Giving parents an allowance when you start working is a common practice in Singapore. Some attribute it to a Confucian reverence for filial piety, while others grudgingly blame lack of a social safety net.
Unfortunately, your elderly parents grew up in a very different world, and not all are financially savvy enough to use your hard-earned cash to give themselves a comfortable retirement.
Here’s how you can support your parents in their old age when they’re irresponsible with money.
Top up their CPF account instead of giving them cash
The CPF system exists as a form of hand-holding, forcing people to put aside their cash and, upon retirement, to receive them in sensible monthly payouts.
If your contributions don’t make up 100% of your parents’ income right now and they don’t seem to be using their allowance wisely, one option is to top up their CPF accounts instead of handing cash over to them.
Under the Retirement Sum Topping-Up Scheme, you can give your parents’ CPF payouts a boost by topping their Retirement Accounts up to the Full Retirement Sum (currently $166,000) or the Enhanced Retirement Sum (currently $249,000).
If they cannot survive till their Retirement Sum has been topped up to a sufficient level, you might want to give them an amount in cash that’s enough to cover their basic necessities, and then put the balance in their CPF Retirement Account.
As an added bonus, you will also qualify for CPF Cash Top-Up Relief when you pay your income taxes.
Pay for their necessities instead of handing them cash
Another way to prevent your parents from getting hold of cash that can be gambled away is to offer to pay for their necessities directly wherever possible. You can then give them the balance in cash.
So you’ll want to pay their phone bills, utility bills and buy their groceries whenever you can. By reducing the cash amount you give them, you’re hopefully removing their chances of spending irresponsibly and then asking you for more money.
Help them plan their finances
Unlike you, your parents didn’t have the benefit of the Internet when they were in their prime. Depending on their level of financial literacy, they may have no clue how to budget or spend wisely.
Sit down with them and help them plan their finances based on their current income. This will give you a better idea of their financial needs so you know how much you should be giving them, rather than blindly handing over a percentage of your salary.
If need be, help them to figure out what they spend on every month and then draw up a budget. If they have any problems like gambling or are losing money in some scam, it’s better that you find out now.
Give them a daily or weekly rather than monthly allowance
Remember when you were in primary school and your parents would give you your pocket money on a daily basis?
They did that for a reason—to ensure you wouldn’t lose or squander all your money. It might sound a bit extreme to do the same for an elderly parent, but if he or she has a gambling issue, a daily or weekly allowance would make it harder for them to misuse the money.
Thanks to Internet banking, you can simply schedule daily transfers from your bank account in advance to save time.
Do you give your parents allowance? Tell us how you do so in the comments!