Chinese New Year is exciting for children because of the new clothes, goodies and being able to receive money (Ang Bao Money). With the collected red packets or e-Ang Baos, there’s an extra sum to “play with”. Wondering what to do with your child’s Ang Bao money? Read on for some practical ideas!
Here are some ways to use your child’s Ang Bao money + tips and tricks to maximise that moolah:
1: Discuss with your child what he plans to do with his Ang Bao money
One of the things I hope to impart to my sons would be financial literacy. Teaching children about money can start at around 5 years old, where they are able to grasp the concepts of buying things and savings. My son knows what ‘sale’ and ‘discount’ mean too – kids are learning even when we’re in a shopping mall. Besides passing the cash to mummy or daddy to keep, how about giving your child the decision-making ownership to think about what he would like to do with his extra dollars? That way, he gets to weigh the pros and cons of different options. As parents, we can learn to find out our child’s thoughts, reasoning and understanding of real-life situations too.
Jenelle’s financial literacy tips for kids: Give your child a portion to spend or save up for something that he wants and save the rest. This lets you talk through with him about his purchase decision and budgeting too.
2: Spend on experiences and learning instead of material goods
Buying a new toy or more books is an easy and immediate gratification choice. To young kids, it’s the most straightforward option because he can see, touch and feel the “prize” that he bought with his own Ang Bao money. The reality is: there’s only so much space in our homes, and kids often outgrow their toys very quickly; abandoning the old for the new. Consider spending his Ang Bao money on experiences which will create memories that will be etched in his heart and mind (and yours too!) for longer. Look out for child-friendly activities in Singapore that kids can try out, or perhaps a parent-and-child activity like a baking session. Let your child pick that fun activity that’s he’s interested in – it could be coding classes, indoor playgrounds, educational tours in Singapore or outdoor fun at Sentosa as a family!
3: Maximise your child’s CDA to optimise the Government’s co-matching contributions
If your child is under 18 months old, do remember to maximise your savings and contributions to enjoy the dollar-to-dollar matching for his Child Development Account (CDA). This is a quick way for you to earn “extra money” simply by saving your child’s red packet money.
4: Save up for your child’s education funds
As a parent in Singapore, I know that children’s education can be costly. One of the things that parents need to set aside funds for, would be for children’s tertiary education. Higher education fees are increasing; school fees and expenses differ between local universities versus an overseas education too. Don’t forget about meals, transport, textbooks and more… so, the only way to ensure you have enough for each child is to start saving early.
Jenelle’s tips for planning children’s education expenses: Did you know that there are education subsidies and loans for students in Singapore? Find out how the CPF Education Loan Scheme and MOE Tuition Fee Loan (TFL) help families buffer these costs.
5: Invest in maximising your child’s Ang Bao money
Depending on your risk appetite and amount of cash collected during Chinese New Year, investment plans are a way of giving your child a head start towards achieving a certain sum by a specific age. The idea is: the earlier investment starts, the more time that money is given to grow. Take advantage of the power of compounding – let this extra cash do the hard work for you by growing further on its own. If you’re someone with a conservative risk profile, you can consider a savings plan that provides a guaranteed return. For those with a higher risk appetite, there are other financial instruments that you can consider which includes stocks, shares and bonds. However, do ensure that you’ve done your due diligence by researching, ensure that you’ve at least 6 months of emergency funds and are able to commit long term (e.g. 5 years, 10 years or more).
6: Remind your kids to think about those who may need the money more and encourage donating his Ang Bao money
Besides family reunions and gifting of red packets, Chinese New Year is also a time to spread joy to others in the community. Take this time to remind your kids about those who may not have their family with them or are going through challenging times. The world could do with more empathy and less self-centred people and this nurturing starts from young. Share some ideas with him on how his Ang Bao money can go a long way to make a big difference in someone else’s life. Donating it to a social cause or charity organisation, is a way of stretching that cash and helping others at the same time.
Are you ready to plan ahead for your family’s future, including retirement and kids’ university fees? I’m a mother and Financial Consultant raising my family in Singapore, and I understand how challenging achieving financial confidence may seem like a distant dream. I’m just a phone call or text away to share my knowledge and experience to journey with you beyond finance.