Your children’s Ang Baos – save or spend?

Your children’s Ang Baos – save or spend?

As the festive season of Chinese New Year nears, and your children's excitement mounts, encourage them to consider how they want to spend their Ang Bao money and introduce the idea of financial planning to them.

The season of cherry blossoms, pineapple tarts and plenty of Ang Baos (otherwise known as red packets) is almost upon us again!

For singles and children, collecting Ang Baos is a time-honoured tradition of the Lunar New Year and probably the highlight of the season (because who doesn’t like free money?). But along with the excitement of opening the money packets and counting their gains, it’s also an invaluable opportunity for you to help your child cultivate a healthy relationship with money.

Of course, inculcating good values towards saving money should be a sustained, long-term process – especially with children whose eyes and ears are always open to listening and learning. But if you haven’t started yet, Chinese New Year is an opportune time to bring up the issue of good ways of handling that pile of Ang Bao money.

Here’re some things you can consider doing with your child:

  1. Count the money together

Let your child actually handle the money as you explain its uses – that it can be a tool of good and the not-so good. Tell them that the money belongs to them. Often, younger children think of cash and credit cards as “those bits of paper and plastic” in your wallet that are seemingly in endless supply.

Explain to your child as simply as possible that money is precious, can be used to trade for nice things but also to pay bills (for say, internet and mobile phone – pick the ones they can relate to) and that you have to work to earn it. If your child is not familiar with the different types of denominations, now’s a good time to explain to them.

Why do this?

It’s to get them into the habit of being savvy, independent and familiar with money. Otherwise, your children could very well see you as their personal ATM for a very, very long time.

children and savings

Letting your child divide up the money for different purposes helps build a healthy attitude towards savings.

  1. Divide the money and identify different uses for it

Good saving habits are not nurtured by you merely taking the entire Ang Bao collection to the bank without letting your child having an experience of it. That is you saving for them, rather than them saving for themselves, which is what you really want to encourage.

Involve them in the process so they feel responsible for their own little pot of money. Also, set aside a reasonable amount for your child to enjoy. Do talk to him about what he’d like to do with that (limited) amount of cash.

Why do this?

Taking away all of your child’s Ang Bao money – even to put in a savings account for them – may breed apathy and resentment. Your child might come to think of you as the big, bad person who takes away their money.

Instead, talk to them about the concept of spending and take time to take them to the bank and to explain that most of their Ang Bao money is being put aside in a safe place to accumulate and grow.

Once you’ve decided on a sum to allocate for spending, talk to your child about their options. They might want a terribly expensive toy or tickets to Universal Studios. If the amount is insufficient, you can encourage them to either save up for it or pick another toy or activity that meets their budget. This will teach them the value of money and also the notion of delayed gratification.

  1. Consider letting your child donate part of his Ang Baos

The festive season is a good occasion to reflect and be thankful for the blessings we have. Not everyone is this lucky. There are many organisations that accept donations for the less fortunate during festive occasions and you can pick one for your child to contribute to.

children and savings

Let you children share their good fortune with those less fortunate than them.

Why do this?

On top of doing a kind deed, part of knowing the value of money also lies in the realisation that there are many segments of society that get by (or have to make do) with so much less than what we have.

If your children are constantly demanding toys and expensive fun activities while taking them for granted, this is a good way of acquainting them with the less-fortunate as well as cultivating positive values such as social responsibility, gratitude, and empathy.

With your guidance, your children will grow up to be sensible and savvy with their money choices.

Have you had a conversation about money with your children? How are you teaching them to save? Help out other parents by sharing your tips, suggestions and experiences in the comments section below.

This post was brought to you by Aviva, one of the leading insurers in Singapore.

This article was first published on Aviva’s Money Banter blog – for more useful tips and guides on financial planning subscribe to their free monthly-e newsletter!


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