8 Ways To Help Your Parents With Their Finances Without Giving Them Money

Are your parents consistently rejecting the money you’re giving them? Or do you feel it’s never quite enough? Here are some other ways to support your parents financially without having to actually hand them cash.

For many Singaporeans brought up with Confucius’s value of filial piety, giving a monthly allowance to our parents once we start working in a full-time job seems like a rite of passage. After all, our parents were the ones who tirelessly brought us up — we ought to give back!

However, if your parents are the stubborn type who refuses to accept any monetary gifts, fear not, we have a Plan B, up to a Plan I even.

From signing them up for a supplementary card to being a co-borrower for their mortgage, here are eight ways to help your parents out financially without directly giving them money. We’ve also grouped them according to age groups to suit the needs of different parents better!

Related to this topic: 
How To Plan And Achieve Your Financial Goals For 2022

Parents in their 50s

#1 Buy bonds

If you’re looking to help accumulate wealth for your parents with retirement in mind, you can consider buying a bond. Not a traditional gift, I know, but it can contribute towards their retirement fund or offset some of the financial burdens once the bond matures. Not only do they offer stable yields ranging from 2% to 3%, but they are also relatively low-risk investment vehicles. 

Bonds usually distribute interest payments twice a year. You can earn from collecting interest payments and selling the bonds at a higher price to earn profits. There are many bonds you can consider with investment-grade credit ratings on the SGX market that have shown the potential to perform well.

For the risk-averse, Singapore Savings Bonds (SSB) are generally a lot safer and have returns ranging from 1% to 3%. They only require a minimum of S$500 to get started.

Shopping for bonds to help your parents’ finances grow? Check out the best brokerage accounts in Singapore.

#2 Introduce them to a Financial Advisor

In the past, financial advisors weren’t really that common compared to the current generation. If your parents are flying solo on their financial planning journey, a financial advisor might be able to help them out by giving professional advice. 

Even in their 50s, there’s still a lot that your parents can do to beef up their savings plan, coverage or investment portfolio to ensure a more comfortable retirement. Whether it’s increasing their coverage with a rider or buying a short-term savings plan, your parents will definitely benefit from a detailed look-through. Factoring their age in, there is still a workable time horizon to improve their finances.

#3 Contribute to an endowment plan

Endowment plans are great if you are looking for better returns on cash locked inside your account, as they provide higher interest rates than your average savings accounts. With endowment plans lasting up to 25 years, plans with a longer policy term usually give you a higher interest rate of up to 5%.

But don’t worry if you think 10 years is too long. There are many short-term endowment plans you can choose from as well, ranging from one to three years. Their interest rates are usually on the lower side of about 1% to 2%, but they are still more competitive than some savings accounts.

Depending on the available capital and financial needs, you can choose a policy term that is suitable for your parents. Alternatively, you can look into fixed deposits or other savings plans that work similarly.

If you prefer more liquidity, you can park your parents’ savings into one of these savings accounts that give you high interest rates.

Related to this topic: 
5 Easy Ways To Meet Your CPF Basic Retirement Sum
Are Your Ageing Parents Ready For Retirement?

Parents in their 60s

#4 Help them with annual reviews of their coverage

If they're skeptical about financial advisors, offer to review their insurance portfolio with them annually. Sit them down and go through each plan one by one, review their budget and if the coverage is applicable at their life stage. If you are unsure, you can always seek professional advice by calling the insurer’s hotline. These guides from Life Insurance Association (LIA) can help individuals get started. 

From the age of 60 and above, seniors are more prone to injuries and medical conditions. This might be a good time to increase their coverage if they haven’t done so earlier. 

Most types of insurance plans charge premiums based on the age you purchase the plan, which means that the younger you buy it, the cheaper it is for life. The exception is health insurance premiums, which increase over time as we age. 

When it comes to health insurance, all Singaporeans will automatically be enrolled into Medishield Life which covers a certain portion of your medical bill for inpatient and outpatient treatments. However, if you want to boost their coverage, you can consider adding an Integrated Shield Plan for greater peace of mind.

Compare the best insurance plans for your parents for sufficient coverage that meet their needs.

#5 Be a co-borrower for their mortgage

If your parents are in their 60s and are still paying mortgage payments, there’s a high chance that they have less than five years left on their tenure since the home loan might not be approved in the first place when mortgage tenure exceeds age 65.

If you’ve got a relatively high salary, it could be a good idea to be a co-borrower for their mortgage. However, you’ll have to be a co-owner of the house in order to be a joint borrower. If your parents own an HDB flat, this means that you cannot simultaneously hold another HDB flat under your name, though you can own private property.

As a joint borrower, your Total Debt Servicing Ratio (TDSR) and Loan-To-Value (LTV) will also be compromised, since there is an additional loan that you’ll have to repay under your name. On top of that, your credit score may be affected. 

Though being a joint borrower seems like a good idea in theory, there are many implications you have to take note of. It is only suitable for those with a high-paying salary (since salary is taken into consideration for you to be approved as a co-borrower) and who own an existing private property (since TDSR and LTV will be affected) to consider being a joint borrower.

Are you or your parents looking for home financing options? Compare the best rates for home loans in Singapore. 

Related to this topic:
CPF Retirement Sums - A Complete Beginner's Guide (2022)
New Studies Show Large Retirement Savings Gap In Singapore

Parents in their 70s and above

#6 Sign them up for a supplementary card

For parents in their 70s, we can safely assume that most of them would have retired, albeit some may have taken on part-time jobs to help ease the financial burden or kill boredom. 

This is a good time to sign them up for a supplementary card for them to purchase their daily necessities like food and groceries, without having to rely on their own retirement fund.

Pros

These cards make spending a lot easier since you won’t have to allocate a specific sum of money to cover their monthly expenses, even when you’re not physically present to pay. 

Supplementary cards also usually share the same rewards structure as the principal card, so they can help boost your rewards too. Alternatively, you can use the points received to let your parents choose their own gift. 

Cons

A supplementary card doesn’t increase the spending limit. This means that you’ll either have to opt to raise the limit or budget your spending on your primary card to prevent any instances of a rejected card when your total spending hits the cap.

Pro tip: It’s best to choose a principal/supplementary card that has no rewards cap so it helps to maximise the cashback or miles that you can earn with double the spending.

Compare the rates for the best credit cards in Singapore to maximise the rewards for you and your parents!

#7 Top up their CPF

Since your parents were born before 1957, they are on the Retirement Sum Scheme where the payout amount depends on how much they have set aside in their Retirement Account (RA). If they did not opt to start their payouts earlier anytime from the Payout Eligibility Age (PEA), their payouts would have automatically started at 70 years old, and last until their RA savings run out.

To help them receive higher payouts, you can top up their CPF SA through the Retirement Sum Topping-Up Scheme (RSTU) to grow their retirement savings. With the new CPF implementations, you can now top up your parents’ accounts up to S$8,000 per year, from the original S$7,000.

Not only will they receive higher payouts, but you’ll also get to receive up to S$8,000 in tax reliefs (depending on the amount you choose to top up).

#8 Prepay bills

If your parents refuse to accept cash, you can simply help to pay off some of the recurring bills like their utility bills, insurance premiums, mortgage or phone bills. Even if they’re not struggling financially, it’s a kind gesture to show that you love and care for them.

This can help to offset some of the financial burdens and give them a little extra money to treat themselves to material purchases.

Nothing says “I love you” more than offering to support your parents financially. But if you want to go beyond just handing them cash, here are some ways you can show your appreciation for raising you to become the person you are today — a small gesture can go a long way!