Monday, September 27, 2010

How much do you need to have a family & live comfortably?

I was just wondering how much a typically Singaporean needs to earn in order to survive comfortably. The government is asking us not to be perfect and to have a family life (which includes 2 kids) as soon as possible. I am wondering how it is even possible to have all these without the necessary thought to the financial expenses involved. How much does a Singaporean need without kids?

Let's run through some of the expenses involved:

1. Housing - $750
2. Insurance - $500
3. Parents - $500
4. Food - $500
5. Transport - $200
6. Entertainment - $200

Total : $2,650

Riddle: How many kids do you see in the pic above?  Answer: two 

That amount of money is based on a typical single with housing (4-5 rm resale), with no cars and no kids. Let's just round it up to $3,000. I've no idea how much you need to raise a kid, but my guess is that at different levels, different sums of money will be needed. Initially you'll need cans of milk powder and diapers, then you'll progress to toys, books, clothes and shoes, then it'll be tuition fees, school fees and enrichment fees and so on. I don't even know how to begin calculating.

But I think a safe guide will be at least twice the amount of money calculated i.e. $6k for household income. I think with $6k as a household income, it'll be a life where you can afford to spend a little now and then, but on big purchases, you'll still have to deliberate and think if your year end bonuses allow for it. The occasional trip overseas will be to nearby SEA countries (think thailand, M'sia, Indonesia) instead of lofty places like Europe, Australia or USA.

What about retirement? With 6k combined income, I think there's not much left for retirement in the CPF account. I think most would have to be spent on education for kids, as well as for the mortgage payment for housing loans. Is a car possible? Maybe...a small family car, nothing luxurious, nothing fanciful, but it'll be extra load to the family. Better make sure both are gainfully employed because if anyone got retrenched, then the hardship will be felt immediately. I doubt there'll be much savings that can be made based on a 6k household income.

Since both parents have to work, then a domestic helper is necessary. Supposedly there's no family support to help out on the caring part, then a maid have to come into the picture, which will add in an extra few hundreds to the expenses per month. No choice I guess, unless either the husband or wife is a high income earner who can earn more than the combined total of the household, perhaps like 8k or 10k, then one of them can stay at home to take care of the family. Then again, such arrangement will raise the risk of the family as a whole because when the economy downturns and jobs starts flying off, a retrenchment exercise is going to introduce a lot of stress to the family. At least for dual income family, one can still stand while the other retreats.

Is it a wonder then, that Singaporeans delay having kids, or don't even want to have kids? I think any responsible parent will think twice on their ability to shoulder the financial burdens of having 1-2 extra members to the family before heeding the calls of the government to drop the perfect conditions to have a kid. It's not just adding an extra pair of chopsticks to the dinning table...if only it's that easy.


AK71 said...

Hi LP,

I have always felt sorry for married couples who are rushed by their elders to have kids.

This blog post of yours has described a fundamental problem of staying in Singapore: high costs.

I have more to say but I will stop here as my unfeeling analysis might offend some. ;)

la papillion said...

One of my readers emailed me...I thought I should put it up here as well:

Hi LP,

If you have $3k while single, and your other half can chip in, say like $2k, that's about enough for 2 kids, at least by my standard.
I have 2 kids, elder P5, younger nursery, condo, car, maid, but we keep our expenses in check. I was lucky that my wife can share
the expenses, and parents not needing my support. I do pay them, but I am fortunate not to have to support them eg. medically etc.
(well at least not for now) I guess every household is different, but among our relatives, we've seen worst cases financially, meaning
lower income from both parents and supporting more children, having higher debt etc, and they get by. So my guess is if both
of you can allocate $2-3k, then that's about enough for at least 1 kid, IMHO.

Children at different stages have different expenses. I find the highest during 0-5 as things like milk power, diapers, doctors, and
in some cases nanny/childcare, are unavoidable. When reach primary school, the expenses shift to something else but at least
they are controllable.

Oh, don't forget to budget in 'house maintenance' as an item in your expense.xls. If you renovate your house or change furniture,
that lump sum has to be amortized. HTH.


la papillion said...

Hi AK,

Send me an email. Want to hear your views :)

Jeremy said...

Dear LP,
If both parents are employees drawing average income, it is not easy though still possible to raise a small family with their combined income.

Running businesses is the best way to go in terms of generating potentially unlimited income. I know of a Malay family whose father of the family is now retired in his fifties and has managed to raise up his 7 children through his courier business income. 3 of his children are still studying and yet he and his wife no longer works anymore since the whole family is living by his accumulated savings from his business which he has already closed down a few years back.

He started his business since young so has been able to accumulate much savings through the many years of operating his business that allows him to raise up a large family and retire early as well.

Just a few cents of my sharing...

AK71 said...

Don't want. Later, you publish here, I die. ;p ... haha... kidding.. you are an honourable person, I'm sure.

I rather just share with you my thoughts verbally if we do meet up in future but what I have to say is nothing new or exceptional. You would have heard the same thoughts from others before.

Not revealing too much, I will say this: To me, having children, you must like children. If you like something, you will never think of it negatively. It's all in the mind anyway. So, it's a matter of perception and rather subjective. I tend to look at it more objectively and take away the fuzzy feelings that might be involved. Such an objective analysis would be unfeeling and might even offend some. :)

Createwealth8888 said...

If you want to have kids, have them early.

Anonymous said...


Perhaps the first question anyone who want to have kids is why they want to have kids. The next question is, do you need a reason to have kids ?

Then move forward from there. Cost is definitely something that needs to be considered. Each of us will have to adjust to our own earning capabilities. Cannot afford 4 or 5 room HDB, go for 3 room. There will have to be compromises along the way. It's just like some who die die also must have a car. They will have to sacrifice on other things to own the car.

Having said all that, my wife and I still decided not to have kids for our own reasons even though we can more than afford to based on your calculations.


ck said...

i was updating my mthly financial PL sheet and really felt demoralized over it.... despite i dont travel, dont aim to geta LV bag, dont plan to dine in luxury over the weekend... my mthly salary is just enough to cover household expense, daily allowances which is closedto 65% of my income..

Remaining goes to savings... whihc i really felt it's quite pathetic (especially so when i'm already saving all the luxury items/pleasure yet money still not enough)!! ideally, i want to save half of my salary and split that into investments & etc..... with this, it just dont support my hubby & i to have any kid at the moment ...

is it the standard of living in sg has really grown or is just that i dont how to make use of opptnty to grow passive income ? this really beats me.. how does the young couples could plan to have long/multiple long hauls trips, just doing what they like & yet planning for a kid before 30yrs? >

Musicwhiz said...

Having kids is more than the money; as I've heard many say. Well since I've had a kid, it's really true. My girl seems to surprise me in so many ways I cannot even imagine; so this kind of joy and laughter is, to me, priceless.

Of course, for those who don't fancy kids, to each his own. But for those who like/love kids but are put off by the $$, I still say please try to find a way somehow to budget; and don't wait till age catches up with you and it's too late.

For a family to survive in Singapore, frankly you don't need that much. Unless the person who emailed LP to say he has a condo, cars and maid yey can get by; I think most people can get by without the condo and car (maid I have lah I admit cos I have a child); so a family can really have that much more disposable income and savings should you choose it.

It's a matter of choice. We all have to live with our decisions. Just make sure they do not get us into a load of poo.....:)


la papillion said...

Hi Jeremy,

Wow, running a business is definitely not something everyone can do. The risk reward is quite extreme actually.

Actually for Malay family, they hve very strong family support network. It's something that we can all learn from. Chinese have very nuclear family and the need to have 'face' prevents us from seeking help around...

Stereotypes ya? haha

la papillion said...

Hi AK,

Sure, np :)

la papillion said...


Ya, definitely before age 35 for me. Maybe wait 1 yr or so after marriage, get used to each other then talk about it.

la papillion said...

Hi Ali,

I agree, you have to sacrifice something to get another. I'm just saying some people do not have an inkling of what they are sacrificing before committing.

That's utterly irresponsible.

la papillion said...

Hi ck,

Perhaps these couples didn't plan too far ahead? In a way, they are having fun now but will have a harder time in the future?

No point speculating on others, I suppose.

I think if work doesn't give one the income needed, then perhaps some other means of securing more money had to be sought. Investments? side line? Of course we can also reduce our expectations.

la papillion said...

Hi mw,

Good advice mw :)

Just want to ask you who wants the baby more? You, your wife or both are equally enthusiastic?

Anonymous said...

those who fall in love with their heart will end up marrying each other. those who fall in love mentally will probably still thinking the pro and cons about marriage. Having kids is the same. Will I and by husband be $120,000 richer by now if we don't have our set of twins of 9 years old. This is only a budget of $1000 per month for both of them irregardless of their age. a lot of parent will agree that this is a conservative amount.


PanzerGrenadier said...


The costs of having children are high upfront. You have to first factor in the maternity charges (assuming is natural birth without caesearean and epidural etc) can be $4-10k depending on what is the package and how many nights you stay.

The other big lump sum costs are confinement nanny (typically $1.8k a mth for 1 mth)

First two years, costs of diapers, infant formula and infantcare (if you don't have maid/parents to help take care when both spouses work) is astronomical. Costs of infantcare is $1.2 to $1.6 before MCYS subsidy of $0.6k. Hence, have to fork out $0.6k to $0.8k and we are talking about basic run-of-the mill unbranded child/infant care centre.

Childcare is net $300-$600 (depending on quality. Mid range is $400ish per mth after MCYS subsidy of $300 for full-time working mother.

Medical can be another killer. Pediatric doctor consult is $40-50 + medicines so average bills can be $60-80 range easily each time.

Supplements can cost $1 a tab (e.g. certain brand of probiotics) etc..

Bottom line, having children can cost a lot but it's our opportunity to have the next generation live after us :-)

Be well and prosper.

Anonymous said...

I rent out two common rooms HDB total S$1300 per month, and basically I saved 100% of my salary as the rental can cover all my expenses .. You may want to think about it

la papillion said...

Hi Bolt,

1000 per month seems do-able :) Actually I'm more worried about the duties and responsibilities than the financial burden. I'm just discussing only the financial part of the eq in my post :)

la papillion said...

Hi PG,

Thks for giving me such a good breakdown of the figures! I can keep it as reference in the future :)

la papillion said...

Hi anonymous,

Don't think I would want to rent my rooms out. But thanks for the suggestion!

Createwealth8888 said...

Married with kids or not?


Top Mutual Funds said...

This blog post of yours has described a fundamental problem of staying in Singapore: high costs.

Musicwhiz said...

Hi LP,

I think it just happened! Haha, we were both sort of trying for some time liao, so oh well..... :)