Spend or save hongbao?

SINGAPORE - Eleven-year-old Marianne Tan wants to spend $59 of her hongbao money on a 100ml bottle of One Direction perfume. Her brother, Maximilian, nine, wants to save his hongbao takings to buy a laptop in three years' time, so he does not have to borrow money from his mother.

Each of them received about $800 in hongbao this year.

Their mother, events manager Ann Tay, 39, says she has been saving their hongbao bounty in a bank account for each of themsince their first Chinese New Year. "But they can use the money to buy what they want any time during the year, subject to approval. Purchases must make sense," says Ms Tay, citing examples of a One Direction mug and a violin bought previously.

Marianne, a Primary 5 pupil at CHIJ Kellock, generally agrees with her mother. But she adds: "Parents should give their children a bit of freedom to spend their hongbao money. For example, to buy a birthday present for a friend, so we don't need to dip into our savings."

Meanwhile, Ms Tay expects her son to be asking for Pokemon game cards. She is likely to oblige their spending request this year as she noticed more $10 hongbao that her children received. The family live in a four-room HDB flat in Havelock Road.

Her observation seems spot-on.

From an OCBC Bank study of "substantial spikes" in deposits in children's accounts during the month of Chinese New Year over the past five years, and based on "forecasting techniques", the bank estimates that each child may pocket about $780 this year on average.

Its head of group customer analytics and decisioning, Mr Donald MacDonald, 41, says the sum is the highest in the past five years.

In fact, takings have been rising, from $522 a child in 2010 to $715 last year.

But kids who want to splurge using their generous bounty may have little luck.

Ten out of 14 parents interviewed say they squirrel away all of their children's hongbao takings, usually for education.

Ms Tok Geok Peng, DBS Bank's senior vice-president of consumer deposits, says: "During the festive season, we open 60 per cent more new kids' accounts compared to other months of the year."

Ms Rimawati Hasjim says her son Reever, now 11, had been taught from young to pass his hongbao money to his parents for safekeeping.

The 36-year-old cost controller at Swissotel Merchant Court hotel and her husband, self-employed driver Raymond Kang, 37, then deposit the full amount of about $800 each year into their only child's savings account. The family live in a four-room HDB flat in Punggol.

"There's no need for him to have the hongbao money and he does not need to bargain to keep any part of the amount," says Ms Rimawati.

Reever's wishes for toys - for instance, a Gundam robot - will be met by either parents or grandparents on birthdays or at Christmas, she adds.

Even older children do not necessarily have more say about what to do with their hongbao collection.

Polytechnic student Loi Yiting says she does not mind that she receives only "loose change" each year from her hongbao collection.

"For example, if I collect $106, I get just the $6 and mum takes the rest for safekeeping," says the 19-year-old, the only child of an accountant mother and senior sales manager father, both in their 40s. She collects about $400 each year. "Otherwise, I may spend it on frivolous things such as clothes, ice-skating or movies."

For 20-year-old Ryan Tan, his parents let him keep his stash of about $200 since he was a teenager. The polytechnic student's construction manager father, who is a Singapore permanent resident, has family in Malaysia and his Singaporean mother is a travel agent. They are in their 50s.

His parents let him and his siblings keep the money because they feel their children can handle the money.

"I usually leave all the money hidden in some corner and forget about it until my wallet is empty or if I'm too lazy to withdraw money from the ATM," says Mr Tan, a middle child, with a laugh. "Then I look for it and feel slightly happy to know that I have money after all."

His family live in a five-room HDB flat in Aljunied.

Parents may want to consider giving their children latitude in managing their hongbao haul.

Mr Vasu Menon, OCBC Bank's vice- president of wealth management Singapore, says that while the bulk should be kept to fund children's education, parents "should allow their kids to spend some of their money during school holidays as an incentive for agreeing to save most of their hongbao for later years".

He adds: "For parents with older children, it may be a good idea to include their children when making decisions about how to use the hongbao money and to explain their decisions so as to impart money-management skills from young."

Indeed, housewide Julia Teo lets each of her two older children, Myron, 11, and Raeann, nine, keep $350 this year, which is half of each child's hongbao collection.

The children also save part of their daily pocket money - $1.50 for Myron and $1 for Raeann - and have about $50 to top up the hongbao kitty by year's end.

Mrs Teo, 38, says: "So, if they have $400 at the end of the year, they get half of that to spend. Whatever is not spent is saved, and we count their hongbao afresh each calendar year."

This practice began when they started Primary 1 and may have wanted "things that their friends have", says Mrs Teo, who lives in a private apartment in Simei with her family.

"We don't buy them these things because the computer games will distract Myron from his studies and you really need only one Barbie doll," says Mrs Teo.

Myron does not insist on bigger payouts from his mum. "Visiting seven homes is not hard work. So I don't think I should take all the hongbao money back."

While he and Raeann keep half of their visitation collections, his four-year-old sister Kaitlyn has to give her hongbao takings - about $700 this year - to her mum.

Mrs Teo, who is married to security manager Teo Kee Kiat, 41, says: "The logic is that my husband and I have to come up with the money to give hongbao, so we need to recoup our outlay."

She adds with a laugh that she does not suffer "losses", though, because having three children means more takings.

In Ms Adrena Chai's family, the 43-year-old also lets her children learn to handle their own hongbao money as they get older.

While her nine- year-old daughter, Faith, gives her takings to Ms Chai for safekeeping, older daughter Hannah, 12, began keeping her hongbao money last year because "she has matured". The amount Hannah received last year was $100. This year, she received $170.

Her parents' trust in her has not been misplaced. She has not spent a cent of the $270, which she keeps at home, on frivolous things.

The Secondary 1 student at Methodist Girls' School says: "I like to know the money's there, so I feel rich."

The home-held reserves have come in handy: Hannah used the money to pay for school books and stationery and Ms Chai reimbursed her since those were school necessities.

Ms Chai, a trainer in a retail company, adds: "Sometimes, when I haven't had time to withdraw money and don't have cash on me, I borrow from her to pay the laundry man when he comes around."

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