Saving for kids

The Sunday Times highlights four programmes to help parents raise financially secure children. Besides teaching children how to save, parents can also consider regular investment saving plans that require amounts as little as $100 per month, through unit trust platforms.


The CDA - a special savings account - is a no-brainer for parents of newborn babies.

Under the CDA, the Government matches deposits dollar for dollar up to a cap, depending on the birth order of the child.

You can open a CDA with DBS, OCBC or United Overseas Bank (UOB). Standard Chartered Bank will cease managing the CDAs by December 2018.

The banks pay up to 2 per cent a year in interest, so it makes sense to top up balances.

You will have up to 12 years to save in your child's CDA and the Government will match your savings in the account within two weeks. You can use the CDA funds for educational and healthcare expenses at Baby Bonus-approved institutions, which include selected childcare centres, kindergartens, hospitals and clinics.



Introduced last year in three schools, the POSB Smart Buddy programme aims to teach your child early on how to regularly monitor his expenses and savings.

The initiative uses portable and wearable devices, such as a watch or a student card, that are modified so students can use them to make contactless payments at school. The programme also comes with a mobile app that tracks their expenses and savings in real time, and allows parents to preset daily allowances for students.

Thanks to the positive feedback it has garnered, DBS says that it looks forward to rolling the programme out to more schools as part of the POSB National School Savings Campaign. To find out more about the programme, visit smartbuddy



Parents can jointly open a Monthly Savings Account (MSA) with their child to encourage him or her to save regularly.

If your child deposits more than $50 in the MSA every month without making a withdrawal, he will earn a higher interest of 0.4 per cent a year. If your child has a CDA with OCBC, he can earn an additional interest of 0.4 per cent, or 0.8 per cent a year (compared with 0.05 per cent for regular savings accounts) in total.

There is no minimum initial deposit required or minimum balance to maintain, so your child can deposit and withdraw as needed. Parents can track their kids' savings with e-statements, which also contain illustrations on financial concepts, such as computing interest, to help parents teach their children about savings.

OCBC says there are priority queues for kids on Sundays at "Sunday at OCBC" branches. This allows your child to queue on his own, to understand what saving money is and the concept of a bank.

There is also a Mighty Savers Game app to encourage children to be early adopters of good money management habits.

The game teaches wise spending, differentiating needs and wants, sound investment, saving more with compounded interest and giving to others. The mobile app is available for free at the Apple App Store and Google Play Store, and on the bank's website.



For older children, this account offers the usual perks of a savings account (ATM card, Internet and phone banking), along with life insurance coverage for one parent.

When the child turns 16, the UOB Junior Savers Account can then be converted into a regular statement-based savings account. Parents can contribute to this account regularly and use it as an illustration of how to enjoy the benefits of compound interest.

This article was first published on Feb 5, 2017.
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