Filial Piety and Financial Independence | Clara Chong
Updated: Jul 30, 2021
One unsaid yet silently expected act from young adults is having to give our parents allowance, a gesture often tied to filial piety in Asian households.
Yet there is no one “correct” sum, mode or interval in which allowance should be given, if any at all. How do we decide how much to give?
The challenge that many of us in our roaring 20s will grapple with is twofold: wanting to be filial and support our parents through retirement, yet eager to build our own wealth and be financially independent.
Some reckon a good benchmark is to give roughly 10 per cent of our income, but much also depends on multiple other factors.
Factors to Consider
Firstly, an important consideration will be how financially stable they are - if they are still employed; have built up recurring streams of income (such as from investments or property rentals); have any medical conditions, debts or loans that have yet to be fully paid up.
Secondly, our own financial commitments. These years will be filled with many exciting changes in our lives. We could be buying our first insurance policy, applying for a flat, moving out, purchasing our first car, getting married and so on. Or it could be the dreams we want to chase, such as saving up for further studies, money for investments or other leisure activities like travelling. We should also be setting aside some spare cash for rainy days and not live from paycheck to paycheck.
Finally, how each household looks at money will also differ, and this underlying context also matters. Giving less allowance might not necessarily be unfilial. Some parents see the act of giving money as being filial while others might prefer to have quality time with their children. Some of us might also be paying for expenses incurred in the household, such as utility bills or even contributing to our younger sibling’s education or allowances.
Where to Get Started
All this could sound like a minefield to navigate, but perhaps a good starting point will be to keep track of our monthly expenses to get a gauge of our spending habits: How much money is spent on essentials like food and transport, or fixed payments like insurance, phone bills and other monthly subscriptions (eg. Netflix, gym memberships etc) and roughly how much is spent on leisure.
This documentation need not be a laborious process, with many phone apps allowing for hassle-free and neat logging of expenses. Once muscle memory kicks in, this will all soon become second nature. As a user of such apps, I vouch that this is a highly effective way to stay accountable and feel a lot less guilty when we splurge on big-ticket items.
Thereafter, a casual open dinner time conversation with our parents will help to bridge the gap between expectations and reality. It is good to start the ball rolling by finding out about how your parents view money and retirement. Find out their financial obligations and concerns, what’s a realistic sum to set aside and if this sum should be a percentage of your income (which would mean a higher allowance as income grows) or a fixed monthly or yearly amount.
Allowances also need not come in the form of cash or bank transfers, and in fact, CPF top-ups to their retirement accounts will help to give them better returns. If your parent is not yet 65-years-old, these top-ups will compound and give them higher CPF LIFE payouts in the future. You won’t lose out as well, as you will be able to get some level of income tax relief. Things could also be flexible, such as giving a bit more on months you receive salary bonuses and a bit less on months when you want to put more into investments or have booked a trip abroad. This conversation will also be a good opportunity for you to be candid about your financial goals.
Last but not least, it is noteworthy to realise that you might meet resistance when sharing your financial plans or investments with your parents. They belong to a generation that is a lot less risk-taking, where a stable job, savings and CPF are the hallmarks of financial security. However, today’s youth have been exposed to a wide variety of investment vehicles that have low barriers of entry - opening a brokerage account, trading on margin, buying cryptocurrency or non-fungible tokens have all been made very easy. Leaving too much cash in the bank could be labelled as silly, especially in an environment of low-interest rates. Hence, presenting these ideas to our parents could be seen as a form of “gambling”. Emotions might run high, making it critical to be patient and to have done your due diligence so that your parents can trust your judgement and decision making.
Don't forget that knowledge and risk management is what differentiates gambling from investing, and to borrow a quote from the famous investor Warren Buffet - risk comes from not knowing what you’re doing.
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