Lucky Money: Do You Save or Spend?

Red Envelopes



With Lunar New Year officially over, I’ll bet your kids are flush with cash. Sometimes, I think my kids are richer than I am with all the red envelopes they get for Chinese New Year. I have to admit, when they were smaller, sometimes I’d just use their lucky money to buy groceries or whatever. It’s all in the family, right?

Well now that the boys are older and know the value of the dollar (or $100!), I could never get away with that. By the end of the new year’s period, they each have a stack of red envelopes from various relatives, friends and parties. And the money doesn’t usually pass through my hands anymore. I used to collect all the envelopes and keep them in a safe place, but now that they’re in elementary school and have learned what all those numbers on the bills mean and can read the price tags at Toys R Us, I don’t do that anymore. Last year, I interviewed several financial experts for an article I was working on about teaching kids about money, and I was surprised that all agreed that kids need to be given a chance to spend their own money in order to learn how to manage their budgets in the future.

So we started doing a thing where big sums of money get deposited into the college savings account, but smaller bills go in the piggy bank or wallet. And you know what? My boys are very good at managing their cash. Little Brother, is especially judicious with his spending, because his birthday is in January. So it goes: Christmas, birthday, Lunar New Year. Then… the starvation period. As in 11 months without a major gift-giving holiday. He came up with that term himself, by the way. He’s very careful with his funds, carefully deliberating over Pokemon cards and comic books, and even spreading out his use of little things like Jamba Juice gift cards throughout the year. It’s almost painful for me to watch him agonizing over whether to spend his money on a Lego set or when he whether he needs to pay for the sales tax himself or whether I’ll pay for it.

Big Brother saves his money, too, although he’ll use a few dollars here and there to buy crowns on Wizard 101 or some other online game. Which I think is a waste of money, and it irritates me, and I want to ban him from spending his hard-earned cash (I know, he didn’t have to earn it), but I bite my tongue. After all, it’s his money. And that was one of the other lessons financial experts say kids need to learn: what happens when you waste money. Better to learn that now, than when they’re in college and have to call home in the middle of the month and beg for a wire transfer. Or worse… when they’re adults and can’t pay the bills.

What do your kids do with their lucky money (or birthday checks, or what not)? Save or spend? 




  1. says

    I totally agree that it’s better to have control over their finances now rather than later. Don’t worry, he will realize that buying online game stuff isn’t nearly as satisfying as they thought. My parents did it the same way, encouraged large bills to be saved in the bank account, and petty cash to be saved in the piggy bank. I could withdraw money whenever I needed by asking my parents to take me to the bank, but it was funny I almost never did, instead I would keep it there.

    My mom actually got me an old check deposit register, one for my piggy bank and one for my savings account, so I could keep track of my money. That might be a good idea for the older brother, so when he sees he’s spent $20 over time on online stuff, he can realize that could have been $20 for something more substantial! It was also good at showing how practical being good at math was, and I remember being so proud when my register matched up with my piggy bank count, penny for penny.

    Compared to my friends, who raid their savings account for shoes, it really helped me get in the mindset of “savings account is for for the future and emergency only” and that it’s important to manage your piggy bank (or checking account as it is now).

    • says

      What a good idea with the check register. I’ve never been good at keeping track of money down to the cent like that, but I do thank my parents for teaching me to save the big money for the big things in life.

  2. says

    Isaac collected a fair bit of cash at Chinese New Year and I wanted to set up a savings account for him. But he’s only 3, is that too little? My thoughts are either to buy a piggy bank or just put that money into his college fund. BTW, I did end up spending the cash at the supermarket but with all intentions of giving it back!

    • says

      Yup, that’s exactly what I’ve done. I’d rather deposit checks to the bank, instead of cash. I didn’t feel that guilty about rolling their lucky money into the general fund. We need to eat, too! I have to admit, we didn’t open a savings account for our kids until Big Brother was in Kindergarten. I’m still not sure we made the right decision with the kind of account we started, but that’s a discussion for another day!

  3. says

    It’s hilarious that he calls that the starvation period, but it certainly sounds like he’s learning some good lessons! I think money management is one of those things that too few kids really learn before the stakes get high.

  4. says

    That’s funny – 2 of my kids have birthdays in December so I totally am familiar with that dry spell for most of the year. That’s why I like to keep some of our red envelopes on the side to use throughout the year! Everyone has good ideas – I think I should start to incorporate some of the savings tricks on my kids. I typically store all the envelopes for them but this would be a very good money learning lesson!


Leave a Reply

Your email address will not be published. Required fields are marked *