START THE MONEY TALK NOW

by Wong Man-shun

Wong Man-shun, Unit-in-charge of the Youth Employment Network, shared his experiences and analysed the problem of financial literacy in Hong Kong.

Whenever I pay for something in cash at a convenience store, I hear the familiar “beep, beep” of Octopus card transactions all around me. Sometimes I think I’m the only one still old-school enough to pull out notes and coins from my wallet to pay. However, while it might seem inconvenient, this method allows me to know exactly how much money I have in my pocket, which is my basic financial principle: you need to know how much money you have before you know how much you can spend.

Times are changing, however, and the younger generation has become used to paying in a cashless or digital way. This makes me wonder, because if they cannot actually see or feel the amount of money they have, how do they feel secure about their financial management?

This is where the importance of financial literacy comes in. But what exactly do we mean when we talk about concepts of financial literacy, financial management and financial education?

What is Financial Literacy?

We all understand that financial management is an essential element of life planning. As one achieves more financial freedom, one has more choice, especially for life and career development such as pursuing further education or starting a business. Both of these require not only good financial standing, but good management skills as well.

According to the Investor and Financial Education Council (IFEC) in Hong Kong, the ultimate goal of financial management is help improve people’s overall well-being, wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow enjoyment of life.

To achieve financial security and accumulate wealth, however, one must learn relevant knowledge, acquire skills, and demonstrate them in behaviour. This process of learning and application is most often called financial education.

Financial education involves equipping individuals with the knowledge, skills, attitudes, and behaviours necessary to make informed financial decisions. These elements collectively constitute what is known as financial literacy. For an individual, this could be as simple as creating a budget, saving effectively and making informed decisions about expenditure and investments. It also means being able to protect oneself against fraud and exploitation. These steps enable the accumulation of wealth while building good spending habits and being well-prepared for the future. Therefore, the primary goal of financial education is to help individuals establish a healthy financial mindset, laying a solid foundation, both personally and collectively, that results in a society retaining overall socio-economic stability, with less financial stress and without excessive debt.

Where Do Youth Stand?

Given this basic premise, where do young people stand today? Recent studies have shown that among the earners of the four post war generations – Baby Boomers, Gen X, Millennials and Gen Z, Gen Z has the lowest rate of financial literacy.

There are complicated reasons for this, including avoidance of learning due to economic uncertainties; parental safety nets leading to limited experience of earning or financial independence; the complexity of financial products; and the stress on immediate gratification and wellbeing rather than long term planning. What stands out in all this is the lack of, or limited access to, financial education by parents or at the school level.

Hong Kong, in spite of being an international financial centre, is left behind in financial education compared to places like Denmark, Australia and Singapore. According to the IFEC Financial Literacy Monitor 2024, while overall financial literacy in Hong Kong has improved to a new high score of 71.1 out of 100, there remain notable gaps in financial attitude and behaviour, especially among students and young working adults. For example, students reveal weaker financial attitudes and behaviours than in the past, such as less discipline in managing finances, paying bills on time, and making considered purchases.

Moreover, digital financial literacy scores have declined slightly from 2022 to 2024, signalling concerns about the population’s ability to safely use digital financial services, even amid rising fintech adoption. These worrying phenomena reflect an urgent need to strengthen financial education for Hong Kong youth.

When to Start?

I believe the moment young people start interacting with money is when they should begin to learn. In Hong Kong, there is more focus on academic results while children are in school, and many believe that financial education should only be introduced after starting working and earning a salary.

Developmental psychologists, however, generally agree that the juvenile period, from ages 6 to 11, is a critical time for establishing personal values. During this stage, youngsters begin to form complex abstract concepts, such as the meaning of right and wrong, and good and bad. They observe and absorb societal norms, cultural beliefs, and patterns of life, on which many of their future life habits are formed.

In Hong Kong we know that at primary school age, young people already have contact with money, through their Octopus cards for shopping and transport, and when receiving lai see packets and pocket money. The moment they have money to spend, habits begin to form.

My professional work for the Federation’s Youth Employment Network brings me into close contact with young people and their financial activities. For example, in 2023, we began a financial education activity for primary schools called More Fun with Money Management (理財多Fun).

During this initiative, we found that some primary school students received over 2,000 Hong Kong dollars per month in pocket money from their parents. This is a large amount by any standards for this age group, and because they lacked even basic financial concepts, these students ended up spending most of their money on purchases of electronic games.

In another career planning activity focused on young professionals, we discovered that one participant under the age of 30 had already accumulated a debt of over 1 million Hong Kong dollars through credit card expenditure and overdrafts. No one had taught this young person to manage personal finances.

What became abundantly clear is that people of all ages have different financial management needs. While we cannot say with certainty that financial management and education can solve all problems, we can be sure, at least, that people of different ages will understand the value of money. There should be no shame or shyness about learning something we know little about. Some people think that financial management is an inherent skill. It is not. And the sooner we all start to learn, the better. In fact, the moment a person, no matter what their age, comes into contact with money, the learning process should begin. ■