Cost of raising children an increasingly heavy burden for HK parents
Raising a child from birth to university is a financial struggle for manyparents who feel compelled to shell out large sums on education and even holidays, writesLi Hui-ming
Mok Lai-kwan and her husband, both middle-ranking civil servants, knew from the start that raising a child would drain their resources. But neither expected it would begin as soon as their baby was born. Within a month, they had spent more than HK$200,000 on medical treatment for their daughter, who was diagnosed with a nerve disorder of the colon.
The first two years were especially tough as medical bills piled up, with many visits to specialists and hospitals.
"At that time, we were struggling to make ends meet. We had to employ a helper as neither of us could afford to give up work to look after her," Mok recalls.
Fortunately, their daughter recovered fully and they later managed to sign her up on a medical insurance scheme against future health problems.
Medical issues aside, Mok and her husband are like many other middle-class families with children (University of Hong Kong social scientist Paul Yip Siu-fai defines middle-class households as those earning HK$50,000 or more each month - only 10 per cent of the city's 2.4 million households). Between paying for the children's health care, tuition and other expenses until they finish university or some other tertiary training, there's not much spare cash.
Other than buying a home, providing the children with a sound education so they can make their way in the world is undoubtedly a top priority and often the biggest outlay for the family.
The costs pile up in different ways. Desperate to enrol their youngsters in elite schools, many parents relocate to a district with a cluster of famous schools - a "good school net" - despite the high rental and property prices in these sought-after areas. Mok's family, for example, owns a flat in Tai Po, in the New Territories, but pays a monthly rent of HK$18,000 to live in a two-bedroom flat of less than 700 sq ft in Causeway Bay. Her friends do the same: one rents a 400 sq ft flat in Western district for HK$12,000 a month, also to boost her child's chances of getting into a good school.
"Families like us mostly aspire to send our children to famous schools. You may not see it, but everyone has hired home tutors," says financial consultant Sonia Cheng Mee-lin, who has two teenage children studying at leading secondary schools (so-called "band one" institutions).
Cheng's children, for example, have been receiving tuition since they were toddlers. Since Kelvin, 12, goes to a government school, while Winnie, 15, attends a direct subsidy scheme school, their fees are not a huge drain on the family coffers compared to children attending private schools. As a result, Cheng has more resources available for private lessons to help with her children's English and Putonghua proficiency, and generally improve their grades.
"I'm not going to be tight-fisted about it. I've hired tutors specialising in different subjects since my children were at kindergarten," she says. "But it's also the school system which forces us to do this. The schoolwork is just too tough for students to keep up with."
One-on-one home tutoring typically costs between HK$250 and HK$350 per hour. And as demand for these services increases, fees are creeping ever higher. Then there's the plethora of extracurricular classes - piano, violin, ballet or a sport - that are being crammed into youngsters' schedules. It's a rare parent who can withstand the pressure to give their children every possible advantage in Hong Kong's fiercely competitive culture. Being able to play at least one musical instrument has become a basic expectation for primary school admissions when interviewers ask what the child is learning outside school.
In Cheng's case, tutorials and school fees take up about 35 per cent of expenditure on her children; music classes and sports programmes add another 15 per cent, so education accounts for about half of the spending.
Former windsurfing champion Li Lai-shan caused a stir six years ago when she appeared in a bank advert which suggested that bringing up a child through to college could cost HK$4 million. Many bristled at the figure, dismissing it as an exaggeration and an elitist approach to raising a child. But that estimate does not sound so startling now, as prices of services and daily purchases are constantly rising.
Mok cites the cost of potato chips as a rough indicator. A packet of chips cost HK$13.50 three years ago and now it's HK$19.90. That's a 48 per cent increase over three years, she says.
Cheng estimates it would cost on average about HK$200,000 a year to bring up a child from birth through to university - assuming they go to a local school and tertiary institution. So the HK$4 million touted for the whole period is about right. The total cost would be far higher if the child were enrolled at an English Schools Foundation or international school, or studied abroad.
Even families with monthly incomes of HK$60,000 to HK$70,000 may not have a lot of disposable money because the cost of living is so high nowadays, she says. Family holidays necessarily also cost more since they have to travel during peak periods when prices are at their highest. Last year, Cheng spent about HK$100,000 on a summer break for her family of four in Australia. Moreover, there's social pressure in more well-to-do schools for youngsters to notch up a variety of unusual holidays, she says, with some children being teased by classmates when they travel, for example, to the mainland. "Many children have already seen most parts of the world before they reach adulthood," she says.
Still, Cheng regards lavishing resources on her children as a "reasonable use of resources".
"A long time ago, a parent told me that if you gave your child HK$1 million when he's grown up, it may not help change his life. It's better you spend it on them when they're young to help them build a good foundation," she says. "If you don't spend money on them when they're young, it'll be too late."
However, court interpreter Vivian Lai Ying and her architect husband Eric Ngai are taking a more down-to-earth view. They have sent their elder daughter Lucille, seven, to a private primary school but will probably opt for a subsidised school for her secondary education, especially since spending will rise even more when her two-year-old younger daughter Louise starts school.
Lai says they intend to take advantage of the free education that Hong Kong citizens are entitled to, even though they are dissatisfied with the demanding curriculum adopted by the local school system.
"I compared some textbooks from Hong Kong schools with those used in foreign countries and found that our Primary One pupils are learning things that children in other countries are not expected to learn until Primary Three or older," she says.
She concedes private tutoring may be necessary to help her children catch up with schoolwork but says she has no intention of signing them up for an array of extracurricular lessons, as so many parents do, unless the girls show interest in a particular area.
"It may not be good to instil so much in children so early. Their brain and muscles may not be developed enough to cope with all these," she says. "The children should be left to feel happy and free of pressure. That's why I think raising children could be expensive but it could also be cheap."
But because Lai and her husband lack confidence in the government's health care provisions, they are taking up medical insurance for their daughters. Lai has increased the amount insured on her life policy since her second child was born, and the young couple also set aside about HK$20,000 a month to invest in stocks and other assets. With prudent investments, the couple believe they can provide for the children's needs in the future.
Of course, investing in Hong Kong property may lead to faster growth in one's wealth. Parents fortunate enough to have bought at the right time will be able to fund their children's schooling with the profits made from flat sales and rental income.
Keith Siu is one such investor. A trading businessman, he bought a flat in Kowloon Tong some 10 years ago for about HK$3 million. The value of the flat, which has been leased out, has since tripled to about HK$10 million. As a result, financing his daughter's high school and university education in Britain, estimated to cost HK$500,000 a year, has become easier.
"We're fortunate that we bought the property at the right time. We didn't have any other plans to finance the children's future. We just did what we could afford at the time," Siu says.
"But at the end of the day, the children should find their own destiny. My parents did not have much money when we were young and we had to work part time since Form One to pay for our school fees but we did OK. This is life."