Financial education outcomes

Improving financial literacy of Hong Kong people could enhance the effectiveness of some public policies that address certain socio-economic issues. Taking this into account, the Financial Literacy Strategy identifies five behavioural themes on which the different target groups can be educated to empower them to take control of their finances.


Youth

The youth group aged 18 – 25 comprises tertiary students, working youths and the unemployed or non-engaged youths. They become responsible for their own financial decisions as they gain more financial independence. Yet, they tend to have relatively low levels of financial literacy, being more prone to over-consumption and not using credit sensibly. After they join the workforce, they will inevitably face the dilemma of making key financial decisions to pursue their day-to-day lifestyle and the need to plan for their future. The issue is particularly acute among young people in low-paid jobs, as many youths adopt a "live-for-today" attitude.

Working adults

Working adults are income earners who support themselves and probably their families. They work towards long-term goals such as buying a flat, starting a family, caring for dependents (parents and children) and preparing for retirement life. Optimism bias often leads people to plan for positive life events but neglect the need to prepare for negative ones. This psychological inclination often applies to retirement planning too. While in employment, adults still have the resources and time to plan and be prepared to meet these financial challenges.

Elderly

The population in Hong Kong, has one of the highest life expectancies in the world. The elderly face the challenge of managing their limited financial resources over their entire retirement life with no or dwindling income. They have to make ends meet and be financially prepared to spend increasingly on health care and medical treatments while ageing. In general, they have relatively low financial literacy. Many want to increase their wealth and may easily be tempted to follow improper investment practices thus becoming victims of mis-selling and scams.

Vulnerable groups

Low-income families, ethnic minorities, new immigrants, foreign domestic helpers and the disabled are normally the most vulnerable groups in society. They tend to have low income and heavy financial burdens. Living in close-knit groups, they integrate less in the community, and have lower financial literacy than other population segments. Some may have less access to financial services, be reluctant to get external help and are less capable to recover from financial shocks.

School children

For school children, money management is less visible nowadays, but opportunities to spend are on the rise. Cashless transactions rival physical cash payments and parents give their children pocket money electronically instead of cash. This reduced visibility changes a child's attitude towards money. People should be educated about financial matters as early as possible in their lives for two main reasons. Firstly, the financial literacy level of an adult is a direct consequence of what was seen, learned and experienced in childhood and adolescence; and secondly, it is more efficient and effective in providing financial education at childhood than taking remedial education efforts at adulthood.

A.
Preparing financially for future personal goals

Preparing financially for future personal goals

Outcomes:
  • Youth believe that if they start planning early, they will have more options for attaining what they want in life, and they are executing a realistic financial plan for what they want to achieve in the short-, medium- and long-term.
  • School children believe they are responsible for planning their own future, and financial planning concepts are embedded into Career and Life Planning education.
Financial education:
  • Resist the societal influences encouraging spending now rather than saving for future.
  • Identify personal goals.
  • Research how much financial resources are required for achieving the goals.
  • Develop and implement a workable financial plan to achieve the goals.
  • Review and adjust the implementation of the plan as needed.
B.
Saving more for retirement

Saving more for retirement

Outcomes:
  • Youth believe that saving for retirement should start when they enter the workforce, and they are actively managing their MPF/ORSO savings.
  • Working adults see the urgent need to save for retirement, and are filling up the retirement savings gap.
  • School children are motivated to develop a saving habit at an early age.
Financial education:
  • Examine the challenges that retirement has on one's (and dependent's) finances.
  • Outline the desired lifestyle of one's retirement years and estimate the living costs.
  • Evaluate the contribution that MPF/ORSO investment has on one's overall retirement plan.
  • Identify suitable ways of accumulating wealth, during different life stages, for retirement use.
C.
Making the most of limited income

Making the most of limited income

Outcomes:
  • Youth are motivated to equip themselves for career advancement in order to increase their earning power, and resist unplanned purchase temptations.
  • The elderly can decummulate their wealth at a pace that allows their income and savings to sustain their retirement.
  • The vulnerable are conscious about spending within their means, and are minimising spending.
  • School children believe that they need to be responsible for their own money, and are given the opportunity to learn about money management as part of their whole-person development.
Financial education:
  • Track daily expenses to identify areas to reduce spending.
  • Make regular savings before spending.
  • Set a budget to prioritise spending.
  • Identify the best deals.
D.
Building resilience against financial adversities

Building resilience against financial adversities

Outcomes:
  • The elderly believe that "low risk, high return" investments do not exist, and they can recognise if a tactic used in scams is being applied to them.
  • The vulnerable believe that there are ways to safeguard themselves against financial adversities, and have an emergency fund.
  • School children are aware of the different financial risks when they spend money off-line and on-line.
Financial education:
  • Identify and evaluate how unexpected events may lead to financial loss.
  • Identify ways to mitigate, transfer or avoid financial loss.
  • Reduce debt and avoid further borrowing.
  • Make appropriate financial arrangements in anticipation of inability to manage one's own finances.
E.
Selecting suitable financial products

Selecting suitable financial products

Outcomes:
  • Youth believe in "saving to buy" rather than "borrowing to buy", and avoid personal loans and minimise debt as much as possible.
  • Working adults believe that they should actively manage their money, and use appropriate financial products to help manage their wealth.
  • The elderly consider their own circumstances and specific needs in their life stage when selecting financial products.
  • The vulnerable use protection insurance to transfer risks that they cannot manage themselves.
  • School children are interested in daily financial matters, and learn about how financial services and products are used in daily life.
Financial education:
  • Ask appropriate questions and gather impartial information about financial products.
  • Assess and select financial products that are appropriate to one's needs and risk tolerance level.
  • Compare different types of insurance for different kinds of protection needs.
  • Compare the pros and cons of different channels for buying and selling financial products.

Target Groups

Youth

The youth group aged 18 – 25 comprises tertiary students, working youths and the unemployed or non-engaged youths. They become responsible for their own financial decisions as they gain more financial independence. Yet, they tend to have relatively low levels of financial literacy, being more prone to over-consumption and not using credit sensibly. After they join the workforce, they will inevitably face the dilemma of making key financial decisions to pursue their day-to-day lifestyle and the need to plan for their future. The issue is particularly acute among young people in low-paid jobs, as many youths adopt a "live-for-today" attitude.

Working adults

Working adults are income earners who support themselves and probably their families. They work towards long-term goals such as buying a flat, starting a family, caring for dependents (parents and children) and preparing for retirement life. Optimism bias often leads people to plan for positive life events but neglect the need to prepare for negative ones. This psychological inclination often applies to retirement planning too. While in employment, adults still have the resources and time to plan and be prepared to meet these financial challenges.

Elderly

The population in Hong Kong, has one of the highest life expectancies in the world. The elderly face the challenge of managing their limited financial resources over their entire retirement life with no or dwindling income. They have to make ends meet and be financially prepared to spend increasingly on health care and medical treatments while ageing. In general, they have relatively low financial literacy. Many want to increase their wealth and may easily be tempted to follow improper investment practices thus becoming victims of mis-selling and scams.

Vulnerable groups

Low-income families, ethnic minorities, new immigrants, foreign domestic helpers and the disabled are normally the most vulnerable groups in society. They tend to have low income and heavy financial burdens. Living in close-knit groups, they integrate less in the community, and have lower financial literacy than other population segments. Some may have less access to financial services, be reluctant to get external help and are less capable to recover from financial shocks.

School children

For school children, money management is less visible nowadays, but opportunities to spend are on the rise. Cashless transactions rival physical cash payments and parents give their children pocket money electronically instead of cash. This reduced visibility changes a child's attitude towards money. People should be educated about financial matters as early as possible in their lives for two main reasons. Firstly, the financial literacy level of an adult is a direct consequence of what was seen, learned and experienced in childhood and adolescence; and secondly, it is more efficient and effective in providing financial education at childhood than taking remedial education efforts at adulthood.

Behavioural Themes

A. Preparing financially for future personal goals
Outcomes:
  • Youth believe that if they start planning early, they will have more options for attaining what they want in life, and they are executing a realistic financial plan for what they want to achieve in the short-, medium- and long-term.
  • School children believe they are responsible for planning their own future, and financial planning concepts are embedded into Career and Life Planning education.
Financial education:
  • Resist the societal influences encouraging spending now rather than saving for future.
  • Identify personal goals.
  • Research how much financial resources are required for achieving the goals.
  • Develop and implement a workable financial plan to achieve the goals.
  • Review and adjust the implementation of the plan as needed.
B. Saving more for retirement
Outcomes:
  • Youth believe that saving for retirement should start when they enter the workforce, and they are actively managing their MPF/ORSO savings.
  • Working adults see the urgent need to save for retirement, and are filling up the retirement savings gap.
  • School children are motivated to develop a saving habit at an early age.
Financial education:
  • Examine the challenges that retirement has on one's (and dependent's) finances.
  • Outline the desired lifestyle of one's retirement years and estimate the living costs.
  • Evaluate the contribution that MPF/ORSO investment has on one's overall retirement plan.
  • Identify suitable ways of accumulating wealth, during different life stages, for retirement use.
C. Making the most of limited income
Outcomes:
  • Youth are motivated to equip themselves for career advancement in order to increase their earning power, and resist unplanned purchase temptations.
  • The elderly can decummulate their wealth at a pace that allows their income and savings to sustain their retirement.
  • The vulnerable are conscious about spending within their means, and are minimising spending.
  • School children believe that they need to be responsible for their own money, and are given the opportunity to learn about money management as part of their whole-person development.
Financial education:
  • Track daily expenses to identify areas to reduce spending.
  • Make regular savings before spending.
  • Set a budget to prioritise spending.
  • Identify the best deals.
D. Building resilience against financial adversities
Outcomes:
  • The elderly believe that "low risk, high return" investments do not exist, and they can recognise if a tactic used in scams is being applied to them.
  • The vulnerable believe that there are ways to safeguard themselves against financial adversities, and have an emergency fund.
  • School children are aware of the different financial risks when they spend money off-line and on-line.
Financial education:
  • Identify and evaluate how unexpected events may lead to financial loss.
  • Identify ways to mitigate, transfer or avoid financial loss.
  • Reduce debt and avoid further borrowing.
  • Make appropriate financial arrangements in anticipation of inability to manage one's own finances.
E. Selecting suitable financial products
Outcomes:
  • Youth believe in "saving to buy" rather than "borrowing to buy", and avoid personal loans and minimise debt as much as possible.
  • Working adults believe that they should actively manage their money, and use appropriate financial products to help manage their wealth.
  • The elderly consider their own circumstances and specific needs in their life stage when selecting financial products.
  • The vulnerable use protection insurance to transfer risks that they cannot manage themselves.
  • School children are interested in daily financial matters, and learn about how financial services and products are used in daily life.
Financial education:
  • Ask appropriate questions and gather impartial information about financial products.
  • Assess and select financial products that are appropriate to one's needs and risk tolerance level.
  • Compare different types of insurance for different kinds of protection needs.
  • Compare the pros and cons of different channels for buying and selling financial products.

Focusing on where the biggest differences need to be and can be made for the targets is often at the centre of a financial education initiative. Stakeholders are encouraged to support, promote and deliver financial education along these five key themes. Financial education may result in different outcomes according to the different target groups.