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...
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I did not apply for the SSBs offered in January and February this year as both offered 10 year average yields of lower than 3% p.a. which was lower than what I would get from my CPF account.
Now, I am not saying that those SSBs were not attractive for everybody but they were not attractive to me as my plan was to apply with money earmarked for CPF voluntary contribution in 2024.
I suppose many people agreed with me as those SSBs were rather badly undersubscribed, with the one offered in February less than half subscribed.
The one that is offered this month, however, is very interesting to me as it is offering a 10 year average yield of 3.15% p.a.
With the dividends coming in this month, I would set aside at least $10,000 to apply for the SSB.
I have made a note on my calendar to apply by 28 March 2023.
If the 10 year average yield remains higher than 3% p.a. for SSBs offered in the next few months, I would be able to fully deploy the $38,000 I have earmarked for voluntary contribution to my CPF account in 2024 earlier than anticipated.
I could do this in 2Q 2023 easily as 2Q and 3Q are usually relatively strong passive income generating periods for me.
In the next day or two, I will talk to myself a bit more on the subject of fixed income and how a meaningful exposure will do my investment portfolio a whole lot of good.
However, I have also shared in my blog in recent years that I was providing my parents with financial support.
Sounds contradictory to what I said many years ago?
Well, my parents didn't ask me for financial support.
I offered.
The thing is if we are blessed with good parents, they usually try not to burden us, their children.
They might just tighten their belts or make some pocket money doing some part time work.
If we are good children, we wouldn't want to see our parents do that.
They have labored to provide for us children till we became independent and, in their golden years, it is our turn to make sure they are at least financially comfortable.
I believe that this is the least we can do as children.
Anyway, the catalyst for this blog was something I read online.
The author asked how much money did people give their parents?
He said he gave his parents 10% of his salary monthly.
If the author's parents were relatively well off and he was just giving them a monthly allowance to express his filial piety, I think his method would be OK.
Method?
Yes, setting aside a fixed percentage of his monthly pay to give to his parents.
Otherwise, it seems pretty arbitrary to me.
It's like saying,
"Hey, don't say I don't give you any money, OK?"
Don't get me wrong as it is better than not giving any money at all.
It would be more meaningful, however, to find out what our parents' needs might be financially and if we could do more to help.
Also, simply giving parents money might not always be the best way to help them.
Helping them pay recurring bills might be a better idea, especially if we want to make sure that the money is being used properly.
Some people are just not very good with money.
Both the giver and receiver would have peace of mind this way.
Hopefully, not having to worry about recurring expenses, our parents would have sufficient resources of their own to take care of their daily expenses.
Otherwise, we might have to provide financial support to defray their daily expenses too.
Then, it might also be a good idea to set aside an emergency fund for our parents, especially if they do not have one.
Things do go wrong like they sometimes do and unexpected expenses do pop up.
Being prepared for a rainy day or, worse, a storm is never a bad idea.
So, what about me?
Well, I don't set aside a percentage of my passive income to give to my parents.
I also do not give them money monthly but I do give them relatively generous red packets on Father's Day, Mother's Day and their birthdays.
That's the only cash I give them.
I can hear some long time regular readers asking questions now.
Yes, in a blog which I published in August 2022, I revealed my updated budget.
In that blog, I said I would be setting aside $48,000 per year from my passive income to provide financial support to my parents.
Most of the money would go to helping them pay recurring expenses and the biggest ticket items are H&S insurance premium, property maintenance and property taxes.
Up until recently, recurring expenses also included mortgage payments.
Thankfully, the final housing loan was fully paid in 2H 2022 and I paid the legal fees to discharge the mortgage as well.
To be honest, $48,000 per year has quite a comfortable buffer as the amount I set aside for parental support was $40,000 per year before.
So, what about the amount in excess of annual red packets and paying recurring expenses for them?
Well, I could increase the size of their red packets henceforth.
However, being a worrier, most of the excess would go into the emergency fund I have set up for them.
I have blogged about the importance of having an emergency fund and how mine was big enough to cover 24 months of routine expenses not just for myself but also my family.
However, I have not blogged about how our emergency fund should also keep pace with inflation, if my memory serves me right.
If we have set up an emergency fund a few years ago and if we have not looked at it since, maybe, it is a good idea to check if it is still as robust as before.
If you are new to my blog or need a refresher, read:
So, how much money am I giving my parents in percentage terms?
Well, this number is going to be different from year to year since my passive income is going to be different each year.
My passive income for 2022 totaled S$205,999.
$48,000 is about 23% of that total.
To be sure, I am not telling anyone how much money they should give their parents.
I am definitely not saying that I am 10x better than someone who gives $400 a month or $4,800 a year to his parents.
We most probably have different circumstances and, in some cases, quite possibly, very different circumstances.
However, instead of asking how much money are you giving your parents monthly, perhaps, the author of the article which was the catalyst for this blog should be asking are you giving your parents enough money monthly?
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