How my parents' tough love made me financially savvy

Starting from the age of 4, my parents conducted a years-long, unplanned "experiment" on me. Don't worry — it wasn't as scary as it sounds. The experiment, so to speak, was intended to turn a toddler with a piggy bank into an adult with a well-funded bank account.

Let's be clear: Their goal was not to teach me how to "get rich." I grew up in an average, middle-class household in Singapore as the daughter of a technician and a housewife. We were by no means wealthy, but my parents had been financially independent by the time they were in their twenties — and they wished the same for me.

I didn't realize it at the time, but the goal of their experiment was to instill habits in me that would make smart spending, saving, and budgeting almost second nature.

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It started with a "salary"

The first major money decision they made was to gift me a set allowance for my personal spending. They would gradually give me "raises" as I grew older, and they changed the frequency with which they gave me the funds — all of which was meant to prepare me for when I got a real paycheck. My salary hikes, in Singapore dollars, went something like this:

From ages 4 to 6: 50 cents a day

From ages 7 to 8: $1 per day

From ages 9 to 10: $10 per week

From ages 11 to 12: $15 per week

From ages 13 to 14: $100 per month

From ages 15 to 16: $200 per month

From ages 17 to my early twenties: $2,000 to $2,200 every six months

When I was young, I kept the money in a piggy bank. The fact that I was responsible for the money inside not only taught me the importance of saving, but it also gave me ownership over my finances. I would use the money on purchases like chocolates and stationery when I was younger, and when I got older, it paid for after-school social activities and clothes. I would count the money regularly, and whenever the amount exceeded my last count, I felt exhilarated — my money was growing!

Saving my annual windfall

Apart from my allowance, another major source of income was money that I would customarily receive every Lunar New Year. That's when I would get red envelopes full of cash, called "Ang Pao," from parents, relatives, family friends, and even my friends' parents. I could receive as much as $300, and the largest single Ang Pao amount was usually from my parents.

From kindergarten on, I was allowed to keep and manage my Ang Pao money, and every dollar went straight into my piggy bank. In fact, counting that money was how I learned to add up dollars and cents. However, I wasn't allowed to blow it all at once. I could spend, over the course of the year, up to half the total amount that I was given — which taught me to curb the temptation of instant gratification.

Shortly after the Lunar New Year that followed my seventh birthday, Mom took me to the bank to open a savings account. It was one of the most exciting days of my short life; I finally felt like a big girl.

I selected the bank myself, and since I was too young to provide a signature, I "signed" all of the important-looking documents with my thumbprint. I became the proud owner of a passbook, which I used to record deposits and withdrawals. I remember that Mom matched my deposit dollar for dollar, probably because I didn't have enough to make an opening deposit, despite having emptied my piggy bank.

Learning the basics of budgeting

Every year thereafter, Mom would take me on an annual trip to the bank to deposit my Ang Pao money. I was eventually allowed to determine how much to deposit and how much to keep in my piggybank for personal spending.

But they threw in a new rule: Once the amount was in the bank, I was not allowed to withdraw it. That forced me to plan my spending for the whole year, and divide it by 12, so I knew how much I had to work with each month. Without knowing it, I was learning the importance of advance financial planning.

This budget muscle was being flexed when it came to my allowance too. As the amounts got larger, I received the money less frequently. When my allowance was doled out weekly, I could only get it on Sunday evenings. When it switched to a monthly payout, I received it on the last day of every month. And when it was given to me biannually, I got it as a check on the first day of every January and July. At times over the years I was annoyed with their stringency, but by not giving in and handing over the money to me early, it trained me not to spend what I didn't have.

When I first started receiving my pocket money, I was, admittedly, terrible about managing my spending. It took trial and error to estimate how much I would need to sustain myself. When I'd run out of money early, there were consequences — I'd have to pack my school lunch rather than buy it, or forgo an evening out with friends. These lessons are what help keep me within my monthly budget to this day.

After graduating from secondary school (similar to American high school) at 17, I took a six-month break before starting polytechnic, one of the tertiary educational institutions in Singapore. My parents stopped my allowance during the time that I wasn't in school, so I earned a few hundred dollars through a part-time data entry job. By then, I was also allowed to make withdrawals from my savings account, so I was still able to go out and have fun without being overly strict.

When I started polytechnic, my parents issued me two checks a year, so I had to be even more conscientious about spending. The total amount they paid was based on the expenses I thought I'd have for the year. We'd go through a list together, including things like a portion of my cell phone bill or school-related outings. During the three years that I was at polytechnic, I also took up a paid internship and two part-time holiday jobs to supplement my allowance.

My parents were also adamant that if I were to go on to a university, I'd have to pay for tuition on my own. So I attended a school in New Zealand on a scholarship, and they wired me an allowance for living costs, also twice a year. This reinforced the need to do a review of my finances every six months — and budget smartly.

The experiment is a resounding success

All of my parents' money lessons taught me to spend comfortably within my limits, and keep to a budget. I also adopted great financial habits that stuck over the years, such as being diligent about itemizing expenses. I had always watched my mom line-item what she spent. Now whenever I feel like I'm spending more than I should, I'll list my expenses over the course of a month, so that I can pinpoint where the money went. This way, I can minimize or eliminate that expense the following month.

They also taught me the importance of having enough savings to take care of myself for a few months in case I ever lost a job or experienced an emergency. I didn't understand the value of this until after I graduated from college. I took a two-month break between finishing school and starting a new job, but I didn't end up getting my first paycheck until a month into my new job. As a result, I spent every cent of my leftover allowance and savings within those three months.

Now, at 31, I have enough emergency funds to cover six months of living expenses. I also make sure that I have enough to pay for fun things — in the year leading up to my 30th birthday, I managed to squeeze in five trips without busting my budget.

There is no one method for learning good financial habits, but I think my parents' experiment worked. I'm pretty sure that being able to pay my monthly bills on time and having zero credit card debt were the results they hoped for. And while it's been years since they gave me an allowance, there is one tradition that holds — they still give me Ang Pao money every Lunar New Year.

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