I have brought up the topic of having children and what a pragmatic attitude towards having children should be before. In an expensive country like Singapore, I believe that having a healthy dose of pragmatism is even more important.
For young couples, it could seem like the most natural of things to spend money freely, giving the best they could to their children. However, it might be a good idea to hold back a little.
Now, before anyone protests, I am not suggesting depriving children of necessities. I am suggesting not depriving ourselves of a comfortable retirement!
I shared a story in an earlier blog post before:
A reader discussed with his wife on whether some of the enrichment classes they sent their two children to were necessary. He knew they were spending a lot of money on such classes but he was surprised at how much they actually spent. So, apart from classes which were deemed essential, lifestyle classes such as tennis lessons were axed. This helped them save about $600 a month.
From: How to have a comfortable retirement?
$600 a month means $7,200 a year. Let us assume their children were to take classes for 6 years, it would amount to $43,200!
Now, imagine if they were to do a CPF Minimum Sum Top Up (limited to $7,000 a year) to enjoy a 4% risk free rate and income tax relief at the same time.
That would go some way to ensuring retirement funding adequacy. Want to upsize $100K to $225K? AK shows you how and with some music to boot: here.
Often, whether decisions are good or not will become clearer after some time. Hindsight is always perfect, isn't it? So, spending freely on children now might seem like the natural thing to do but, in our old age, we might just regret it.
In an article in MoneySmart recently, a Mdm Ang who is in her 60s complained about spending too much on her 3 children in the past. She and her husband didn't want their children to be saddled with huge study loans and paid for their tertiary education.
Mdm Ang complains that her children are so wasteful and take everything for granted now. "I should have used the money for my own retirement," Mdm Ang said. "My childen don't even appreciate the sacrifices we made for them."
Another senior citizen, Mrs. Tan, 60, said that she and her husband spent almost $1,000 every month, sending their daughter to all types of classes, from ballet to abacus to piano. They don't even have a piano at home anymore.
Although thinking about children as consumption items might sound unfeeling, I believe that a dash of pragmatism is helpful.
Like with all consumption items, we want to avoid over-consumption which inevitably will always set us back financially.
1. Married with kids? AK shares 5 steps.
2. What is our attitude towards having children?