The email address in "Contact AK: Ads and more" above will vanish from November 2018.


Featured blog.

1M50 CPF millionaire in 2021!

Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.


"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Recent Comments

ASSI's Guest bloggers

Tea with EY: Make CPF a part of your child's savings plan?

Friday, January 2, 2015

EY sent me an email and said:

"I called CPF this morning to enquire on the CPF contribution for my children. I have been mooting this idea for some months already and finally decided that I'll take action soon."

In relation to this, EY has decided to share another thought provoking guest blog here:

If you have children, what would you expect their New Year resolutions to be?

Being quite a laissez faire parent, I have never nudged my children to set any New Year resolutions. 

Two weeks ago, I decided it was about time to have them commit to some goals for 2015. Among them were a few financial goals/habits.

Below are the financial resolutions my teenage boys made, or more accurately, I made for them. Oh yes, of course they agreed!

1.      Save $10 per week from the weekly allowance of $25

2.      Save at least $500 for voluntary contribution into CPF OA/SA/MA

3.      Keep an expense journal to record daily expenses

4.      Maintain a cash flow statement at the end of each month

To sweeten the deal, I have agreed to match a dollar for a dollar savings into their CPF account. So if they save $500, I will top up another $500.

Some may ask why do I want my boys to contribute to CPF when they are only turning 15 and 16 in 2015? I have two reasons for this. 

Firstly, I want them to save up and partially fund their own university education. 

Secondly, I want them to actively manage their CPF money and be exposed to more complex financial decision making but within a relatively risk-free environment.

If my boys get into university, they will have 5 to 6 years to build up their CPF OA. CPF allows members to use up to 40% of the OA savings for polytechnic/university tuition fees. 

Along the way, I will encourage them to work during their school holidays and increase their voluntary contribution to CPF. 

Hopefully, they will accumulate enough to pay school fees for 1 semester. 

After they graduate, they will to pay back their own CPF OA. 

I want them to experience some form of financial obligation when they start work so that they won’t take on debt too readily.

Once they have settled their school fees for 1 semester, they shall decide what they want to do with their CPF OA. Let it accumulate slowly to more than $20,000 and use the excess to buy stocks subsequently?  

Or transfer the OA savings into SA to take advantage of the higher interest rate? I’ll leave it to them. 

For illustration sake, I’ll show them that at 4%, $5,000 in SA at 21 years old will grow 4.8 times to almost $24,000 when they reach 65 years old. 

Hopefully, this will inspire them to grow their SA more consciously and plan for retirement adequacy earlier. 

My children’s New Year resolutions will mark the beginning of my attempt to formally introduce financial literacy at home, which happens to be one of my own New Year resolutions. 

To keep all of us on track, I have downloaded the CPF voluntary contribution form from the CPF website and shall do the inaugural contribution using my boys’ current savings within the next week or so.

That shall be a good start to a prosperous 2015 and beyond!

Remember the POSB mascot, the squirrel? 

We might see a couple of squirrels on steroids here! Good one, EY!

EY's guest blog jolted my memory and I remember I started my CPF account before I had mandatory contributions too but it was for those discounted SingTel shares. 

I am sure some of you might remember the year that happened. I still have those shares today.

Thanks, EY, for providing munching material for consideration.

Read other guest blogs EY: here.

Related post:
Financial freedom is a family affair.


Gary said...

Simple idea and I think it is easy to implement! =) Got me started thinking for my kids. Do you know where I can find that calculator which you have shown in your blog?

AK71 said...

Hi Gary,

You will find all the calculators (and games) here:

CPF calculators and games.

Rebel said...

My plan - 18 yrs old. . . They can start their cpf, srs, cdp while in the army or working or in university.

Gd move EY!

Unknown said...

I am also keen to implement for my child. Do you know what age can start voluntary cpf contributions?

Thank you


yeh said...

To me, my CPF money mainly to keep for my mum or probably my siblings.

i do not think i can live so old enough to enjoy my CPF money.

Benjamin said...

AK, what is the youngest age of our kid that we can start to contribute to their cpf. I also have the same thinking as u but din ask cpf cos my son is only two

AK71 said...

Hi Phyllis and Benjamin,

This is a guest blog by EY who is a very wise parent, in my opinion. So, EY would be the best person to answer your questions.

However, I believe that once we get our NRIC, we are allowed to start a CPF account. That means 15 years old. :)

E H said...

Two things I wonder:
1. Would the boys' quality of life be better with the extra $10 per week?
2. Would the boys appreciate the efforts and planning of their parent when they grow older?

qook said...

Can the cpf money be used for university overseas?

AK71 said...

Hi qook,

For a list of approved institutions, please see:


Siew Mun said...

What the advantages if I max out the child's SA?

AK71 said...

Hi Siew Mun,

I think you will see the magic of compound interest at its most dazzling. LOL. ;)

That is what happens when we give compound interest more time to work its magic. :)

Siew Mun said...

One more question, do u get any Iras tax deduction if u contribute to your child's CPF? I know u can get iras tax breaks when u contribute to wife, parents and siblings

AK71 said...

Hi Siew Mun,

I do not see why not. However, I am not able to find any such information online. So, it is best for you to enquire directly with the CPF Board. Let us know what they say if you do. Thanks. ;)

EY said...

Hi Rebel,

Sounds like a good plan! :)

EY said...

Hi Phyllis,
I’d asked CPF the same question. Was told there is no minimum age in starting a CPF account and making voluntary contributions.

Just that if the child has not received his IC, he/she will not be given a Singpass account which would allow online access.

EY said...

Hi yeh,

There are ways to maximise the use/benefit of the CPF money. The key is knowing the regulations on what we can do with the savings in the OA/SA. Then it’s planning the work and working the plan. Here I’m talking about using the CPF for the various investments/education and maximising interest returns.

The portion that you mentioned that is ‘untouchable’ is the minimum sum and the Medisave. At 55, we can withdraw whatever that is above the MS and Medisave minimum sum. I would treat the MS as the ‘pension fund’ that my employers contribute to my retirement. I choose not to view it as my money until I receive disbursement. I’m quite happy to leave this ‘pension fund’ behind for my loved ones. :)

EY said...

Hi Benjamin,

CPF hasn’t specified the minimum age in setting up a CPF account. To confirm, you may wish to call them to enquire. 1800-227-1188.

EY said...

Hi EH,

Quality of life is relative, isn’t it? :) $3 for recess and lunch is sufficient if they budget properly. Cut the drinks and they will have 2 relatively decent meals. There is fresh milk and snacks at home if they are hungry in the late afternoon. Dinner is home cooked food. BTW, I do lead by example. My budget for lunch is $5 and on most days, I spend within my budget. :)

My boys understand why I have encouraged them to spend less and save up. There has been some ground work done over the years. I have been quite laissez faire in the sense that I don’t restrict them on using their savings to buy stuff they want. For instance, my elder boy had saved up to buy his expensive Transformer toys. He has a collection of 10 and all bought with his own savings. He also saved up to buy his mini iPod.

I’m trying to ensure that they are able to delay gratification and understand the concept of opportunity costs. So far so good. I count my blessings. :)

EY said...

Hi Siew Mun,

There isn’t any tax deduction for voluntary contribution to our children’s account. Sorry that I can’t find the link but I’ve read it on the CPF website.

Benjamin said...

Cpf says there is no restriction on what age we can contribute to our kid cpf

AK71 said...

Hi Benjamin,

Thanks for sharing your findings with us here. :)

AK71 said...

Which account should we do VC for kid? OA,SA or MA?

Depends on what you want to achieve. Each account has a different purpose.
If you are unsure, then, do a regular VC and the money gets apportioned by the CPF into all 3 accounts.

Monthly Popular Blog Posts

Bloggy Award