Here's what your 19-year-old should be thinking about when it comes to starting families

Parents in Singapore, we have a problem. A baby problem. No, I'm not just talking about our Total Fertility Rate, which currently stands at 1.25 babies born per female. I'm talking about the things we're doing to solve this. We're doing them all wrong. It's bad enough that the government thinks that throwing money at young couples is enough to encourage us to give birth. Now a volunteer group has decided to focus on getting 19-year-olds to start thinking of having children.

That's right, they want your 19-year-olds to think of having children.

Look, I totally understand the good intentions behind these plans. The volunteer group is targeting these teenagers because they claim "they're mature enough to think about love, dating, courtship and future marriages". Yet, at the same time, they also suggest that teenagers plan to only have kids after they turn 30, but are ignorant about the risks of late pregnancies.

These are all important messages, but like so many attempts at promoting parenthood before them, are missing the key point that your 19-year-olds should really be thinking about.

Can you afford to be a parent in Singapore?

Now, I know what you're thinking. It's really easy for us to say having kids in Singapore is just too expensive. As parents, you know it costs a quarter of a million dollars to raise your child in the first 16 years of life. Even if you're surprised by the exact amount, you shouldn't be surprised to hear that the cost of living in Singapore is one of the highest in the world.

But the high cost of living doesn't mean you should be discouraging your teenagers from becoming parents. What it does mean is that you should be helping them come up with financial goals, so that when the time comes, they will have enough saved to decide if they want to start a family or not.

But will teenagers really care about setting financial goals?

That's a great question, and the correct answer is, they will care once you tell them why they should care. So why should teenagers care? Because setting financial goals give them options they wouldn't have otherwise. Let's put it broadly - if your kids have $100,000 set aside by the time they turn 30, they can comfortably start a family, or put the downpayment for a fancy house, or go for further education. The possibilities are endless.

On the other hand, if they don't have even 10% of that amount set aside by the time they're 30, they'll probably be writing personal finance articles for a living.

But $100,000 is a lot! Why would my teen need to set aside so much to start a family?

If you're just looking at having a baby, then that's a good question. Sure, it's not cheap to get pregnant in Singapore. Just the childbirth alone will cost you at least $5,000, with the best care costing you almost $9,000. And we're not even including how much it'll cost you to get the necessary items that every baby needs. We're not even considering whether the baby will have her own room! Assuming the most budget-friendly of baby logistics, we're looking at an additional $2,500 in the first year. At least.

With the initial costs of having a baby already setting you back by around $10,000, you can imagine how much easier it would be to have that money already set aside as soon as your child reaches 30. So why do you need to have saved $100,000 before you can think of having a child?

Because there's a lot more stuff that should happen before your teen becomes a parent!

So let's put that in perspective.

At 19 years old, your teenage daughter is probably finishing polytechnic or starting university. If you're lucky, she gets into a local university which is subsidised. Even then, she should still expect to pay around $30,000 for her basic degree. The actual cost will depend on the university and course she applies for.

Say she graduates within 4 years and gets a good job, finds the person she wants to spend the rest of her life with. The wedding is going to cost a lot. So much that there's even such a thing as wedding insurance. Even if your daughter and her partner understand that the point of getting married is not to have the most extravagant wedding possible, the wedding banquet itself is probably going to set you back by at least $30,000. Don't expect the wedding guests to be generous with their ang paos.

After the wedding, the next thing to worry about is getting a property. Sure they could probably save money by staying with you, but last I heard, the cost of a psychiatrist is pretty high in Singapore. Based on current policies, your child will need to come up with a portion of the property price as a downpayment. If you're not buying a HDB flat, part of the down-payment needs to be in cash. How much? At least $30,000 for a property that costs $600,000.

In summary, that's $30,000 for higher education, $30,000 for the wedding and $30,000 for the property downpayment. Altogether? That's $90,000. Add that to the $10,000 it'll cost your child to give birth, that's a cool $100,000 you'll need to have by the time your child is 29.

But is saving $100,000 possible?

Surprisingly, it doesn't take a lot to save $100,000. Thanks to the magic of compound interest, just setting aside $700 a month for 10 years, assuming a very conservative rate of return of 4%, means that your 19-year-old will have more than $100,000 by the time she's 29.

So instead of getting your 19-year-olds to think about parenthood now, it's infinitely more productive to get them to think of how they can set aside money for their future. Because when they have money in their accounts, you'll be surprised how much easier it is to decide to have a child.

Do you think 19-year-old Singaporeans should be thinking about parenthood?

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