[Financial Planning for the 100-Year Life] Teaching Children Proper Independence Education Over Private Tutoring

In an era of low growth and aging populations, more parents are increasingly worried about the risks associated with raising children. Without proper plans for retirement funds, if they have overspent on child-related expenses and end up bearing the living costs of children who are not financially independent in their old age, how difficult would that life be? This is a typical example of what can be called the child risk.

In fact, earlier this year, the US CNN broadcast cited the ‘2024 China Childcare Cost Report’ published by the Chinese private think tank Weiye Research Institute, reporting the ratio of child-rearing costs for ages 0 to 18 relative to GDP in major countries worldwide. South Korea ranked first with 7.8 times. China was second with 6.9 times, and Italy third with

6.3 times. For reference, the US ranked eighth with 4.1 times, and Japan seventh with 4.3 times. Although there are debates about the calculation methods of these ratios, it is clear that South Korea is among the top countries that spend excessively on child-rearing costs relative to income.

The problem is that these excessive child-rearing expenses are not significantly helping the children become independent. Considering South Korea’s university enrollment rate of 73% (2023), the employment rate of university graduates can be considered an important indicator of independence, but the employment rate of university graduates in February 2023 was only 70%. Excluding those who enlisted in the military or entered graduate school, the actual employment rate would drop to the 60% range.

Considering that the employment rate of university graduates in Japan reached 97% in March 2023, it shows how severe the employment difficulties are in South Korea. Possibly due to this employment crisis, according to Statistics Korea, as of August 2023, there are 673,000 people in their 20s and 30s who neither have a job nor are looking for one, so-called “just resting.” Among them, 428,000, or 63%, rely on their parents for living expenses.

The number would be much higher when considering all adults. Yet, the likelihood of this employment crisis improving in the short term does not seem very high. From a parent’s perspective, what is the way to reduce such child risks? Instead of forcing excessive private education to send children only to top universities, it might be much more important to provide economic independence education so that children can become truly self-reliant after reaching adulthood. Without economic independence, they will inevitably live off their parents or someone else for life, causing burdens.

True economic independence means cultivating the ability to fit oneself into the given economic circumstances. Among these, ‘saving’ is especially important. Over the past 30 to 40 years, we have lived through a high-growth era, a very special time, so although we think we are being frugal, from the perspective of people in advanced countries like the US or Japan, there are too many wasteful and bubble factors in our lifestyle.

To develop the ability to fit oneself into the given economic situation, ‘independence of consciousness’ must come first. Independence of consciousness means that one’s awareness is not subordinated to the wrong trends or customs in society that hinder true independence. Especially in our society, a distorted culture of face-saving dominates. Even the standards for the middle class are based on others’ eyes: an apartment larger than 30 pyeong, a car over 2000cc, savings balance over 100 million won, overseas travel at least once a year, and so on.

On the other hand, in advanced countries today, there is a movement for owning small houses, the so-called Small House movement. In advanced countries, being middle class means being confident in one’s own opinions, playing fair, regularly reading at least one critical journal, and so on ? standards based on being ‘mature internally.’ It means living life by one’s own eyes without being conscious of others’ eyes.

Kang Changhee, Representative of the Happy 100-Year Asset Management Research Association