6 Important Money Questions New Parents Must Ask Themselves

Along with their adorableness, babies can also stress their parents out. Besides sleepless nights and their first fever, they add an entirely new list of costs to family budgets: diapers, clothing, milk bottles – the list can seem endless, especially for first-time parents.

Imoney.com estimates that it will cost up to RM24,500 to raise a baby in the first year. But having a baby doesn’t have to break the bank. Here’s how you can plan ahead financially to make sure that your baby gets the best without going over budget:

Question 1: How do we save more money?

Sure, you can choose to spend money on all the extras, but they aren’t necessary. Here are some ideas on how you can save more money:

Buy less baby gear. Check out our Baby Goods Musts and Skips for an idea of what mothers have found essential and non-essential in baby’s first year.
Consider breastfeeding. Mothers that breastfeed end up saving a ton of money on formula.
Pick gender-neutral items. If you opt for neutral colors for your firstborn, there’s a better chance you can use the items again with any future children.
Go for the convertible gear. For instance, buy just a crib that turns into a toddler bed.
Embrace hand-me-down or buy used. Babies grow out of their clothes and get tired of their toys quickly. If you don’t mind gently-used baby items, check out Facebook groups like PrelovedMy and KLmomsSwapAndShop.
Take advantage of sales. Hypermarkets and baby expos often offer promotions on diapers, formula and other essential items so keep your eyes open for them. Alternatively, you can download the SmartShopper Malaysia app on your mobile devices.

Question 2: What types of insurance packages should we buy? And how might it help us save money in the long run?

According to Ravi Kumar, Senior Wealth Consultant at RK Group, new parents should consider Investment Linked Policies. It encompasses medical, life cover and savings, which are tied to a unit trust and comes with a medical card. This would help families save in the long run because from your monthly premiums, some portion also goes to the savings; this amount can be tailored on the percentages of how much goes towards the savings and on the life, medical and critical illness cover. The important point is that you are insured in every way possible so that if you happen to have a medical bill you don’t have to take money out from your savings to pay for it.

Question 3: Do families receive any tax reliefs or exemptions?

According to iMoney.my, parents are provided with these following annual assistance and tax reliefs:

Schooling assistance for school-going children (primary and secondary) – RM100 per child
1Malaysia Book Voucher – RM100 per child
Child relief – RM1,000 (only for one of the parent)
Child education policy – RM3,000 (for both parents)
Skim Simpanan Pendidikan Malaysia (SSPN) – RM3,000 (for both parents)

Question 4: How can we save for our children’s future university fees?

The cost of a child’s university fees will differ depending on the desired course and university of choice. A private university will cost more than double of a government university. It isn’t easy determining the exact cost of fees as it may change over the years. But, it’s always good to have an estimate on how much it may cost and how much you can save up until that moment. Many experienced parents have suggested investing in a promising project whether it’s real estate, a company and so on. Even the smallest investment can go a long way over the years to come.

In Malaysia, financial aid is offered to students, so new parents may feel at ease knowing this. Yet experienced parents have suggested that cutting back on the little things and luxuries can help save a lot of money for your child’s college/university education in the long run.

Question 5: Where do we need to cut back in order to save more?

Parents should start cutting back in advance, before the baby is born. For example, eating out less saves money or streaming movies is a low-cost alternative to heading out to the cinema.

When the baby is born, avoid purchasing unnecessary items. We all want the best for our kids but mothers have shared from experience that they have spent excessive amounts on baby items that they end up using only once. Breastfeeding is another tip that experienced mother’s have suggested new parents consider in order to save money – because you cut back on expensive formulas.

Question 6: Can we survive on one income?

It’s definitely a hard decision to make, to raise a family on one income. It is usually by mutual choice or forced upon as a result of layoffs and so on. But from what we’ve gathered, it’s do-able.

In order to survive on one income, couples need to have a mutual understanding on savings and budgets. A family on one income may be limited to certain things, but surviving is possible provided they understand where they might need to cut back – electricity, expensive groceries, living in an expensive neighbourhood, etc. Living on one income would mean having to save more and having to sacrifice more for the future.

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