Starting a family is an exciting and joyous time, but it also requires careful planning. One of the most critical aspects of planning is financial preparation. Starting early and having a solid financial foundation to support your growing family is crucial. However, you can begin preparing more easily by following a dedicated checklist. Find out more here!

Financial Checklist for New Families

Before starting a family, ensure that you tick off these boxes so you and your loved ones can enjoy a more comfortable and stress-free life:

1. Health insurance

The first item on the financial checklist for new families is health insurance. Medical expenses can add up quickly, so it’s essential to have adequate health coverage. Check with your employer if they provide health insurance or consider purchasing a family health insurance plan. Additionally, you can enjoy tax relief on personal insurance as mentioned in our full list of personal income tax relief for 2024.

2. Budget for baby and child supplies

Having a baby can be expensive, so budgeting for baby and child supplies is essential. Your supplies list should include diapers, formula, clothes, and furniture. Start by listing necessary items and prioritizing them based on your budget. Alternatively, you can borrow unused toys, strollers, and baby furniture from friends or relatives to save more money.

3. Emergency savings

Unexpected events can happen at any time, so it’s crucial to save for rainy days. Aim to save at least six months’ living expenses in an emergency fund to help you prepare for unexpected events like job loss or medical emergencies.

4. Education savings

Education is a significant expense in Malaysia, so it’s essential to start saving early for your child’s education. The average cost of education in Malaysia is RM18,126 to RM21,8881 per year for private primary schools and RM25,650 to RM28,7851 for private secondary schools. 

Furthermore, if you want to ensure your child remains comfortable while pursuing undergraduate education, you need to prepare a total of these funds for tuition costs and living expenses:

  • Local public universities: RM63,300 to RM70,800;
  • Local private or IBC universities: RM140,629 to RM370,100;
  • Overseas universities: RM435,137 to RM1,999,305. If your child enrols in a US university, add RM339,876 for one extra year of study. 

How to Build Your Child’s Education Funds Early

Now that you know higher education requires a steep amount of funds consider these tips to build your little one’s education fund as early as possible:

1. Invest your earnings

Consider investing in long-term savings options like unit trust funds or mutual funds, as they have the potential to earn higher returns through compounding interest. That said, it’s worth noting that these investments come with inherent risks, as is common with any investment opportunity. Timing and thorough research are crucial in making informed investment decisions.

2. Open a dedicated savings account

Many banks offer junior education savings accounts with higher interest rates than regular ones. Consider opening one of these accounts to save specifically for your child’s education. Furthermore, having a dedicated bank account will help you separate the necessary funds for schooling and other needs like groceries and healthcare to avoid any mixups.

3. Consider education insurance

Education insurance policies from companies such as Etiqa Insurance and Takaful, Great Eastern Takaful Berhad, and The Pacific Insurance Berhad are designed to provide financial support for your child’s education expenses. The support includes coverage for the caregiver’s death and permanent disability, medical treatment for international students, and bonus savings for tuition fees in the long run in each child’s age milestone.

4. Make use of tax relief schemes

The Malaysian government offers tax relief schemes like Skim Simpanan Pendidikan Nasional (SSPN) and Child Education Insurance Policy (CEIP). These schemes provide tax relief for contributions to your child’s education fund, helping you save up to RM14,000 annually, not including RM1,000 from the textbook purchase relief scheme. Moreover, the Post-Graduate Education Tax Relief exempts you from paying taxes worth RM8,000 if your child is taking an undergraduate program at university.

 

Thorough financial preparation is crucial when starting a family. Having a solid financial foundation by creating a financial checklist to support your growing family is essential. Ensure adequate health insurance, budget for baby and child supplies, establish an emergency fund, and start saving early for your child’s education. With careful planning and preparation, you can build a bright future for your family. Good luck!