If you have followed my blog, you must have known that I am actually a very new parent myself. My son has just celebrated his first birthday. Only after being “promoted” to fatherhoods, I got to learn that a child really takes up a lot of my time and also money.
Recently, there is an interesting post written by Xin Lu at Wisebread about the financial consideration of having a newborn baby. The article is more catered to the situation in the USA. Although it might differ in terms of currency, the other facts might similar and worth our study.
This sparks the idea of writing this post to share with you the financial side of being a new parent in Malaysia.
Pregnancy and delivery cost
The regular check-up during pregnancy is between RM50-200 per visit at a private hospital in Penang, as frequent as once a month.
My wife had to go through caesarean because my son didn’t turn his head down during delivery. I stayed in the hospital for about 10 days together with my wife and my son. To keep the story short, we spent about RM13,000 in total of hospital bill. Luckily her company covers the medical bill in case of complication during delivery, we ended up paying only about RM3,000.
Usually, a normal delivery will cost about RM3000 at private hospital. It costs a lot less if you go to the government hospital which is fully subsidised. Of course the only difference is the level of service. You may only need to pay less than RM100 for delivery in a government hospital.
Shockingly, it costs about US$25,000 for a normal pregnancy and delivery in the United States.
Maternity Insurance Coverage
In Malaysia, the normal Hospitalization and Surgical benefit insurance (a.k.a. Health Card or Medical Card) does not cover pregnancy-related hospitalization.
There are two exceptions:
1. Your company may provide group insurance benefits that covers maternity claim. Normally you can get these benefits if you are working for MNC (Multi-national Corporation like Intel etc)
2. Some lady care insurance plans especially designed for lady-related illnesses and maternity may give some minimum coverage for child delivery, neonatal death or some other pregnancy complication. But these insurance policies normally won’t pay the medical bills as charged.
It is a tradition for a Chinese mother to be confined for 30 days after giving birth. This period of time allows the mother to rest and rejuvenate.
1. Staying at confinement centre
In Penang, a typical confinement centre charges about RM2500-3500. My wife stayed at Ai Xin confinement centre at Batu Maung, Penang. They employ local babysitters to look after your baby. You will be served 5 meals a day.
2. Employ a confinement lady
This will cost about RM2800 and above. You will need to prepare a place for the confinement lady to stay. Normally she will help to take care of the baby and cook some special food for the mother. Most confinement ladies don’t do house works.
If your mother or mother-in-law can replace the confinement lady, you will be able to save a few thousand ringgits.
Insurance for the child
The most important coverage for your baby is the medical insurance. For a standalone medical card, the premium may be a few hundred ringgits. Some people like to buy the packaged plan where there is life coverage, including 36 critical illnesses, medical card plus some savings for future education.
For a healthy baby, parents will still pay medical bills for:
1. Normal sickness â€“ RM25-100. It costs more if you are seeking consultations from paediatrician.
2. Vaccination â€“ nowadays, there are so many vaccination needed to be injected into your babyâ€™s body. It causes pain on our baby and also our pocket. Roughly over RM2,000 needed to be spent on full vaccination at a private medical centre.
Of course, every thing is likely to be free of charge if you bring your kids to government clinics or hospitals.
New Tax relief for parents
With a new born baby, you can pay less tax. Several tax benefits you can get include:
1. Child relief – RM1000 (only for one of the parent)
2. Child Education policy – RM3000 (for both parents)
3. Skim Simpanan Pendidikan Malaysia (SSPN) – RM3000 (for both parents)
Refer my article about how to make use of the tax relief for education purpose for more details.
Family Protection Planning
I have had many clients who top up their life insurance coverage after they have a baby. Most will write a will or rewrite their will to include the newborn baby as the beneficiary.
One thing most parents usually neglect is to set up a family protection trust. This is a very useful and powerful arrangement in case of double tragedy (where both parents pass away due to accident).
A normal private trust cost less than RM1000. A simple will is around RM500. Financially, be prepared to spend about RM2000 one time fees for thorough protection, plus a few hundred ringgits a month to top up life insurance.
Caring for the baby
After the confinement period, you will have a new member at home. A baby needs a lot of caring. You will have to arrange one of the following:
1. Employ a babysitter
You can send your baby to the babysitter. It will cost RM550-800 for week day care only, or RM800-1200 for 24 hour care. I will prefer to have my baby sleep under the same roof with us. My baby is so cute and lovely. I wouldn’t want him spending to most of the time at other people’s home. A baby will bring a lot of joy to your family. Why would you give most of the happiness to an outsider, right?
2. Being a full time stay-at-home-parent
Some new mother will resign from work for a few years to look after their baby. This really makes sense because the first few years are very crucial. The baby grows so fast! If you go to work too early (when your baby is still asleep), and come back too late (when your baby already asleep), you will only see him/her grow longer, not taller.
3. Maid service
Another possible arrangement is to employ a foreign maid, and have a senior at home to watch over the maid. Upfront fees of about RM7000 need to be paid to the foreign worker agency to engage a maid. Please expect the maid to arrive about 2 months later. You can choose maid from Indonesia, Myanmar, Vietnam, Cambodia, or Philippines. Some experienced maids who are previously trained or experienced to take care of baby require RM700-900/month wages.
Prepare for leave from work
In Malaysia, a new mother will be given two months paid maternity leave. But there is no such leave for the father. You may need to do the necessary preparation to be away from work for quite a long while.
Another consideration is not to waste your annual leave. If you are an employee, somehow you will need to take emergency leave to bring your baby to the doctors from time to time.
Things for the baby
Since LeYoung is born, the milk powder has increased in prices several times. Some branded milk powder such as Enfalac A+ cost RM70/tin. A can only last about a week. Be prepared to spend over RM250/month for the best baby food if the mother can’t or won’t breast-feed. Later on, when the baby grows over 6 months, you can buy the “step 2″ milk powder and it will be a little cheaper.
I actually see clothes as a waste of money. If possible, get used clothes from your relatives and friends for your baby. Used clothes are not so nice-looking, but softer and more comfortable. If you buy too many pieces of clothes, most of them will be worn a few times only because the baby really grows rapidly. When your baby is 3 months old, buy the 6-12 months clothes. When he/she is 6 months old, buy the 12-18 months clothes.
There are super cheap diaper like Tesco brand, and also the most expensive branded diaper like MamyPoko. If possible, you can use cloth diaper which will save some money in long term. We actually use all the diapers mentioned above.
We use MamyPoko at night, which can absorb urine efficiently and last for 12 hours. We use the cheaper diapers during daytime when we can help LeYoung to change regularly. Our babysitter uses the cloth diapers.
I don’t know about other babies. But my son doesn’t really like his toys. He plays a new toy for a few minutes and he will be bored. What he likes the most is my iPhone and my books.
However, some toys are worth investing. Inevitably, you will have to allocate some budget for toys.
Prepare to sacrifice your own personal time
A baby is so demanding. My son needs a lot of attention. Last time, we used to work or enjoy some free time at night and weekend, but nowadays, all our non-working time is devoted to our baby.
Anyway, every minute is worth spending on your baby. You wonâ€™t realize the wonder and magic moment until you have a baby.
Do you need a bigger home?
The house we are staying in currently is a single storey terrace house. But because of having a baby at home, we felt that there is not enough space anymore. We had booked a semi-detached house at Taman Sri Damar. It is actually a downgrade of lifestyle for us because the new house is going to be very empty and wonâ€™t be heavily renovated as our current one.
Put it brief, if your current home is not baby-friendly, you might need to consider a more suitable house. You may need more rooms, more space, bigger garden etc.
Some parents also purposely move to some better neighbourhood in order to give a healthy environment for their children. Some even consider the possibility of getting into a specific well-known school. This is because the address printed on your babyâ€™s IC is going to determine which public school he/she will go to in the future.
Total cost of having a baby
The numbers below is just estimation. It is for the purpose of giving you a financial guideline if you are planning to have a new baby.
One time cost:
1. Delivery â€“ RM3000
2. Will â€“ RM1000
3. Trust â€“ RM1000
4. confinement period â€“ RM3000
Regular expenses (per month)
1. insurance for the baby â€“ > RM100
2. babysitter/maid â€“ > RM550
3. baby food â€“ RM200
4. medical bills ~ RM100
5. clothes/diapers/toys â€“ RM200
So, be prepared to have a net worth cut during delivery and confinement, and then a cut of at least RM1000 every month from you cash flow.
It is true that raising a child might cause more than a million ringgits. But is it worthy?
My answer is a big â€œYESâ€! You canâ€™t buy the happiness of being a parent. It certainly canâ€™t be measured in monetary terms.