Craft a Richer Legacy for Your Children: A Contrarian View About CPF Top-Ups for Child

Let’s discuss a topic that’s close to the hearts and wallets of parents in Singapore, the future of your children. In recent years, many parents have been diligently topping up their children’s CPF accounts, believing in the mantra of building financial security for their children’s golden years. But recently, I stumbled upon a philosophy that made me pause and rethink: “Die With Zero” by Bill Perkins. Perkins advocate that it’s better to spend your money on life experiences rather than hoarding it for a future that’s not guaranteed. Intriguing, right?

In this article, I will explore on the concepts and perspectives written in Perkins’ book and expand on why parents should not be prioritising long-term financial savings for their children through topping up their CPF accounts in Singapore.

The CPF Conundrum: Rethink Topping Up Your Child’s CPF Account

From young, we have been taught that the earlier we start saving, the better. By the same logic, many parents also believe that the earlier we start saving for our children, the better. In recent years, parents have also started making CPF top-ups to their children’s CPF accounts and that seem like a no-brainer for long-term financial security, thanks to the magic of compound interest. Many financial influencers and online media have been encouraging parents to do this as well.

These days, it is very easy to top up your child’s CPF account in Singapore, you can perform the top-up through the CPF website or CPF mobile app. This process will allow you to contribute to their CPF savings early, giving them a financial head start in retirement. By starting early, even small contributions can grow significantly over time due to compounding interest. Additionally, you have the flexibility to top up directly to their MediSave Account or Special Account, depending on your preference.

There are a few reasons to top up your child’s CPR account. They include:

• Build a fund that is risk-free and yields high interest.
• Save money for your child’s education and healthcare needs.
• Make your child a millionaire when he/she reaches retirement age.

But is this way of financial accumulation really the best way to prepare your child for the future? Read on.

‘Die With Zero’: A Contrarian Approach to Family Finances

Let’s look at this from a contrarian view. In the book, Perkins argues that life’s value is maximised through experiences rather than accumulating wealth. He suggests that investing in experiences with children, especially in their formative years, offers more enrichment and lasting happiness than saving money for them to inherit later.

Perkins conducted a Twitter poll asking followers when they would prefer to receive their inheritance. The results of this poll found that individuals often value receiving financial gifts earlier in life, when they can make a significant impact on their experiences and quality of life, rather than later. This insight supports Perkins’ advocacy for prioritising meaningful experiences and financial generosity earlier rather than accumulating wealth for posthumous distribution. By doing so will enable the recipients to enjoy and learn from those experiences when it matters most.

Perhaps it’s time for parents to rethink traditional saving strategies, advocating for a more present-focused approach to spending and life planning. This got me thinking about the balance between parents saving for children’s future and investing in their present happiness and growth. Are parents too focused on the finish line to enjoy the race of life?

The Hidden Price of Over-Saving: What We Lose Along the Way

Focusing solely on saving for our children’s retirement might mean missing out on enriching experiences that could shape our children’s personalities, interests, and values. Think about it: will our kids reminisce about the size of their CPF accounts or the adventures you shared as a family? Not to forget the lasting memories you could be creating now.

We should recognise the possible loss of both tangible and intangible benefits when prioritising long-term financial accumulation over immediate life experiences. Perkins argues that experiences not only enrich our lives in the present but also contribute to a reservoir of happiness and fulfilment that lasts a lifetime.

By choosing to save excessively for the future, individuals risk missing out on opportunities that could have provided profound personal growth, joy, and connections with loved ones. Perkins encourages us to re-evaluate how we allocate our resources, advocating for a more balanced approach that values present experiences as highly as future security.

The formative years of a child’s life, up to 8 years of age, are crucial for their holistic development, including cognitive, social, emotional, and physical aspects.¹ This period is characterized by rapid brain development, influenced by a combination of genetics, environment, and experiences. Optimal growth during these years requires a nurturing environment, proper nutrition, and engaging interactions with caregivers. UNICEF emphasizes the importance of early childhood development and supports measuring the quality of care, access to education, and overall developmental status to advocate for effective interventions.

Finding Harmony: A New Financial Philosophy for Parents

So, where do we go from here? I’m not suggesting we drain our kids’ savings accounts for a spur-of-the-moment trip to Tokyo Disneyland (tempting as it may be). Instead, it’s about finding a happy medium. Can we redefine financial security to include not just monetary wealth but a wealth of experiences too?

Striking a balance between saving for the future and investing in experiences requires a new paradigm in financial planning. This approach entails recognising the unique value of experiences in child development and family bonding, as highlighted by research and insights. By prioritising meaningful experiences without neglecting future financial security, families can create a rich tapestry of memories that enhance personal growth and happiness.

Adopting a balanced perspective fosters a lifestyle where financial decisions are guided not just by future security but by the enriching experiences that define a life well-lived. While I do not have a prescribed way to accomplish this, parents can start by creating a list of experiences that they believe are instrumental for child development and family bonding, and include them in their family budget. Parents can also consider other investment instruments with a shorter investment lock-in period, compared to CPF.

Crafting a Richer Legacy for Your Children Beyond CPF Top Ups

I want to challenge parents to think about your approach to your children’s future. Are we sacrificing the present for a future that’s only imagined? Let’s start a conversation about how we can provide for our children’s futures without overlooking the importance of living fully in the now.

Let’s redefine what it means to truly invest in our children’s futures. I’d love to hear your thoughts and strategies on balancing financial planning with making the most of today. Please leave them in the comments section below.

1. The formative years: UNICEF’s work on measuring early childhood development ↩︎