[Practical Finance] Financial Supervisory Service Team Leader's Tips for School-Age Children

▶Order of Articles
<1> Early Career Financial Management
<2> Newlywed and Childbirth Financial Planning
<3> Preparing Education Funds for School-Age Children
<4> Financial Planning for Children’s Coming of Age and Independence
<5> Healthy Retirement Life

Parents of school-age children solidify their positions at work and household income rises to its peak during this period. However, this time is also a heavy burden as multiple financial goals must be achieved simultaneously, including preparing education expenses, repaying loans, future college tuition, and retirement planning. Additionally, it is necessary to take an interest in financial education so that children can develop proper financial habits. Together with the Financial Supervisory Service, let’s explore smart tips to wisely manage children’s education and strengthen household finances.

The Greatest Asset to Pass on to Our Children: 'Financial Education'

# Yang Hanbin, who has a child in 1st grade of middle school and another in 5th grade of elementary school, has been worried about financial education for her children lately. Although her children study Korean, English, and Math diligently at school and academies, they have never received education closely related to real-life finances. Sometimes she feels uneasy wondering if children who spend pocket money recklessly using their mother’s credit card will naturally become rational consumers and wise investors when they grow up.

There is an interesting survey result regarding financial education for parents and children. Most children believe they have received financial education from their parents, but parents answered that they actually did not provide financial education to their children. This phenomenon occurs because children learn financial habits from their parents’ ‘actions’ rather than their ‘words.’ For children’s financial education, parents themselves must demonstrate proper financial behavior.

Financial education is not simply about learning how to make money through investment. The goal of financial education is to achieve financial well-being, which means being able to solve financial problems independently, understanding the difference between saving and investing, planning financial assets according to life stages, and maintaining a safe state against financial shocks.

Here’s a quick tip! To help your child enjoy financial well-being, we introduce a program that allows systematic yet easy financial education. The Financial Supervisory Service develops and provides free educational materials such as textbooks, workbooks, sticker books, board and card games to applicants. Try mother-led financial education using these materials! Playing with these tools naturally forms correct financial awareness and healthy financial habits.

Every August, the Financial Supervisory Service opens the 'FSS Children’s Financial School' for 4th to 6th graders in elementary school. This free program offers weekly online lessons with close guidance from FSS financial education instructors. By completing missions, children naturally acquire ‘17 essential financial knowledge points to know before graduating elementary school,’ including allowance management, consumption decision-making, and credit. This summer vacation, the 'FSS Children’s Financial School' will be held again for budding financial learners, so apply for your child! More information and educational resources are also available on the FSS e-Financial Education Center website.

Use the Right to Request Interest Rate Reduction if Your Credit Status Improves

# Ko Giyeong, who has worked steadily for 15 years with a rising salary, recently overheard a colleague’s credit loan interest rate at a company dinner. Despite having the same salary, the colleague was receiving a much lower loan interest rate, which made Ko’s stomach churn. After asking how the colleague got such a low rate, Ko learned the secret: the ‘Right to Request Interest Rate Reduction.’

The ‘Right to Request Interest Rate Reduction’ system allows borrowers whose credit status has improved?due to promotion, salary increase, or increased assets?to request a lower interest rate from financial institutions, thereby easing the burden of loan interest.

In the first half of 2022 alone, about 340,000 loan interest rate reduction requests by financial consumers were accepted. Ko plans to visit the bank tomorrow and become one of those 340,000. This experience also made Ko realize the importance of acquiring knowledge about financial systems to protect consumers’ rights.

Balancing Education Fund Preparation and Retirement Planning

# Im Hyeonjeong, who devoted herself wholeheartedly to her son’s education, feels proud as her son has been accepted to the desired university and started earning his own pocket money through part-time jobs. When she jokingly asked her son, who was boasting about his first part-time paycheck, “Mom worked hard supporting you through exams; how about gifting me some nourishing cream?” the son replied seriously, “Who are you?” She had vaguely thought her son would be her retirement fund, but realizing she can’t even get a jar of nourishing cream now was a wake-up call.

Experts predict that the perception among young people about the obligation to support parents will almost disappear soon. According to Statistics Korea’s survey of the population aged 15 and older, the opinion that family should be responsible for supporting parents decreased from 33.2% in 2012 to 19.7% in 2022. Changing perceptions about parental support is another reason to prepare for retirement independently.

You might argue that it’s hard to prepare for retirement when it’s already difficult to cover children’s education and college tuition. However, it is better to start early, even with small amounts.

First, you can check the estimated amount needed for your child’s college tuition on the University Information website. To estimate retirement funds, calculate expected living expenses after retirement and consider the remaining period until retirement and the expected retirement duration.

Once you have these calculations, you can prepare education funds using financial products. If you prioritize stability, use regular savings accounts; if you prioritize profitability, consider installment funds. The basic financial product for regular income after retirement is a pension, structured in three tiers: National Pension as the first tier, retirement pension as the second, and private pension as the third. On the Financial Supervisory Service website’s integrated pension portal for consumer protection, you can check all your enrolled pensions at once, review your current retirement preparation status, and make additional plans to ensure a successful retirement.

The school-age period is a time to simultaneously achieve major financial goals: children’s financial education, starting retirement fund preparation, and preparing education funds for children. Focusing on only one goal may make the coming-of-age and retirement periods difficult. Even in financial hardship, families should work together to prepare for a happy future! More information can be found in the 'Life Cycle Financial Living Guidebook Volume 3: School-Age Children' on the FSS website.

Kim Gyuri, Team Leader, Financial Education Department, Financial Supervisory Service

This content was produced with the assistance of AI translation services.