Teaching children about money early: from saving habits to MPF wisdom

On his way to work, an MPFA financial-education adviser bumps into a colleague on the bus. Beside them, a little girl is throwing a tantrum at her mother, wailing for a toy. After they get off, the mother sighs that in today’s affluent society, many parents grant every wish, raising ever more spoilt children. “I don’t want my daughter to become a ‘Hong Kong kid’ who only cares about material things, so I recently opened a bank account with her to teach her to save and use money wisely.”

The adviser applauds the move: money sense should be instilled young, and he has long encouraged parents to teach children about finance step by step, in different ways. The mother adds that her daughter’s kindergarten has just distributed the MPFA’s new storybook for the school year, Yong Chuang Ji Jin Dao (“Brave the MPF Island”), which teaches concepts like “saving for the future” — and she uses its read-along stories and games to teach her daughter proper money habits.

The adviser notes that beyond kindergartens, the MPFA runs financial-education activities for primary, secondary and even tertiary students, instilling age-appropriate knowledge about money and the MPF. The storybook is also available on the MPFA website’s youth zone for parents to download.

What is dollar-cost averaging?

Dollar-cost averaging means investing a fixed amount in the same fund at regular intervals: prices fall, you buy more units; prices rise, you buy fewer, so the average cost evens out. MPF’s monthly contributions are dollar-cost averaging in action — automatically buying more units in downturns and fewer in rallies, helping ride out short-term volatility over the long run.

Compounding: the earlier you start, the mightier it grows

MPF money is also invested on a capital-plus-returns basis, so it compounds — returns get reinvested, and interest earns interest. The earlier members start their MPF investing, the greater the potential payoff.

Parents should lead by example

The adviser’s parting reminder: parents should practise what they preach, reviewing their own financial strategy regularly — including keeping an eye on their own MPF investments. Before teaching children about money, get your own retirement savings in order; children believe what they see.

For more beginner-friendly financial education, visit the MPF education hub.