Published: May 28, 2021 | Updated: June 14, 2021 | Posted by: Moneymax | Personal Finance
The COVID-19 pandemic is currently fueling a lockdown baby boom due to limited access to birth control and more time for couples to stay at home and be together. Last year, a study led by the University of the Philippines Population Institute (UPPI) and the United Nations Population Fund (UNFPA) showed that the total unintended pregnancies in 2020 may reach 2.56 million, and that may even rise this year considering the continuous implementation of restrictions for travel and mass gatherings.
Although the signs you’re ready to have a baby are clearly manifesting amid the lockdown, it still pays to know the real cost of raising a child in the Philippines, so you and your partner can prepare financially and ensure you’re providing for all your family’s needs.
Note: The child-rearing costs in this article are just estimates to give parents in the Philippines an idea of how much they should budget every month to cover their child’s needs. The actual cost of raising a child varies from one household to another based on different factors.
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Monthly spending varies from one family to another and from one child to another. But here are a few considerations and average estimates you might want to check before jumping into the baby boom bandwagon.
Not many of us own a home to raise kids. But, ideally, you should have your place to either rent or pay off before having a baby. You wouldn’t want to get a bedspace for as low as PHP 2,500 to accommodate you, your spouse, and the baby altogether.
The range of housing cost provided above covers the monthly minimum rental fee for a studio apartment or a Pag-IBIG housing loan. Rent costs differ depending on the location, the number of rooms, and amenities. If you opt for a condominium somewhere in Metro Manila, you might want to set aside at least PH15,000 for rent or loan amortizations for a studio or one-bedroom apartment.
Growing children may need to have their rooms for privacy, so consider renting or owning at least a two-bedroom home.
Most employers now adopt the work-from-home scheme. Check out if this set-up will be permanent. If so, plan to move to the province for cheaper rental and transportation costs.
If you plan to stay in the metro, look for homes a little farther away from the central business area or in the suburbs (e.g., Bulacan, Cavite, Laguna, Rizal, etc.). Homes in these locations are a lot cheaper and bigger than those offered within or near the business district.
How much you’ll spend on food depends on the age and the number of kids you’re raising.
For example, the average cost of formula milk for one child per month is PHP 4,000. This should be included in the budget for kids from birth up to 5 years old. Of course, it’s a different story if moms would opt to breastfeed their babies—a wise move in this time of crisis when most people are advised to stay at home.
For the same age bracket, parents should also include spending on vitamins and supplements, baby food, and family meals where they could be a part of as they grow up. Once babies no longer drink formula milk or breast milk, they can now eat what most adults consume. You can budget PHP 80 per meal for each adult in the household and around PHP 50 per meal for each child.
Breastfeed your baby and cook food at home to reduce the food cost by as much as 50%. Food deliveries are priced up to three times higher than your actual spending when you cook at home.
Also, maximize your credit card benefits, rewards, and points when buying groceries. Whether for dining promos or cashback, you’ll benefit from swiping those plastics for your grub.
You might not believe it, but baby clothes are more expensive than adult clothing. You might be spending more on clothes when kids are at the age of 0 to 9 years old compared to when they are already 10 years and older.
Prices of clothes depend on the type of fabric used and the time and other resources spent when making the product. Logically, an adult shirt uses more material compared to a baby’s shirt. However, it takes more time to finish the smaller ones due to the intricacies and precisions required.
Save more on clothing by accepting or asking for hand-me-downs and buying non-branded products. For example, branded summer pants for little girls can cost up to PHP 450, yet you just need to pay PHP 150 for unbranded ones.
You can also trim your budget when you buy from garage sales, discount stores, and thrift stores. Join barter groups where more people are willing to give away decent clothing and other stuff in exchange for food and grocery items.
Although you can have the privilege of including your dependents in your health maintenance organization (HMO) package benefit at work, you still need to prepare enough funds for emergencies.
In this time of crisis, healthcare is a reasonable add-on to the entire cost of raising a child in the Philippines. Most hospitals are full, and you might need the help of a specialist whose professional fee costs more than someone from an HMO-accredited hospital. Parents should at least save 8% of their monthly salary for their children’s health care.
Consider your child’s health condition when saving up for healthcare. Some children are born with medical complications while others may have special needs.
Prevention is always better than cure. Look for free vaccinations offered by the barangay health center in your area. Most barangay health workers will notify you once vaccines and medicines are available.
It also helps to provide healthy food for children at home. Do away with preserved breakfast and junk foods. Try preparing homemade merienda that are healthier and even cheaper.
Medical emergencies also take a huge portion of your money especially when these involve kids. Explore the best emergency loans and other ways to borrow money. These are better choices compared to loan sharks that slap borrowers with hefty interest rates and loan fees.
Child care services are necessary when you decide to go back to work after giving birth or even if you work from home and you can’t efficiently manage your time. Childcare services may cost as much as PHP 10,000 depending on your arrangement with the nanny or caregiver. An all-around stay-in helper may be paid at least PHP 5,000, though experienced nannies may require more.
On the other hand, education can be very costly, especially considering the shift to distance learning. COVID-19 has redefined the cost of raising a child per year. Books are replaced by modules, and an internet connection that takes a monthly fee of PHP 1,500 is a must. Things get more expensive if you hire a tutor to help kids with their projects and homework.
Young parents should start building their child’s tuition fund as early as possible. You and your partner can plan a savings strategy or invest a certain amount in a small business. Some investment vehicles also include educational plans, mutual funds, Unit Investment Trust Funds (UITFs), stocks, and Variable Unit Life (VUL) insurance.
Smart parents can also take advantage of distance learning for them to choose more affordable schools since most educational institutions employ the same digital teaching and learning strategy.
Considering all the factors mentioned above, raising a child in the Philippines from birth until the legal age of 18 requires at least PHP10,000 each month or PHP 120,000 a year. That means parents should be earning as much as PHP30,000 each or PHP 60,000 combined per month to provide for their child’s basic and emergency needs.
Here are a few ways to future-proof your child-rearing journey:
Set up a baby account and start saving. This could be a regular savings account that requires only a minimal initial deposit amount. You can set it as a baby account to fund your needs from pregnancy until your child grows up.
Review your current budget and make adjustments to reduce spending on non-essentials. You may consider canceling your gym memberships, subscriptions, and other expenditures of this sort. You can use the money to start building your baby fund and help cover the estimated cost of raising a child to 18.
Take time to evaluate your insurance coverage. You might be missing some benefits, or you might find something you can maximize to save more money. Government contributions are mandatory, and these come with maternity benefits. Visit your accounts and check whether all your contributions are posted to ensure you get the benefits you’re entitled to when the baby comes.
Related article: Starting a Family? Consider These 10 Family Insurance Types
The baby boom trend is a painful reality for those who did not plan their pregnancies. Couples should learn the art of balancing love and money and planning the future of their family. Filipinos, in general, should start considering financial planning and learn more about financial tools that could help them ease the impacts of any crisis ahead. Filipino workers are expected to get a 5.6% average salary increase this year, but this might not be enough to finance a child from birth up to adolescence.
If you’re currently experiencing financial difficulties or if your job is not as stable as it used to be before the pandemic, then consider deferring your baby plans until we all get out of this crisis financially strong. However, if you and your partner are already prepared for the cost of raising a child in the Philippines and you’re financially healthy to welcome a newborn, then start building a family and make your life better with children around.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.