INFLATION is a pressing issue in Malaysia, and it is impacting families from all economic backgrounds. The cost of raising a child in the country has been a topic of discussion, with many parents concerned about the rising expenses for medical care, childcare services, clothing, food, formula, and toys.
According to AIA Malaysia, the cost of raising a child from pregnancy through university education can range from RM400,000 to RM1.1 mil, with the largest portion of that cost going towards tertiary education. Childcare is the second-largest expense.
One Twitter user has gained significant attention by sharing that it can cost up to RM4,000 per month to raise a single child, not including the cost of books and toys. However, this figure may vary depending on individual circumstances.
The high cost of raising a child can put a significant financial strain on families, particularly those in lower-income brackets. Policymakers must address the issue of inflation and consider measures that can alleviate the financial burden on families raising children.
Rohani Mohd Shahir, director of Hijrah Wealth Management Sdn Bhd, points out that it was financially more manageable to raise a child in the 1980s and 1990s. “When I was bringing up my children in the 1980s and 1990s, car loan tenures were not more than five years. But now, these can go up to nine years. And credit cards were not given to just any Tom, Dick and Harry as one had to have a certain level of income,” she says.
So, how much does it cost to raise a child in the Klang Valley? The financial planners who spoke to Personal Wealth estimate that parents would have to spend between RM393,000 and RM1.3 million per child on average from birth to university graduation. The total cost would depend on numerous factors, including the area in which you live, the type of childcare facilities and services you choose and the kind of education you want for your child.
Education takes up the lion’s share of the expenses, say financial planners. The overall cost hinges on whether parents opt for private or public institutions and whether these are located here or overseas.
Success Concepts Life Planners CEO Joyce Chuah’s estimate is based on her calculations for her middle-income clients who choose private education for their children. She believes that 30% to 50% of the cost of raising a child is incurred when the child enters university as it costs RM500,000 to RM600,000 a year on average to pursue an undergraduate degree in the UK or Australia.
The cost, of course, depends on where parents send their children for tertiary education, says Chuah. “If you are sending them overseas, then I would say it will probably be about RM1.3 million in total, or half the entire cost of raising them. But if you are sending them to a local university, then it would be about 30% of the total cost.”
Chuah’s estimate is close to what a recent report found. In 2016, AIA Bhd looked at the total cost of raising a child in the country and found that it ranged from RM400,000 to RM1.1 million. The report, titled “The true cost of raising a child in Malaysia”, took into account delivery costs, schooling costs and university fees.
Chuah’s estimate of RM1.3 million (the minimum parents would spend if they choose private tertiary education for their child) shows how costs have gone up due to inflation. She says parents must bear in mind that financial implications kick off well before a child is born. Check-ups, tests and prenatal supplements are some of the things they should take note of. And for those who find it difficult to conceive, fertility treatments could be another financial burden.
“I would say it costs RM20,000, from pregnancy to delivery of the baby, provided there are no complications during pregnancy and childbirth,” says Chuah.
She adds that working parents spend RM1,000 a month on average on childcare before their little ones enter pre-school, which can cost up to RM2,000 a year nowadays. Felix Neoh, a financial adviser and director of Wealth Vantage Advisory Sdn Bhd, observes that parents spend between RM800 and RM1,000 on childcare every month. According to AIA’s report, essentials and one-off purchases would set parents back RM3,000 a month on average as their child grows.
Chuah gives a breakdown of the education costs. “When a child starts primary school — assuming books are not subsidised and parents have to pay fees and allowances as well as for transport, uniforms, events and other miscellaneous items — it would cost about RM35,000 a year on average for them to send their child to a private school. For secondary school or year seven to A-levels, the cost is between RM44,000 and RM50,000 a year,” she says.
“As for monthly costs, parents spend about RM1,000 per child before he or she leaves for university. This only covers basic physical and safety needs, which means extracurricular activities, tuition fees and entertainment costs are not included.”
If parents send their child to a private university, living expenses would cost about RM640,000 a year, says Chuah. On the other hand, it would cost RM13,200 a year to study at a local public university, says Rohani.
She estimates that it would cost RM393,000 to raise a child based on her firm’s calculations for its lower-middle to middle-income clients. This estimate is based on the child attending government-funded schools and public university for their education.
Source : The Edge
Source : AIA
The Coverage Malaysia
