1. Teach them about budgeting
Get them into a habit of managing their own money and be mindful about their spending habits. Teaching your child how to budget will help them understand the difference between needs and wants.
For younger children, you can guide them to set a saving or spending limit. For example, you can establish a 75% savings rule (ie if your child receives $100, they would have to save $75, leaving them $25 to spend).
Older children and teenagers can be more involved with their own budget planning. By getting them involved in financial discussions, they will learn about fiscal responsibility.
2. Let them set a savings goal
Encourage your child to set specific savings goals. Start with short-term goals at smaller amounts. When they reach their goals successfully, they will have a sense of achievement and be motivated to save more.
3. Help them set up a savings account
Once you’ve established savings goals and budgets with your child, a good next step would be to find a place for them to put their savings.
For younger children, a piggy bank or something similar will be great, especially if it’s transparent. A glass jar is a good option. This will allow a child to physically watch their savings grow as they add money.
For older children, setting up a savings account is an important step towards adulthood, providing opportunities for them to learn more about banking and personal finance. Most children’s savings accounts require a parent to open an account with the child unless your child is above 16.
While savings accounts generally don’t offer high yields, your child will be empowered with knowledge on managing personal finance and learn to appreciate the sense of achievement when they meet their savings goals.
4. Multiply that hongbao money
Another way to grow a child’s hongbao money is to invest it on their behalf and get them actively involved on the investing journey. This will also allow you the opportunity to impart knowledge on financial literacy along the way.
For new investors who do not have a huge amount of capital to start with, you can consider low-cost and low-risk investments such as index funds, exchange-traded funds (ETFs) and bonds as they allow you to invest passively.
ETFs and index funds are a collection of stocks constructed to match the performance and behaviours of a certain market index such as the S&P500.
Bonds come in different investment grades, so it’s important to do your due diligence before choosing which bonds to purchase. Low-cost bond investments you could look at include retail corporate bonds and Singapore Savings Bonds (SSBs).
If you’re looking for a place to start an investment portfolio for your child with the added benefit of insurance protection, check out HSBC Life savings and investment plans. | 
