so quickly, everyone we knew was continuously handing stuff over to their friends whose children were a few months younger. In actual way there is no limit to spend the money in the cost raising child. It's too difficult and i am facing because i have to complete every wish of our children

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