Teaching Kids about Money (Full Version)

Table of contents Section 1: Research Background 1.1 Purpose and methodology 1.2 Respondent profile Section 2: Parents, children and money 2.1 Understanding of finance and money 2.2 How children learn about money 2.3 Opinions on teaching children about money 2.4 Money guidance for children 2.5 Money as reward and punishment 2.6 Opinions about access to money 2.7 Generational shift in retirement support © Hong Kong Institute of Certified Public Accountants. All rights reserved.

1.0 Research Background © Hong Kong Institute of Certified Public Accountants. All rights reserved.

1.1 Background and research methodology The purpose of the research In November 2006, The Hong Kong Institute of CPAs commissioned independent market research consultancy, Cimigo, to undertake an investigation into parent’s attitudes about educating their children in good money management habits. The research methodology A total of 300 face-to-face interviewer- administered questionnaires were completed. Professional interviewers were assigned to intercept parents of children between six to 12 years old in prominent shopping locations. The sample was split 50:50 between male and female parents and parents of male and female children. Respondents were asked to think about one age group with their children aged six to 12 years. © Hong Kong Institute of Certified Public Accountants. All rights reserved.

1.2 Profile of parents responding to the survey D1. Education D2. Household Income D3. Age D4. Location of Residence Base – Parents of Children aged between 6-12 yrs (n=300) © Hong Kong Institute of Certified Public Accountants. All rights reserved.

Section 2.0 Parents, children and money © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.1 Understanding of finance and money Most parents in Hong Kong claim to understand finance and money somewhat well, with relatively few understanding money very well and just over one in 10 indicating they understand finance and money not at all well. % The two factors most strongly correlated with parents self described understanding of finance and money are education and household income. Those with lower income (less than HK$10,000) had a significantly lower understanding of finance and money – 23% claimed to not understand it well at all vis-à-vis 14% amongst all respondents. Parents with secondary education only were likely to say they understand finance and money not at all well. However, it should be noted that the majority (77%) of secondary educated parents still say they understand money somewhat well. Q7. Which of the following best describes your understanding of finance and money? Base – Parents of Children aged between 6-12 yrs (n=300) © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.2 How children learn about money Parents School Television Friends Shopping Other children in the family Other relatives (Grandparents/Aunts/Uncles) Magazine Newspaper Internet Books Other Don't get advice Don't know Most parents said they themselves teach their children about money. School is also an important source for a substantial minority of children, especially older children, and one in ten parents believe their children learn about money from television. The probability that parents educate their children about money is lower if they have a low household income or less education. Parents with lower income (less than HK$10,000) are less likely to educate their children about money – only 67% said they themselves are a source of information about money versus 90% of respondents earning more than this amount. As children get older, school becomes more important for learning about money - 47% of parents of 10-12 years old say their children learn about money from school, versus 30% of 6-9 years old. 89% of parents who describe themselves as understanding money very or somewhat well teach their kids about money. Comparatively, of the 14 percent of parents who understand money not at all well, 72 percent are teaching their children about money and 37 percent of this group (around 5% of all children) said they are the only source of information about money for their children. % Q1. To the best of your knowledge, where do your children aged [6 to 9 / 10 to 12] years currently learn about money? Base – Parents of Children aged between 6-12 yrs (n=300) © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.2.1 How children learn about money - subgroup Total Child’s Age Child's gender Household income Parent's education Percentage saying Yes (n=300)% 6-9 yrs (n=150) % 10-12 yrs Male (n=160) % Female (n=140) % Less than HK$10k (N=252) % More than HK$10k (n=42) % Secondary (n=247) University (n=53) Parents 87 85 89 88 67 90 94 School 39 30 47 38 40 45 Television 12 13 14 11 7 Friends 6 3 9 2 Shopping 4 5 Other children in the family Other relatives (grandparents / aunts / uncles) Magazine 1 - Newspaper Internet Books Other Don't get advice Don't know MEAN NUMBER SOURCES 1.7 1.5 1.8 1.6 © Hong Kong Institute of Certified Public Accountants. All rights reserved. Significantly higher at 95% C.I.

2.3 Opinion on teaching children about money Parents were asked their attitudes to a range of statements about teaching their children about money. The chart overleaf shows that the majority of parents are concerned their children may grow up poor if they don't learn good money habits now, and they worry their children may fall victim to a financial scam or fraud. Although most parents feel capable of teaching their children about good money habits, a majority of parents also feel they would benefit from information or assistance. Most parents are not concerned about their children having sufficient money to support them in their old age and they are also mostly not concerned that their children will suffer socially if they have less money than their peers. While only one in five feel their own children has access to too much money, the majority do not see this as an issue. Yet more than 70% of parents agree that the young generation in Hong Kong have too much access to money. (see 2.6) 69% agree that their children will grow up to poor if they don't learn good money habits now 56% agree they worry their children may fall victim to a financial scam or fraud 68% would benefit from information or assistance on how to teach their children about money 37% of parents agreed either somewhat or strongly that they do not feel capable of teaching their children about money 36% of parents agree they worry their children may not be able to support them in their old age 19% agree their children may suffer socially if they have less money to spend than their friends 20% agree their children have access to too much money © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.3.1 Opinion on teaching children about money Q2.Now, I would like to find out your opinions about teaching children about money. Base – Parents of Children aged between 6-12 yrs (n=300) Mean Children will grow up to become poor if they don’t learn good money habits now Children may fall victim to a financial scam or fraud Would benefit from assistance on how to teach my children about money Not capable of teaching good habits with money Children will not be able to earn enough money to help me in my old age If children have less money to spend than their friends, they will suffer socially I feel my children have access to too much money 2.8 31% 69% 2.6 44% 56% 2.7 31% 68% 2.2 63% 37% 2.2 62% 36% 2.0 80% 19% 2.1 80% 20% % © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.3.2 Opinion on teaching children about money – sub-group differences Parents of older children (10-12 year olds) worry more about their children not being able to earn enough money to support them in old age (43%) as compared to parents of younger children (28%). Interestingly, the level of concern appears to be related more strongly to the age of the children than the age of the parents. Parents with lower education level (secondary education or less) feel less capable of teaching their children about good money habits (39% agree they are not capable) versus parents with university level education (23%). Parents with household incomes below HK$10k per month are more likely to say they would benefit from information or assistance on how to teach their children about money (88%) than those with higher household incomes (65%). Parents with household incomes, below HK$10k per month are also more likely to agree that if their children have less money to spend than their friends, they will suffer socially (40%) than those with income over HK$10k (15%). However, they are less likely to worry that their children will grow up poor because they don't learn good money habits (57%) than those with incomes over HK$10k (72%), indicating perhaps a lower general concern with money than their more wealthy counterparts. Of the 37% of parents who do not feel capable of teaching their children good money habits, 88% are providing money advice to their children, indicating a definite need for such parents to be provided with information and support. © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.3.3 Opinion on teaching children about money – by sub-group % agree Total Child’s Age Child's gender Household income Parent's education Percentage agree (strongly or somewhat) (n=300)% 6-9 yrs (n=150) % 10-12 yrs Male (n=160) % Female (n=140) % Less than HK$10k (N=252) % More than HK$10k (n=42) % Secondary (n=247) University (n=53) Worry that children will grow up to become poor if they don’t learn good money habits now 69 67 71 68 57 72 70 66 Worry that children may fall victim to a financial scam or fraud 56 51 61 60 54 58 47 Would benefit from info or assist on how to teach my children about money 88 65 Not capable of teaching good habits with money 36 37 33 39 23 Child will not be able to earn enough money to help me in my old age 35 28 43 38 32 If children have less money to spend than their friends, they will suffer socially 19 17 21 20 18 40 15 I feel my children have access to too much money 26 Significantly higher at 95% C.I. © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.4 Money guidance for children While parents are active in encouraging positive attitudes in their children towards money such as encouraging to give to charity and to save, practical actions such as encouraging children to compare prices or obtaining educational materials are less common. Encouraged my children to have a healthy attitude to money Encouraged children to give to charity or people in need Encouraged children to save money Encouraged children to compare prices Obtained educational materials to assist in educating children about money and finances Ninety-five percent (95%) of all parents have encouraged their children to have a healthy attitude to money and encouraged their children to give to charity or to people in need. A similar proportion (94%) have encouraged their children to save money. However, only 69% have encouraged their children to compare prices and only half (52%) have obtained educational materials to assist in educating their children about money and finance. Only half (56%) of parents who feel incapable of teaching their children about money have actually obtained materials to assist in educating their children about money and finances. % that have done Q3a Which of the following applies to you and your child/children aged [6 to 9 / 10 to 12] years? Base – Parents of Children aged between 6-12 yrs (n=300) © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.4.1 Money guidance of children – by sub-group The incidence of encouraging children to compare prices was higher among parents of older children (75%) versus parents of younger children (64%). Female parents are more likely to encourage their children to compare prices (77%) than male parents (62%) as are parents with secondary or lower education compared to university educated parents (72%). Parents with high household income (>HK$40,000) are less likely to have encouraged their children to compare prices (51%) versus 69 percent among all, indicating that this is a lower priority in their children's money education. Parents with household income greater than HK$10,000 per month are more likely to have encouraged their children to have a healthy attitude towards money, although most parents of lower income do this too. Parents with income below HK$10,000 were less likely to have encouraged their children to give to charity – 12 percent had encouraged their children to give to charity versus 4 percent amongst all. Total Child’s age Child's gender Household income Parent's education Percentage saying Yes (n=300)% 6-9 yrs (n=150) % 10-12 yrs Male (n=160) % Female (n=140) % Less than HK$10k (N=252) % More than HK$10k (n=42) % Secondary (n=247) University (n=53) Encouraged my children to have a healthy attitude to money 95 96 94 88 98 Encouraged children to give to charity or people in need 97 Encouraged children to save money Encouraged children to compare prices 69 64 75 71 67 68 72 57 Obtained educational materials in educating about money and finances 52 51 53 Significantly higher at 95% C.I. © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.4.2 Children's age when given responsibility to manage their own money Mean 8.5 years Median 8.0 years Mode 6.0 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years 11 years 12 years 13 years 14 years 15 years 16 years 17 years 18 years On average, parents say they have or will give their children the responsibility to manage their own money between the age of eight and nine years. However, the distribution of ages is very variable and there is no single age which most parents agree is the right age to confer this responsibility. Half of all parents have given their children responsibility for managing their own money by the age of eight. However, a small number of parents (3%) indicate they have given their children such responsibility at the age of three and 21 percent in aggregate have given this responsibility by the time their child is five years old. At the other end of the spectrum, 19 percent of parents will not give money management responsibility until their children are aged at least 12 years. There are no significant subgroup differences for the age when children are given responsibility to manage their money 3b. At what age did you or will you give your child(ren) the responsibility to manage their own money such as pocket money or allowance? Base – Parents of Children aged between 6-12 yrs (n=300) % © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.5 Money as reward and punishment Many parents are willing to give their children money above their usual allowance. While a substantial minority withhold money as a form of discipline, most parents do not use money to reward good grades at school or to compensate for their own absence. Given extra money to pay for something they wanted, above their usual allowance Withheld money / allowance to discipline my children Given money for getting good grades Have felt manipulated by my children when they have wanted more money Have gone behind my back to get money from others, such as relatives When I have less time with children, I gave them more money to compensate Whilst 52 percent of parents have given their children money above their usual allowance to reward good grades, only around a third (31%) have withheld money to discipline their children. Around one in five parents (19%) said they have given money to their children for getting good grades and seven percent have given their children more money to compensate for their own absence. Around one in ten parents (9%) have felt manipulated by their children when they wanted more money or discovered their children sourcing money from others behind their back. % that have done Q4 Which of the following have you done in the last six months with regard to money given to your child/children aged [6 to 9 / 10 to 12] years? Base – Parents of Children aged between 6-12 yrs (n=300) © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.5.1 Money as reward and punishment – by sub-group The behaviour of parents and their children with regards to money is consistent across different segments. The age of the children, parents’ income and parents’ education appear unrelated to how parents use money for reward and punishment and how children may seek to obtain money. However, two key differences stand out. Parents over 40 years of age were more likely to have withheld money / allowance to discipline children (36%) than parents below 40 years of age (24%). Male children are more likely to get money over their allowance for something they wanted (58%) than are female children (45%). Total Child’s Age Child's gender Household income Parent's education Percentage saying Yes (n=300)% 6-9 yrs (n=150) % 10-12 yrs Male (n=160) % Female (n=140) % Less than HK$10k More than HK$10k Secondary (n=247) % University (n=53) Given extra money to pay for something they wanted, above their usual allowance 52 47 56 58 45 48 49 Withheld money / allowance to discipline my children 31 26 36 34 28 19 30 Given money for getting good grades 18 21 17 Have felt manipulated by my children when they have wanted more money 9 11 7 12 8 13 Have gone behind my back to get money from others, such as relatives 10 When I have less time with children, I gave them more money to compensate 6 Significantly higher at 95% C.I. © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.6 Opinion about access to money Q5.How strongly do you agree or disagree with the following statements. While 80% of the parents felt their own children do not have too much access to money (see Q2), more than 70% of parents agreed that the younger generation in Hong Kong have too much access to money. Among this group, most agreed that it would be consequently hard to teach the younger generation about money, and they will not understand what it takes to be successful. Two thirds also believed that the next generation will not have the same success because of their easy access to money. Mean The younger generation today has too much access to money (n=300) Hard to teach them about money as they have too much access to money (n=216) As they have easy access to money, they do not understand what it takes to be successful (n=216) As they have easy access to money, they will not have the same success as our generation (n=216) 2.9 26% 72% 3.0 16% 83% 3.0 71% agree that the younger generation today has too much access to money 83% of this group agree that it is hard to teach this younger generation money because they have too much 89% agree that the younger generation does not understand what it takes to be successful because they have too much money 69% agree that the younger generation will consequently not have the same success as their parents’ generation 89% 2.8 31% 69% © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.6.1 Opinion about access to money – by child’s age There were no sub-group differences in attitudes towards the next generation’s access to money. Total Child’s Age Child's gender Household income Parent's education Percentage net agree (n=300)% 6-9 yrs (n=150) % 10-12 yrs Male (n=160) % Female (n=140) % Less than HK$10k More than HK$10k Secondary (n=247) % University (n=53) The younger generation today has too much access to money (n=300) 72 74 70 69 75 71 73 79 Sub-sample size (n=216) (n=111) (n=105) (N=30) (N=183) (n=174) (n=42) Hard to teach them about money as they have too much access to money (n=216) 83 80 87 84 85 76 As they have easy access to money, they do not understand what it takes to be successful (n=216) 89 90 91 88 93 As they have easy access to money, they will not have the same success as our generation (n=216) 67 68 77 © Hong Kong Institute of Certified Public Accountants. All rights reserved.

Of whom 72% feel most in their generation feel the same way 2.7 Support of parents’ retirement by children – for two different generations Q6a. How strongly do you agree or disagree with the following statement about retirement? There is a strong generational shift in attitudes towards children's financial support of their parents in retirement. While almost nine in 10 parents expect to support their parents in retirement, only half of the parents would in turn expect their children to support them in retirement. I expect to support my parents financially in retirement I expect my children to support me financially in retirement Mean 3.1 86% of parents agree that they expect to support their parents in retirement, with 23% strongly agreeing with this statement. 48% of parents expect their children to support them in their retirement. While this is a substantial minority, half of the parents expect to support their parents, but not receive support from their children. Notably, 72% of parents who expect to support their parents in retirement feel that most in their generation feel the same way. The same figure applies to those expecting their children to support them in retirement. 86% Of whom 72% feel most in their generation feel the same way 13% 2.5 48% Of whom 72% feel most in their generation feel the same way 52% Q6b & c. You said that you (answer of Q6a, A/B) expect to support your parents / your children to support you in retirement. Do you think most people of your generation feel the same way? Base –6 b (n=299) & 6c (n=298) © Hong Kong Institute of Certified Public Accountants. All rights reserved.

2.7.1 Generational shift in retirement support The table below shows that while the prevailing opinion is decreasing reliance on children to support retirement wealth and education have a role to play. Specifically, parents with household income below HK$10,000 are more likely to expect their children to support them in retirement (62%) than are those with household income above HK$20,000 (46%). Similarly, those with secondary or lower level of education are more likely to expect support from their children in retirement (50%) compared to those with a university education (34%). The conclusion is that parents are less likely to expect their children to support them if they have more wealth. Total Child’s Age Child's gender Household income Parent's education Percentage agree (strongly or somewhat) (n=300)% 6-9 yrs (n=150) % 10-12 yrs Male (n=160) % Female (n=140) % Less than HK$10k More than HK$10k Secondary (n=247) % University (n=53) I expect to support my parents financially in retirement 86 85 87 84 89 83 I expect my children to support me financially in retirement 47 50 45 46 49 62 34 Significantly higher at 95% C.I. © Hong Kong Institute of Certified Public Accountants. All rights reserved.