HSBC says it is important to have a financial plan that considers competing priorities and future financial security
By FARA AISYAH / Pic By MUHD AMIN NAHARUL
A STUDY by an international bank showed that 57% of Malaysian parents continue to financially support their children over the age of 18.
HSBC Holdings plc’s new report, “The Power of Protection: Facing the Future”, revealed that parents in Malaysia are ranked fourth globally in financially supporting children into adulthood while the United Arab Emirates (UAE) tops the global table of the highest proportion of parents still supporting their grown-up children at 79%.
“The study in Malaysia shows it is very common for parents to be support ing children well into adulthood.
“Almost half (50%) of those supporting an adult child have been doing so despite most parents (64%), who support grown-up children, believe that their children should stand on their own two feet financially when grown up,” HSBC said in the report.
The report represents the views of 13,122 people in 13 countries and territories namely Argentina, China, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, UAE, the UK and the US.
For the Malaysian findings, the survey was conducted on a sample of 1,000 people over the age of 25.
HSBC country head, retail banking and wealth management Lim Eng Seong (picture) said with parents supporting their children for a longer tenure, it is important to have a financial plan that considers competing priorities and future financial security.
“Thinking about what is important in your life today, what you want to protect for the future and seeking professional advice are good first steps to putting a plan in place.
“As the cost of living rises higher, parents would have the additional burden of supporting their grown-up children and it is important they have enough to take on this additional cost,” Lim said in the same statement.
He added that it is always important to have a financial contingency plan and it is never too late to check on what options are available to ensure one’s financial future is secure.
Most parents or 69% of them provide financial support for education while 41% are helping with everyday living costs such as utility bills, groceries and home repairs.
They are also helping with medical and dental care (38%), and rent/ accommodation costs (27%).
Over one in four (29%) are even helping to pay for holidays.
Parents are spending an average 33% of their disposable income on supporting their grown-up children and 49% are spending less on themselves in order to have more for their families.
This, according to HSBC, may result in significant knock-on effects to the parents’ long-term financial planning.
About 22% of parents say their adult children would not manage at all financially if they themselves develop a long-term illness or disability, if they have to significantly reduce their financial support to them (16%) or if they are unable to work (16%).
Yet, 54% of parents supporting grown-up children do not have insurance that would pay them if they had a serious illness or accident that prevented them from working, and 52% do not have life insurance.