3 Ways You Can Make Good Use of Your Child’s Ang Bao Money

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Each year, you dress your kid up like a Chinadoll and send him or her, armed with two Mandarin oranges, out into Chinese New Year gatherings with the aim of collecting as many ang baos as possible.

Whether your relatives are the sort who give four figure ang baos or you can hear the coins jigging around in the red packets, don’t forget to help your kid use that cash wisely.

Do you stash it away in a bank account, never to see the light of day until your kid comes of age? Do you (gasp) keep it for yourself? Here are three ways to use that cash that will actually benefit your kids.

 

Give your child a fraction to spend and save the rest

While you might think saving all your kids’ ang bao money would be more beneficial to them than letting them spend the cash on nonsense from Kiddy Palace, pry your fingers away a few of those notes.

Giving your child a small fraction to spend as he likes gives you the opportunity to sneak in a little lesson about budgeting.

If your child is of lower primary age and isn’t old enough to rock up to a shop on his own and spend the money independently, you can step in as the well-meaning parent and talk him through his purchasing decision.

Discuss what he would like to buy, do research on where the toy can be purchased and then visit more than one retailer together to comparison shop. Your kid will learn how to budget the amount he’s been given to spend, and seriously consider whether he wants to buy multiple small items or one big-ticket one.

With older kids, you can simply discuss what they plan to do with the cash. This might lead to a think about whether it would be wise to just blow the entire sum on Starbucks frappucinos, or whether it would be worthwhile saving up to buy that Nintendo 3DS.

 

Invest the money and monitor the gains together with your child

After a few years of ang bao collecting (or just one, if you have really generous relatives), your child should have saved up enough to start investing.

You only need $500 to start investing in Singapore Savings Bonds, while the lot size on SGX is a mere 100 units. For teaching purposes, it’s probably best to start with a low risk investment like bonds or even a fixed deposit, though.

Instead of letting the money rot away in a savings account, use this as an opportunity to teach your child about the concept of interest. Every Chinese New Year, you can look back at the investment and watch it dawn upon your kid that his money is growing without his having to do anything for it.

 

Encourage your child to donate a portion to a good cause

There are enough spoiled, entitled brats in Singapore, and your child doesn’t need to be one of them.

So often, parents push their kids to succeed but neglect cultivating empathy in them. One good way to do the latter is to encourage your child to donate a portion of his ang bao money to a good cause.

That gives you the opportunity to talk about the various social issues in Singapore, and how charity organisations are working to address them. Discuss which issues your child feels most strongly about and then talk about how donating some money will help.

Having conversations like that will, over time, help your child to become a more civic-minded, less selfish individual… and hopefully stem the competition-fuelled fear and anxiety that so many experience during Chinese New Year.

What did your parents do with your ang bao money when you were a child? Tell us in the comments!

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.