1. Teaching Kids about Money (Full Version)

2. 2 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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

3. 3 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 1.0 Research Background

4. 4 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 1.1 Background and research methodology 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. 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 parents attitudes about educating their children in good money management habits.

5. 5 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 1.2 Profile of parents responding to the survey Base – Parents of Children aged between 6-12 yrs (n=300) D1. Education D3. Age D2. Household Income D4. Location of Residence

6. 6 © Hong Kong Institute of Certified Public Accountants. All rights reserved. Section 2.0 Parents, children and money

7. 7 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 2.1 Understanding of finance and money Q7. Which of the following best describes your understanding of finance and money? Base – Parents of Children aged between 6-12 yrs (n=300) 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. %

8. 8 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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) 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. 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 % 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.

9. 9 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 2.2.1 How children learn about money - subgroup TotalChilds AgeChild's gender Household income Parent's education Percentage saying Yes (n=300)% 6-9 yrs (n=150) % 10-12 yrs (n=150) % Male (n=160) % Female (n=140) % Less than HK$10k (N=252) % More than HK$10k (n=42) % Secondary (n=247) % University (n=53) % Parents878589888567908594 School393047384045384030 Television12 131411713 Friends639662767 Shopping6745612565 Other children in the family425520444 Other relatives (grandparents / aunts / uncles) 4724425311 Magazine11221-214 Newspaper11221-214 Internet11111-1-4 Books111112-1- Other111-12-1- Don't get advice12112512- Don't know112122-2- MEAN NUMBER SOURCES1.71.51.81.61.71.81.71.61.7 Significantly higher at 95% C.I.

10. 10 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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

11. 11 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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) 2.3.1 Opinion on teaching children about money Children will grow up to become poor if they dont 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 2.6 2.7 2.2 2.0 2.1 Mean 31% 69% 44% 56% 31% 68% 63% 37% 62% 36% 80% 19% 80% 20% %

12. 12 © 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.

13. 13 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 2.3.3 Opinion on teaching children about money – by sub-group % agreeTotalChilds Age Child's gender Household income Parent's education Percentage agree (strongly or somewhat) (n=300)% 6-9 yrs (n=150) % 10-12 yrs (n=150) % 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 dont learn good money habits now 696771 6857727066 Worry that children may fall victim to a financial scam or fraud 565161565760545847 Would benefit from info or assist on how to teach my children about money 686966676988656960 Not capable of teaching good habits with money 363736 33373923 Child will not be able to earn enough money to help me in my old age 352843333836353632 If children have less money to spend than their friends, they will suffer socially 191721201840151823 I feel my children have access to too much money 201920211819201826 Significantly higher at 95% C.I.

14. 14 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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) 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. 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. 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 % that have done 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.

15. 15 © 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. TotalChilds ageChild's genderHousehold incomeParent's education Percentage saying Yes (n=300) % 6-9 yrs (n=150) % 10-12 yrs (n=150) % 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 959694 9688969498 Encouraged children to give to charity or people in need 95949796958896 94 Encouraged children to save money 94 9594 9594 96 Encouraged children to compare prices 696475716771687257 Obtained educational materials in educating about money and finances 52515253515751 53 Significantly higher at 95% C.I.

16. 16 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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) 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. 2.4.2 Children's age when given responsibility to manage their own money % 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 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 Mean 8.5 years Median 8.0 years Mode 6.0 years

17. 17 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 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) 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. 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. 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 % that have done

18. 18 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 2.5.1 Money as reward and punishment – by sub-group TotalChilds AgeChild's gender Household income Parent's education Percentage saying Yes (n=300)% 6-9 yrs (n=150) % 10-12 yrs (n=150) % 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 52475658454852 49 Withheld money / allowance to discipline my children 312636342819263036 Given money for getting good grades 191821 17363119 Have felt manipulated by my children when they have wanted more money 911799128813 Have gone behind my back to get money from others, such as relatives 99911710999 When I have less time with children, I gave them more money to compensate 7777878613 Significantly higher at 95% C.I. 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%).

19. 19 © Hong Kong Institute of Certified Public Accountants. All rights reserved. Q5.How strongly do you agree or disagree with the following statements. 2.6 Opinion about access to money 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) 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. 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 72% 26% 83% 16% 89% 69% 31% 2.9 Mean 3.0 2.8

20. 20 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 2.6.1 Opinion about access to money – by childs age TotalChilds AgeChild's gender Household income Parent's education Percentage net agree (n=300)% 6-9 yrs (n=150) % 10-12 yrs (n=150) % 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) 727470697571737079 Sub-sample size(n=216)(n=111)(n=105)(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) 838087848380848576 As they have easy access to money, they do not understand what it takes to be successful (n=216) 8987909187 908893 As they have easy access to money, they will not have the same success as our generation (n=216) 6967716870776869 There were no sub-group differences in attitudes towards the next generations access to money.

21. 21 © Hong Kong Institute of Certified Public Accountants. All rights reserved. Q6a. How strongly do you agree or disagree with the following statement about retirement? 2.7 Support of parents retirement by children – for two different generations 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. 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. I expect to support my parents financially in retirement I expect my children to support me financially in retirement 86% Of whom 72% feel most in their generation feel the same way 48% Of whom 72% feel most in their generation feel the same way 52% 13% 3.1 Mean 2.5 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)

22. 22 © Hong Kong Institute of Certified Public Accountants. All rights reserved. 2.7.1 Generational shift in retirement support TotalChilds AgeChild's gender Household income Parent's education Percentage agree (strongly or somewhat) (n=300)% 6-9 yrs (n=150) % 10-12 yrs (n=150) % 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 868587848983878689 I expect my children to support me financially in retirement 475045464962465034 Significantly higher at 95% C.I. 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.