Asked 3w ago
My elder sister has been working for 5 years since graduating with a degree. She reasoned that paying back student loans to my mum (a housewife) is technically like giving allowance. As such, for the past 5 years she hasn’t been giving any allowance. While i greatly disapprove of her actions, I am trying to understand if this is a norm for any other household. How should I allocate a portion of my salary as allowance for my parents yet being able to juggle repayment of student loans post-grad?
It depends on the dynamics of the parent and the child. Some parents really insist (I emphasise on that word) that their children give them a monthly allowance for bringing them up. It's especially pertinent in an Asian Chinese society because of the Confucian concept of filial piety. That being said, it wouldn't have mattered whether the child is repaying the parent for a loan Since the "repayment" for upbringing is a lifelong thing. Most children do take the initiative to return back to their parents too so that works best since it's a two-way thing.
There is no one-size fits all answer because different households do it differently. Some parents are willing to withhold receiving of allowance from their children till their student loan is paid off. Some still insist on receiving the allowance despite the monthly student loan repayment. Ultimately it requires open communication with the parents. What about saving up for big ticketed items like wedding etc?
The assumption here is that every parent has their children's best interests at heart. I know of parents who avoid taking an allowance for the time being because their children is managing items like housing etc.
Practically, your loan should theoretically be frozen in light of the COVID-19 measures. You can consider giving back to your parents for now, and then asking if you can delay the allowance once your loan resumes if finances are tight. This allows you the space to save too.
However if repayment of your loan is pertinent to you, you can allocate 10-20% of your monthly salary to repay your loan while 10% of your income to your parents for now. The rationale is to avoid the interest rolling And get it done asap. Once your loan is repaid, you can adjust 10-20% of your income allocation for your parents. A typical Budget for remaining expenses will be 10% for investment, 10% for savings, 20% for emergency fund and 10% on insurance And remaining on expenditure if that works for you.
Financial planning is an integral part of life. You can reach me here to find out more.
The values being imparted (or not being imparted) about love to your sister is very wrong. I hope when she's old and being someone's parent, she'll get to understand the difficulties of parenting and being a provider, especially sandwich generations and not getting the same treatment from her kids.
Let's not learn from what is wrong but let's do what is right. Discuss with you parents if they are short of $, understand their income / expenses and lifestyle and calculate how much do they live monthly. This is to be aware that are they short of $ and if there's alternative, can they live with a different lifestyle etc.
With that information you find out, you can decide to give:
1) 5 -10% of Monthly allowances and increase gradually as you earn more; next
2) Repay student loan and increase as your earn more
If they need more, then you can:
1) 10- 15% of Monthly allowances and increase gradually as you earn more; next
2) Reduce 5 to 10% of student loan repayment and increase as you earn more.
This is because of the priorities:
1) Allowance for the living, especially your love one should be #1 as they are your love one.
2) Loans/ debts will be repay sooner or later one day, between the living and the debts, the living should always comes first. Of course the earlier you repay, the better your earn (save on interest) after taken care of the living.
Remember that whatever a man sow, he will reap.
Let's not sow bad seed and reach a bad harvest but
let's sow good seed so that our good harvest will be plentiful.
Let's be a blessings! :)
No offence but I disagree with your sis actions too. Repayment of loan and allowance are 2 different things. The fact that the loan is alr interest free is good yet still wanna take advantage.
I will prioritise settling the loan first if its from the bank since there is interest, maybe give a small sum like $100 as allowance. After clearing the loan, then increase the allowance. I'm sure ur mum will understand
Prioritize your student loan repayment first. 5-10% of your salary should be sufficient for family allowance. Unless your family is depending on both of you for their retirement, most would be better off planning their finances themselves given the knowledge gap of investments between generations.
No right or wrong, what is to say that one doesn't give because of issues at hand or that the parents simply do not need it?
Much of the logic behind this is to instill disciplined savings for traditional families, but if one already commands discipline in savings, and have better avenues for investing due to understanding the investment landscape better, conveying that advantage will solve that problem.
Follow me here.
Erm just sharing what I did back years ago...
When I started my first real perm job, starting pay was 2k. 400 went to cpf (20%). I followed my poly friends style and gave 400 to my mum (another 20%). I was paying 150 monthly to cpf (7.5%) for the education loan. Live on the rest, didn't save a lot after paying 213 monthly for whole life policy.
Is it doable? Yeah. It's more a matter of whether you want to do it or not. If you have a budget and a plan, you will find a way to balance things out.
The only rule that matters when it comes to budget is it must balance to zero, so income = expense + savings. Savings cannot be zero. After that is just how you prioritise.
Early stage, no money to invest is OK. Prioritise on loans, keep costs manageable, gradually build emergency fund, then save for hdb.
I had an agreement with my parents that I would prioritise paying student loans first over giving them allowance. Imo it makes more sense because if you're not paying your loans, interest accumulates and that means less money for you/your family in the long run – unless your parents really really need the money right now la.
At the same time, totally understand the sentiment, which is why I'm rushing to pay back my loans (abt 30% of my take home pay) so I can give them an allowance after. Which is why I'm a bit iffy about your sister's situation – unless her job is very low paying or she studied overseas with a massive debt, she should have finished paying by now. So if she is none of the above and still in debt five years in, sounds like she's been paying in quite small instalments and spending the money on her lifestyle – which, imo, means she can afford to give your mum a small allowance.
Just my POV!
Sorry if I don’t quite understand. Is your sis repaying student loans to the bank or is she paying student loans to your mum?
If she is repaying loans to your mum, she is technically giving some amount monthly to your mum, no? Then it’s up to how your mum decides to view the repayment.
However if she is repaying loan to the bank, then it really depends on the family dynamics. To some families, education cost is seen primarily the responsibility of the parents. But for others who do not have that luxury, the onus is on the child at an earlier age compared to their peers. If so, it may seem reasonable for delaying giving family allowance. But of cos, there may be other issues at play too, like money management skills or ‘silent displeasure’ over parents not taking care of child’s education etc. It is really family dynamics.
How about paying for a specific bill or paying an equivalent amount? E.g. groceries, telco bills or utility bills?
It's the thought that counts. I'm sure your parents will understand.