IEC publishes research on money and debt management in Hong Kong
- Financial position of Hong Kong people was reasonably good but 43% did not put aside emergency funds to cater for their unexpected financial needs
- 1 in 5 Hong Kong people borrowed money and 19% failed to repay on time
- One-third of investors expected to have over 20% investment return but over half did not have stop-loss strategy to limit their investment loss
2 April 2014
The Investor Education Centre (IEC) today published its study IEC Research: Knowledge, Attitudes and Behaviour towards Money and Debt Management. The study was conducted to understand Hong Kong people’s knowledge, attitudes and behaviour towards various aspects of money management, and to identify the knowledge and capability gaps for improvements.
The research shows that the overall financial position of Hong Kong people was reasonably good with 76% managed to maintain a surplus but nearly half of Hong Kong people (48%) did not have a personal budget. In addition, 43% did not put aside emergency funds to cater for their unexpected needs. The majority of Hong Kong people (82%) had financial goals that they wished to achieve; of which only 42% took actions to realise their goals. Inflation was ranked the number one concern among Hong Kong people, who on average spent 60% of their monthly income on daily necessities (67% for the lower income group with monthly household income of less than HKD20,000).
Professor Leonard Cheng, Chairman of the IEC presented the research findings and said: "While the research has found that Hong Kong people are reasonably capable in managing their money, it has also revealed a number of areas where financial well-being and capabilities may require further improvements. These include developing regular budgeting and savings habits for better expense control; prioritising "needs" and "wants" to avoid overspending and excessive borrowing; setting up financial goals and plan; as well as responsible investing according to risk tolerance."
"As a dedicated organisation to cater holistically for the financial education needs of Hong Kong people, the IEC will continue to develop diverse education programmes, tools and resources to promote wise and rational spending as well as responsible borrowing, encourage commitment and discipline on savings, enhance understanding on financial products and correct misconceptions on investment and risk management to help raise the overall financial knowledge and capabilities of Hong Kong people," added Professor Cheng.
The highlights of the key research findings are outlined below:
- Personal budget: About half of Hong Kong people (48%) did not have a personal budget to allocate income and expenses, and more so for the lower income group (61%).
- Savings: 45% save every month and 16% did not save at all; and 43% did not put aside emergency funds to cater for their unexpected financial needs.
- Wealth management: When making investment decisions, some Hong Kong people had misconception on financial products, for example, 27% thought that IPO subscription was mostly profitable and 55% considered that investing in RMB guaranteed value appreciation. Stocks (74%) and foreign currency deposits (63%) were the most common financial products held or traded in the past 12 months by the investors. One-third of investors (33%) expected to have over 20% for their annual investment returns, and yet over half (53%) did not have a stop-loss strategy to limit their potential investment loss, particularly for the female (60%) and the lower income group (66%).
- Attitudes and behaviour towards borrowing: About one in five Hong Kong people (19%) had borrowed money over the past 12 months and among them 19% had failed to repay their debt payments on time. Excluding mortgage and credit card instalment, credit card minimum payment/partial repayment and credit card overdraft/cash advance were the most common form of borrowing; however a quarter of these borrowers were not aware of the interest rate and fees charged by credit cards. Buying favourite items (28%) and paying for entertainment expenses (17%) were ranked most common reasons for borrowing.
For details of the full research report, please visit the IEC website (www.hkiec.hk) for information.
Photos and captions:
- Professor Leonard Cheng, Chairman of the IEC presented the findings of the IEC Research: Knowledge, Attitudes and Behaviour towards Money and Debt Management and showed the latest set of IEC's financial education resources available for public use.