Seventy-five per cent of parents in Singapore are concerned about their financial ability and not having enough money to provide for things that make their children happy. In the current COVID-19 climate, there is greater urgency for parents to be more financially secured to protect their child’s happiness.
Although only 26% of parents surveyed indicated that COVID-19 had reduced their financial ability to provide for their child’s happiness, 68% of parents placed greater importance on looking at ways to expand their income at work while 71% saw the need to get a secondary source of income in this current climate.
The research, which was commissioned by NTUC Income (Income), explored the link between parents’ financial preparedness and the impact on their child’s happiness. It found 82% of parents agreed that money and financial security were important to their child’s happiness, especially when they were young. Impacted by COVID-19, 47% of parents were willing to compromise on their own lifestyles in order to financially provide for things that make their child happy.
Marcus Chew, Income’s Chief Marketing Officer, said, “The research confirmed our belief that a child’s happiness is integral to parents’ happiness. We had wanted to get an insight on what make children happy and to what extend parents will go to safeguard that. More significantly, we want to know children’s top concerns when it comes to their happiness and how that can influence parents’ financial priorities and preparedness.”
When it comes to defining happiness, parents and children held different views. Parents thought their children were happiest when they could pursue hobbies and passions such as the arts, sports and gaming, while children saw experiences such as vacations and staycations, gifts, good relationship with peers and quality time with family as more important to their happiness.
On average, parents set aside 26% of their monthly income for their children. The top three highest spending categories annually were found to be academic-related pursuits (24%), family holidays and travel (20%), and allowance for child’s basic needs such as transport, food, clothing, etc. (15%). In a year, parents spent an overall estimated average of $20,800 on their children, out of which, approximately $10,300 was spent on key areas that contributed to a child’s happiness and they include holidays and travel, gifts, experiences and social activities (e.g. celebrations, birthdays).
A child’s happiness is important but parents worry about their financial ability to safeguard it
During challenging circumstances, financial security becomes even more essential. When faced with difficult circumstances, 9 in 10 parents surveyed indicated that they were not financially prepared and amongst them, 77% of them indicated that they would have to compromise on non-essential child-related expenses, such as travel, experiences, gifts and social activities.
As parents are often the breadwinners in the family, unforeseen events such as critical illness (CI) or total permanent disability (TPD) could mean loss of job and income which could greatly disrupt the lifestyle of the family. In such situations, 70% of parents surveyed indicated that expenses on non-essential items, family holidays, allowance for treats and experiences would need to take a back seat – the same things that children said made them happy. This mirrors parents’ financial confidence in the short term, as only 2 in 5 parents were confident that they would be able to financially provide for their children to continue pursuing things that they enjoy in the next three years.
Worries of financial ability and loss of income
When faced with a critical illness (CI), parents’ immediate worry was financial instability due to the loss of income (49%). Forty-three per cent of parents worry about not having the financial means to give their children different experiences or allowing them to continue with the activities that they enjoy, in addition to worrying about the critical illness incurring hefty medical bills (38%).
On the other hand, children were most concerned about their parents’ inability to afford the medical bills (42%) and to spend time with them (37%). Overall, 90% of children were worried that their lifestyle and happiness could be disrupted if their parents were financially unprepared for life’s unexpected events.
Despite worries of financial ability, parents are not taking sufficient action to protect their child’s happiness
While 80% of the parents surveyed agreed that being struck with a CI would compromise their financial ability to enable their children to pursue things that make them happy, they ironically didn’t prioritise protecting themselves against unknown future diseases and being equipped with insurance. Only 1 in 2 have protected themselves with life insurance as a way to improve their ability to financially support their child’s pursuit of happiness.
Mr Chew added, “The survey findings highlight that there is a gap between parents understanding the implications of financial stability on their child’s happiness and taking the necessary actions to safeguard it against unexpected events. When household income is reduced in the event critical illness strikes, 7 in 10 parents would most likely cut back on expenses that compromise on their child’s happiness. The survey findings emphasised the importance of parents having a financial safety net during unexpected life events to ensure financial continuity to maintain their children’ lifestyles which can impact their current and future happiness.”
The online research surveyed 611 parents aged 30-50 years old and 217 children aged 7-23 years old in September 2020.
Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “Many of us take good health for granted and assume nothing will happen, like an accident, a major illness or disability. But when catastrophe strikes, private health insurance can help take away some of the worry of the cost of hospitalisation.”