Parenthood brings immense joy, but it also brings the sobering reality of added expenses and a significant financial commitment. In addressing the rising cost of living and the declining fertility rate in Malaysia, parents must adequately prepare to meet the financial demands associated with raising a child. From essentials like education and medical costs to countless everyday necessities, your expenses can add up quickly, making financial planning an essential aspect of parenting.
Declining fertility, rising cost of living: a cause for concern
Fertility rates are plummeting worldwide, with many nations experiencing levels below replacement. East and Southeast Asia face a significant demographic crisis, with countries like South Korea, China, Japan, Thailand, and Singapore recording total fertility rates (TFR) of 1.3 or lower. Singapore’s TFR reached a historic low of 0.97 in 2023. Malaysia’s TFR steeply declined from 2.2 in 2011 to 1.6 in 2022.
While the fertility rates among the Malay and other Bumiputera populations remained at around replacement levels, the Chinese and Indian communities have experienced a drastic drop, with rates as low as 0.8 and 1.1 respectively, placing them among the lowest globally.
The birth decline is evident, with the national numbers dwindling from 511,527 in 1991 to 444,279 in 2023. Chinese births saw the most dramatic decrease, plummeting from 102,732 to 40,249 over 32 years, while Bumiputera births also declined from 399,276 in 2015 to 344,281 in 2023.
The rising cost of living further exacerbates the situation, making it imperative that we address this issue before the fertility rates plummet further, potentially leading to severe economic ramifications. Malaysia already depends heavily on foreign labour to fill the labour shortage, and this situation is expected to continue.
Dr Tey Nai Peng, Specialist at the Faculty of Business & Economics, University of Malaya, highlights the multifaceted challenges contributing to the declining birth rates. “Rising living expenses, coupled with uncertainties in job markets and businesses, stagnant incomes, and mounting debts for some, place significant strain on young couples. As a result, many feel compelled to limit their family size, perpetuating the downward trend in birth rates. Moreover, the cost of raising children escalates alongside the overall cost of living. Factors such as geographical location, childcare preferences, and desired educational trajectory for the child all play pivotal roles in determining the financial burden of parenthood,” he says.
The cost of parenthood
According to EPF’s Belanjawanku, the funds necessary to maintain a respectable quality of life fluctuate across Malaysia’s regions. For a married couple, sustaining this standard requires a monthly budget ranging from RM3,680 in Alor Setar to RM4,630 in the Klang Valley. However, once they have a child, expenses escalate to RM4,760 and RM5,980 in these areas.
Families with two children face even greater financial demands, with estimated budgets of RM5,430 and RM6,890 in Alor Setar and the Klang Valley respectively. The 2022 median household income was approximately RM6,338 (RM7,243 in urban areas and RM4,094 in rural areas), with an average household size of 3.8. These statistics suggest that nearly half of households lived below the threshold of a decent livelihood.
Additionally, an online report calculated that the cost of raising a child from pregnancy through to university education ranges from RM400,000 to RM1.1mil, with the largest portion of that cost going towards tertiary education.
Estimated cost of raising a child
| Stage | Pregnancy & maternity | Newborn – 4 yrs | 7 – 12 yrs | 13 – 17 yrs | Pre-U/
University |
| Approximate annual cost | RM5,000-RM10,000 | RM37,300- RM48,000 |
RM8,400- RM35,000 |
RM13,200- RM46,000 |
Up to RM160,000 |
| Examples of expenditure |
Prenatal visits, hospital charges (varies if private or government), post-natal visits, and supplements |
Childcare, immunisations and check-ups, formula and food, diapers, clothing and other essentials like stroller, car seat, etc. |
Uniform and books, school fees, transportation fees, food expenses, tuition, clothes, books and toys, healthcare |
Uniform and books, school fees, transportation fees, food expenses, tuition, clothes, books and toys, entertainment, healthcare |
Books, food, transport, accommodation, healthcare, university fees (varies if private, government, local or overseas), entertainment |
*Figures compiled from https://www.akpk.org.my/estimated-cost-raising-child and https://www.aia.com.my/en/knowledge-hub/plan-well/cost-of-raising-a-child-in-malaysia.html
Why are costs escalating?
Dr Tey identifies some of the reasons why the cost of raising a child keeps escalating.
Education expenses: Education costs such as tuition fees, school supplies, extracurricular activities, and private tuitions are escalating. Parents grapple with mounting bills from preschool through higher education to secure a quality education for their children.
Healthcare costs: The expenses of children’s healthcare, including doctor’s visits, vaccinations, medications, and medical insurance premiums, continue to surge. Advances in medical technology and healthcare services intensify the financial burden of ensuring a child’s well-being for many families.
Housing and home resources: Ensuring children’s safe and comfortable living space entails higher rent or housing loan payments. Additionally, escalating costs of utilities, maintenance, and fuel contribute to families’ overall housing expenses. Studies have shown that students from homes with more educational resources, such as having their room, books, and internet access, tend to perform better academically.
Childcare and babysitting: The growing demand for childcare, driven by more workforce parents, escalates costs. Whether through daycare, childminders, or after-school programmes, childcare expenses pose a significant financial challenge, particularly in urban centres like Kuala Lumpur.
Technology and entertainment: In today’s digital era, children’s exposure to technological gadgets and entertainment options expands rapidly. From smartphones and tablets to video games and streaming services, staying abreast of tech trends entails considerable costs.
Inflation and economic factors: Inflation and the slow economic recovery post-COVID-19 pandemic profoundly impact the rising costs of child-rearing. Price hikes in goods and services as well as unfavourable employment opportunities and wages strain parents’ financial stability in meeting growing family expenses.
Changing family dynamics: Evolving family structures and dynamics, such as breakdown of the extended family, rise in single-parent households and dual-income families, influence child-rearing costs. Single parents face heightened financial strain, while dual-income households encounter increased childcare expenses due to both parents working outside the home without the support of the extended family.
Emergence of dual-income families
The rise of dual-income families has introduced a unique set of challenges, particularly for working women juggling multiple roles in the workplace and the family sphere. As female labour force participation increases, many face the dilemma of prioritising career advancement over family formation and child-rearing responsibilities.
To address this issue, Dr Tey suggests implementing more flexible work arrangements to foster a healthier work-life balance. “Such measures can alleviate the pressure on working women, allowing them to navigate their professional commitments better while fulfilling their familial duties. By offering flexibility in scheduling, remote work options, and supportive policies like parental leave and childcare assistance, organisations can empower working women to pursue their career aspirations and desire for family life. This arrangement benefits individual employees and contributes to a more inclusive and productive workforce,” he says.
What are the costs to prepare for?
However, there’s no need to fret. Raising a child from birth until tertiary education involves a range of staple costs that you can easily plan for, says Datuk Dr Zulkifli Ismail, Chairman of Positive Parenting Programme. These include prenatal and postnatal care, childcare and early education, basic needs, medical care and insurance, education and savings.
Dr Zulkifli says, “Prenatal care includes expenses such as doctor visits, ultrasounds, vitamins and childbirth classes. Postnatal expenses may include hospital bills, paediatrician visits, vaccinations, and newborn essentials like diapers, formula (if not breastfeeding), baby clothing and equipment (cots, carseat, stroller). For parents who have to return to work, childcare costs can be significant. This includes expenses for daycare, child minding services, or babysitters. Then of course there are ongoing expenses of food, clothing and personal care items for the child.”
In addition to that, regular medical and dental check-ups, as well as unexpected medical expenses should be factored into your budget, he says, along with insurance premiums. Parents also need to plan for the costs associated with primary and secondary schooling, including school fees, uniforms, textbooks, school supplies, transport to school and extracurricular activities. As your child approaches tertiary education, expenses may include college or university tuition, accommodation, books and other related costs. To plan financially for your child’s university education, you can start as early as when they are born and contribute regularly to a dedicated education or endowment fund.
Indeed, setting aside funds for your child’s future, such as college savings accounts or investment accounts, is essential for long-term financial planning. This may also include saving for other milestones, such as buying a car or helping with a down payment on a home.
Dr Zulkifli says it’s also important for parents to have an emergency fund to cover unexpected expenses, such as medical emergencies, home repairs, or job loss, ensuring financial stability during challenging times. “The 2020 COVID-19 pandemic serves as a classic example of how unexpected circumstances can cause a major roadblock in life, further highlighting the necessity of maintaining an emergency fund to safeguard against unforeseen financial challenges. By considering and budgeting for these staple costs, parents can better prepare for the financial responsibilities of raising a child from birth through tertiary education.”
Are you ready to be a parent?
According to Dr Serena In, Clinical Psychologist and Committee Member of Malaysian Society of Clinical Psychology (MSCP), some couples may look for a sign that they are “ready” to become parents but entering the journey of parenthood is a conscious choice that they need to make on their own.
“An individual should not have a child just because they feel pressured to do so by their partner, family or others. Sometimes people are afraid to become parents because they worry that they are not good enough or worry about the immense burden that comes with it; this may cause them to avoid parenthood entirely. However, those who have courageously become parents often describe that this life choice comes with incredible rewards that far outweigh the costs. Many boldly declare that becoming a parent was the best decision they made of their lives, in hindsight, even if the early days were fraught with doubts and fears,” she says.
She shares some emotional cues indicating that you are ready to become a parent: “You have a wonderful marriage but as a couple, you are starting to feel slightly understimulated or itching for more, may be wanting a little bit more company at home. You may have tried caring for your relative’s or friend’s child and have thoroughly enjoyed it, wanting or craving for a similar bond for yourself. You are also willing to make adjustments to your lifestyle in terms of finance, career, time, and energy, and make space for changes and allocations to raise a child. Last but not least, you are willing to make sacrifices for your loved ones, which will help in being prepared for the parenting journey ahead.”
“Sometimes though,” Dr Serena adds, “it starts with making a choice that you want this and then you will make the necessary adjustments as you go along. The key is to genuinely be willing to make these changes because of your goal to become a parent. That helps you to always reprioritise effectively as you go along.”
Meanwhile, Dr Tey calls for a comprehensive assessment to gauge financial readiness for parenthood by examining current income and expenses to ensure young parents can cover the additional costs of raising a child. “Young couples must establish a budget and savings plan tailored to these new financial needs. Furthermore, evaluating employment situations is critical to securing adequate parental leave and medical coverage. Finally, it is crucial to discuss one’s financial priorities with one’s partner and develop a long-term plan,” he states.
Dr Tey also underscores that preparing for parenthood as a couple can present challenges, particularly when partners have differing attitudes toward money, spending habits, and financial priorities. He elaborates, “Addressing these disparities can help mitigate disagreements when navigating the financial landscape of raising a child. Complexities may arise when there is a significant income gap between partners, hence making it imperative to fairly distribute financial responsibilities for childcare expenses and savings for the child’s future.”
Advices for future parents
Dr Serena provides some advices to couples who are planning to have a child, “Start budgeting early even before pregnancy, for example by setting aside extra savings each month for additional maternity-and-child expenses. You should also speak with supportive family members or friends who are parents and ask them to share their parenting journey and any helpful tips. Identify your main support system whom you can depend on when you need help. Attending parenting talks and reading parenting books can help you prepare mentally too. If you are still feeling unsure about having a child even after discussing with your partner, consult a professional counsellor or clinical psychologist to help you navigate conversations surrounding this major life decision-making processes.”
This financial pressure of preparing for a child, coupled with the emotional stress of anticipating parenthood, can certainly put a strain on the relationship according to Dr Serena. “Despite these challenges, however, if you are able to work together as a team by communicating openly about financial goals and concerns, seeking professional advice when needed, and being flexible in adapting to changing circumstances, you can certainly overcome these obstacles and successfully prepare for the financial responsibilities of parenthood. Couples become stronger as a unit when they work together to navigate the constant changes in the journey ahead.”
In conclusion, parenting is for the long haul and not a short-term decision. Hence, both partners have to wholeheartedly agree with the decision and are ready to work together, no matter what comes their way. Moreover, the financial implications of parenthood are vast and require careful consideration and planning. As highlighted by experts in various fields, the rising costs associated with raising a child underscore the importance of financial preparedness for prospective parents. With careful planning, determination and support, parents can confidently embrace the joys and responsibilities of raising a child. Ultimately, with a sustainable ecosystem for family building and child rearing, it is hoped that the fertility crisis can be mitigated and the nation can move forward together towards a better future.
By: Datuk Dr Zulkifli Ismail, Chairman, Positive Parenting Programme
Dr Serena In, Clinical Psychologist and Committee Member, Malaysian Society of Clinical Psychology (MSCP),
Dr Tey Nai Peng, Specialist, Faculty of Business & Economics, University of Malaya; Board Member, National Population and Family Development Board Malaysia (LPPKN); and Member, National Council on Women & Family
