The story of ang pow" dates back to the Sung Dynasty in China. A village called Chang-Chieu was at the time terrorised by a huge demon. No one was capable of defeating it, not even their greatest warriors or statesmen. However, a young orphan, armed with a magical sword inherited from his ancestors, fought the evil demon and eventually killed it. The villagers were triumphant and the elders presented the brave young man with a red envelope (more like a red pouch I would imagine) filled with money for his courage in saving them. Since then, the ang pow has become a part of traditional Chinese customs.Practically every Chinese family practices giving out thee red packets during the Chinese New Year period, weddings, birthdays or important events like one's child's graduation. Kids or the unmarried stands to gain more from this exercise.
The obligors are normally married couples and older folks. Newly weds are "encourage" to make their "contribution" more sizable in order that their marriage will be a fruitful and lasting one. I've always been taught by my mother to have notes in pairs, depending on the denomination of currency available, e.g. RM11- comprising of one RM10 note and one RM1 note.
The handing out of red packets are reciprocated by kids' parents respectively when families visit one another.