A Read for Parents: Saving for Children’s Future

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Sun Life Hong Kong

Sun Life: More careful financial planning needed for children-rearing

PUBLISHED : Thursday, 02 August, 2018, 12:02am
UPDATED : Thursday, 02 August, 2018, 12:02am

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Parenting could be arduous and there is no better saying than the old Chinese proverb “parenting is ninety-nine years of worry”. Today, parents are more financially capable. They try even harder to plan for the next generation’s future.

Titled “Parents Should Realize Children’s Wishes?”, Sun Life’s recent study, which surveyed 690 parents and 141 students, indicates that 41% of parent respondents have started saving money for their children’s future before the children were born.

“The trend is particularly clear among younger parents. According to the study, close to 60% of parent respondents aged 34 or below (i.e. the 80s and 90s generation) have started saving for children before their birth,” says Belinda Au, General Manager, Distribution and Marketing at Sun Life Hong Kong Limited.

These young parents have already saved, on average, HK$558,844 per child. This amount equals to 20 times of the median monthly domestic household income, reflecting that young parents plan well ahead financially before having children.

“This is not surprising at all,” says Ms. Au, who herself is a mother of 3 kids. “The high cost of living in Hong Kong is going even higher year after year. Parents nowadays need to plan their finance more carefully.”

Burdens on families with kids are heavy. Based on the data from Census and Statistics Department, the per capita expenditure (in nominal terms) on school fees increased by 34% in 2014/15 over 2009/10 for households with children.

Winning at the starting line

But “winning at the starting line” is not only the golden rule for parents. From the survey results, over half (55%) of student respondents also agree that parents should start saving before the birth of their children. 62% of them think that parents should financially support them regularly before the completion of study.

Though about one-third of student respondents hoping to continue receiving financial support from their parents after graduation, 83% believe that the level of regular financial support should be slightly or a lot less than before.

Interestingly, over half (54%) of parent respondents reckon that children need regular financial support for a period of time after finishing their study.

Realizing children’s wishes

Close to 60% of student respondents named “buying an apartment” as their No. 1 life goal in the next 10 years. However, 75% admit that they cannot achieve this goal without financial aids from their parents. This compares to that 83% of them are fairly confident about financing “postgraduate study”, the second most chosen goal, on their own.

Bank deposit is the most popular way for saving for children’s future, followed by stock investments and insurance-linked savings or investment plans.

“It is interesting to note that many parents choose investing in stocks as a way to save for the next generation's future. Stocks are volatile in nature and thus are considered relatively higher risk. Besides,  among the 85% of parents who agree that financial disruption would impact their saving plans, more than half of them don’t have a plan B.” Ms. Au concludes, “Overall, we think parents will need a better financial plan by understanding how much they would need to save for their children’s future, developing a practicable plan to meet this need, and preparing for any contingency.”