Filipino kids lack money management skills — study

HONG KONG — Almost all Filipino children have regular access to cash, but they still do not understand key money concepts, such as earning, saving and spending, and the impact these have on their lives, a study showed.

Nearly all Filipino parents also value financial literacy for their children, as only a fifth of them believe their kids have good money management skills.

A total of 99% of Filipino parents claim their children receive regular pocket money, usually by the age of seven, a study commissioned by insurance giant Prudential Corporation Asia showed yesterday. Some 93% also say their kids get additional money as gifts.

However, only 19% of Filipino parents think their children have “adequate” money management skills, and 98% want their children to learn financial literacy, the report noted.

The study, conducted by Oracle Added Value from March to May this year, spans seven Asian markets: Hong Kong, Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines.

Some 3,500 parents with kids ages 7 to 12 years old across the region were interviewed, with 500 parents from the Philippines, particularly in the cities of Manila, Cebu and Davao. Parents from the middle 60% income brackets were targeted.

While nine out of 10 Filipino parents claim their children knew that adults must work to earn money, nearly six out of 10 say their kids do not hesitate to just ask for more money whenever they need it, the study stated.

A third of Filipino parents also tend to give in when their children request for more money.

“Parents in the Philippines are more relaxed about giving their children more money, since in Asia, only a quarter of parents do so,” Oracle Added Value Regional Research Head Arthur Tam told reporters during a media briefing yesterday.

Moreover, only 52% of Filipino children have a habit of saving, as compared to 59% of Asian kids, the data showed. Filipino kids save only 42% of their money, about the same level as the 41% seen in the region.

“Children do not have a strong understanding of the purpose of saving,” the study explained further.

Eight out of 10 Filipino kids save “simply to buy what they want,” while only two out of 10 “save for the future.” In contrast, six out of 10 Asian children save for their wants, while three out of 10 save for the future.

In terms of expenses, just 8% of Filipino parents believe their children keep a record of their spending, the same percentage seen in the region. Majority of parents, 59%, also do not keep track of their kids’ spending, the report showed.

“The kids don’t record their expenses and the parents don’t either. There is just a hole in the middle as to how much the children have been spending,” Mr. Tam said.

Parents have more of an “advisory role” in their children’s money management, with only a fifth of Filipino parents interfering in their kids’ finances, the study added.

“However, mothers and fathers want to get more involved in their children’s financial education and feel it is their responsibility to do so,” Mr. Tam explained.

Ninety-four percent of Filipino parents will utilize a television or Internet entertainment program to teach money management skills to children, he said.

In line with the findings, Prudential yesterday launched a financial literacy campaign specially designed for children. Cha-Ching, a series of animated musical cartoons focused on money matters, will air across the region starting this month on Cartoon Network, Asia’s leading children’s channel. A Web site, games and phone applications will also complement the TV program.

“We saw a need to round out our financial literacy efforts to an even younger audience. Children in Asia are growing up in families with more disposable income than they had previously and there is now a growing interest in and need for financial literacy skills for children,” Prudential Chief Executive Officer Barry Stowe said during the press conference yesterday.

“Cha-Ching will be a fun, interactive and engaging way for parents to teach their children money management. It is better to show kids what to do than to tell them what to do,” he added.

The campaign will also be a key strategy in targeting the Philippines’ lack of awareness in terms of financial management, said Antonio G. de Rosas, the Chief Executive Officer of Prudential’s Philippine arm Pru Life UK.

“An effective financial literacy program should start from the core, from childhood to be ingrained in the countryís culture and be implemented in the long-term. The youth and families will surely benefit from the Cha-Ching project of Prudential and Cartoon Network,” Mr. de Rosas said in a statement.

Prudential Corporation Asia is part of Prudential plc, headquartered in London and one of the world’s largest financial service firms. –DIANE CLAIRE J. JIAO, Reporter, Businessworld