With the Lunar New Year coming, preparing ang baos to give to the children of relatives and friends are part and parcel of the tradition. And if you have kids, they will no doubt be receiving ang baos from others too.

But the question a lot of parents ask is whether they should let their children keep their ang bao money to enjoy, or, should they safe-keep the money and give it to them bit by bit, or perhaps bank everything into a bank account which they can only access in the future? This especially applies to younger children in Primary Schools or Secondary Schools.

Whichever method you choose, there’s no right or wrong. But the main question you should be asking is whether as parents we should give children cash rewards, and to what extent?

Here, we adopt a balanced view on whether parents should use incentives (cash or gifts) to motivate their children. Read on:

Firstly, why do parents use cash to reward their children?

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Every parent deeply loves their children and want the best for them. From a young age, it is common to see Singaporean parents plying children with extra curriculum classes. Such actions can stem from peer pressure or the insecurity of whether one is being a good parent (coupled with the typical Singaporean ‘afraid-to-lose’ mentality, and you’ve got a triple whammy!)

Does this sound familiar? “But Joey’s son is taking tennis, swimming and golf lessons! And he’s only five!”

Junior can receive little sweets or simple praises from time to time to acknowledge a job well done e.g. taking care of pets. Parents would usually prefer not to break the bank as children are already given regular allowance to spend on necessities. However, when school tests roll around and Junior prefers to play video games for hours, parents are pushed toward bigger cash rewards to encourage their children to focus on their studies and do their best academically.

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Rewarding children with money: The good, the bad and the ugly

In the short-term:

With a juicy carrot dangled in exchange for achieving sterling grades, children often become highly motivated to put in extra effort to get the highest scores at their parents’ behest. However, such actions signal to a child that Daddy and Mummy could care less about their love of learning, and more about the principle of ‘end-results and conditional love’: Get A for your subjects and I will think of you as a success and reward you.

Thus, it would be wise to explain to a child the reason behind using cash rewards to motivate children for getting rewards and being clear on having the right principles and intentions behind doing so. For example:

“Mummy and Daddy will give you $100 or (most desired toy) if you do well in school, ok? We want you to do your best and we love you even if you don’t get good grades. This is only a reward for your achievements (like a medal) and is not something you should expect for everything you do.”

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Medium-term:

While cash rewards can be effective encouragement, parents should tread carefully after using this motivational method for some time, as children can become heavily dependent on such regular rewards to perform well, rather than becoming self-motivated to achieve targets for the sole purpose of doing so. When handled skilfully, children are able to develop a strong self-identity of becoming an innate achiever or the mindset that: “I am able to accomplish [goal] on my own, rewards given or not”.

Long-term:

Giving cash rewards for performing well can be a sustainable method for ensuring consistent performance, assuming one decides to replace tuition fees and motivational courses with direct cash rewards to one’s children to develop self-motivation. However, it might neither be the best way to inculcate strong intrinsic motivation e.g. love of learning or mastery of a subject, nor the principle of accomplishing tasks unconditionally in a child e.g. I do things only to get cash rewards. Hence, it is important to strike a balance in rewarding one’s children for positive behaviour and allowing them to nurture their own set of personal and work ethics as developing individuals.

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Striking a balance for rewards

Instead of relying on cash to reward one’s children for a job well done, effective recognition can be given through different feedback loops. This includes praising, acknowledging a child’s exemplary performance and highlighting the right principles he or she reflects e.g. “Linda, you’re taking really good care of the cats at home. This shows your compassion for animals – what do you say we visit the Zoo together someday?”

Striking a balance between different reward methods is thus crucial in showing one’s love and appreciation for the achievements and actions of one’s children, while maintaining a sense of virtue in them to recognise the fruit of their achievements. Doing so builds a strong foundation for your child’s character and ethics to grow over time.

So for your child’s ang bao money this year, why not try these three steps and inculcate them as a practice for years to come:

  1. Let your child keep a small percentage (10 to 20 per cent) to enjoy buying whatever he wants.
  2. Encourage him to donate 20 per cent to a charity or good cause (it can be anything from animal shelters, to elderly care organisations or non-profit organisations of something your child is interested in.
  3. Put the rest into a bank for your child and tell him that he gets to use this in future. 

When is the best age to discuss money with kids?

Start talking to your kids about saving money before they enter primary school because this is when we start giving our kids pocket money for meals, stationery etc. We would recommend the age of 5 when they can perform understand basic math and the concept of money (money = toys/food).

Where should you save your child’s ang bao money?


Don’t just stuff the cash in a Milo can or keep it under their bed because they’d miss out on opportunities to grow the money through interest.

We’ve compared the different children’s savings accounts in Singapore, so you can see which bank will help grow your kids’ ang bao the fastest:

Bank & Savings Account Interest Rate Minimum Initial Deposit Age Requirement
Maybank
Youngstarz Savings Account
– First $3,000 at 0.1875% p.a.
– Next $47,000 at 0.3125% p.a.
– Amounts above $50,000 at 0.3750% p.a.
$10Below 16 years
Standard Chartered
e$aver Kids Account
– First $50,000 at 0.1% p.a. – $50,000 to $200,000 at 0.15% p.a.- Above $200,000 at 0.25% p.a. $0Below 18 years
POSB
ePOSBkids Account
– First $350,000 at 0.05% p.a.- $350,000 to $1,000,000 at 0.075% p.a.- Above $1,000,000 at 0.1% p.a $0Below 18 years
OCBC 
Mighty Savers Account
– 0.05% p.a- 0.2% bonus if there is a minimum deposit of $50 monthly and no withdrawals $0 Below 16 years
CIMB
Junior Saver Account
0.8% p.a. $1,000 Below 12 years
UOB
Junior Savers Account
– Below $350,000 at 0.05% p.a.
– Above $350,000 at 0.1% p.a
$500 Below 16 years
Citibank
Junior Savings Accoun
– First S$30,000 at 0.05% p.a- Above S$30,000 at 0.1% p.a $0Below 18 years

Text: Lynn Han, The New Savvy & Rohith Murthi, SingSaver / Additional Reporting: Sean Tan & Natalya Molok
Photos: 123RF

This post was updated on January 22, 2020.