Introduction
Extensive attention has been given to studying and promoting financial literacy, as shown by the burgeoning literature on the subject (e.g., Angrisani et al., 2021; Atkinson and Messy, 2012; Kempson, 2009; Lusardi and Mitchell, 2007), financial literacy incorporated as a national priority (OECD, 2015a), and the proliferation of financial education programs worldwide (Kaiser and Menkhoff, 2020). The primary reason for this attention and effort lies in the growing awareness of the generally low levels of financial literacy across the world (e.g., Lusardi, 2019; Lusardi and Mitchell, 2011a) and its impact on financial well-being, which, in turn, influences overall individual and societal well-being (Grohmann et al., 2018).
There is no universal definition of financial literacy, but the definitions used in the literature are essentially similar (e.g., Atkinson and Messy, 2012; Hung et al., 2009; OECD, 2015b). For instance, financial literacy is defined as the “knowledge of basic economic and financial concepts, as well as the ability to use that knowledge and other financial skills to manage financial resources effectively for a lifetime of financial well-being” (Hung et al., 2009, p.12) or “a combination of awareness, knowledge, skill, attitude, and behavior necessary to make sound financial decisions and ultimately achieve individual financial well-being” (Atkinson and Messy, 2012, p.14). The terms “financial literacy” and “financial capability” are often used interchangeably (e.g., Muir et al., 2017; Xiao et al., 2014), referring to the ability to apply appropriate financial knowledge and engage in financial behaviors to achieve financial well-being (Xiao et al., 2014), though it may also include access to financial resources (Johnson and Sherraden, 2007).
These slightly different definitions converge around three interrelated ideas. First, financial literacy consists of basic elements, such as knowledge, attitudes, skills, and behavior, necessary for making financial decisions. Second, it involves the ability to apply these elements for sound financial decision-making. Third, financial literacy ultimately affects financial well-being through improved financial decision-making. Therefore, the extent of individuals’ financial literacy is not merely determined by their knowledge but also by how well they apply knowledge in their decision-making, which requires practice and judgement (Worthington, 2006). To fully understand people’s financial literacy, it is also necessary to examine their financial decisions in terms of both their practice and perceptions.
Disparities in financial literacy among different population groups have been documented based on characteristics such as age, gender, education, race/ethnicity, income level, and marital status (e.g., Brown and Graf, 2013; Lusardi et al., 2010; Lusardi and Mitchell, 2011a, 2011b). Racial/ethnic minorities comprise one of the most vulnerable groups (Al-Bahrani et al., 2019; Angrisani et al., 2021; Brown and Graf, 2013; Lusardi and Mitchell, 2011b). For example, Black and Hispanic individuals in the USA tend to score lower on financial literacy questions than Whites (Lusardi and Mitchell, 2011b). While it is recognized that racial/ethnic minorities have lower levels of financial knowledge, a more comprehensive understanding of their financial literacy is still needed.
First, racial/ethnic minorities’ financial decision-making has not been sufficiently examined. Existing studies focus on banking accounts (Barcellos and Zamarro, 2021; Kim et al., 2016; Lusardi, 2005), credit use and debts (Ekanem, 2013; Gaur et al., 2020; Goodstein et al., 2021; Yao et al., 2011), asset holding (Lusardi, 2005), and retirement planning (Kim et al., 2021). Other important day-to-day financial decisions are less understood, such as budgeting, savings, using other financial products, and detecting financial fraud.
Second, younger members of racial/ethnic minorities, who face double challenges, have received limited attention. As racial/ethnic minorities, they already have low levels of financial literacy. As younger adults, they are more financially vulnerable than their older counterparts. Not only do they have lower levels of financial knowledge, such as inflation, compound interest, and risk diversification (Lusardi et al., 2010; Lusardi and Mitchell, 2011a), but they also face more financial challenges due to longer life spans, more financial decisions to make, and greater financial risks in an increasingly complex global financial environment.
Third, most studies on racial/ethnic minorities have been conducted in Western societies, particularly the USA, with more limited research conducted in other contexts, such as Asian societies.
Fourth, research on financial literacy is predominantly quantitative (Goyal and Kumar, 2021; Kelley et al., 2021). Qualitative studies are few, particularly regarding racial/ethnic minorities (Ekanem, 2013; Gaur et al., 2020). While quantitative studies provide a broad perspective on the subject matter, qualitative studies offer an in-depth understanding of how individuals perceive and make meaning of their financial decisions. This information is valuable for informing financial literacy education and thus improving financial decision-making.
This study examined a range of financial decisions made by ethnic minority young adults in Hong Kong using qualitative inquiry to address these limitations. By adopting a qualitative approach, the study focuses on generating themes that may not be captured in quantitative studies relying on statistical figures. It extends the literature by providing a deeper understanding of the financial decisions made by younger ethnic minority individuals within a non-Western context. The findings also reveal factors facilitating sound financial decision-making among ethnic minority younger people, particularly in Hong Kong. These findings have important implications for tailoring “just-in-time” financial literacy education to meet their specific needs, as opposed to a “one-size-fits-all” approach (Goyal and Kumar, 2021).
In the following, after briefly highlighting the relevant literature on financial literacy and financial decisions, the findings on ethnic minority young adults regarding different areas of financial decision-making will be presented. Factors facilitating their financial decision-making will be identified, and implications for financial literacy education and further research discussed.
A brief overview of financial literacy and financial decisions
Patterns of financial literacy
Financial literacy levels are associated with various socioeconomic factors, including age, gender, education, parental education, employment status, marital status, area of residence, and race and ethnicity. Financial literacy exhibits a bell curve distribution with age. It is lower among young and old individuals than those in the middle of the life cycle (Atkinson and Messy, 2012; Brown and Graf, 2013). For instance, less than one-third of young adults possess basic concepts about inflation, risk diversification, and compound interest (Lusardi et al., 2010; Lusardi and Mitchell, 2011a). Regarding gender, women tend to have lower levels of financial literacy than men. They have less financial knowledge about debt, inflation, risk diversification, and compound interest (Brown and Graf, 2013; Lusardi and Mitchell, 2011a; Lusardi and Tufano, 2015) and are less likely to plan for retirement (Herd et al., 2012). Educational attainment is positively related to financial literacy (Herd et al., 2012; Klapper et al., 2012; Lusardi and Mitchell, 2007, 2011a). Less well-educated people are less likely to answer financial literacy questions correctly and tend to indicate not knowing the answer (Lusardi and Mitchell, 2011a). Individuals without a college degree are less likely to understand concepts about inflation, risk diversification, and simple interest calculations (Herd et al., 2012). More educated people tend to have positive attitudes towards retirement planning (van Rooij et al., 2011a) and possess a bank account (Klapper et al., 2012). Parental education, particularly mothers’ education, and parents’ possession of stock or retirement accounts are positively related to financial literacy (Lusardi et al., 2010). Fathers’ education is positively associated with their daughters’ financial literacy (Mahdavi and Horton, 2014). In terms of employment status, employed individuals have substantially higher levels of financial literacy than those who are unemployed or retired (Brown and Graf, 2013; Bucher-Koenen and Lusardi, 2011). Marital status is also related to financial literacy levels, with married people tending to have higher levels than single individuals (Brown and Graf, 2013). In terms of area of residence, those who live in a city score better in financial knowledge than their rural counterparts (Klapper and Panos, 2011). As for race and ethnicity, individuals belonging to the racial majority or being native-born have higher financial literacy levels (Brown and Graf, 2013; Lusardi and Mitchell, 2007, 2011b). For example, African Americans and Hispanics in the USA have lower financial literacy than Whites (Al-Bahrani et al., 2019; Lusardi and Mitchell, 2007, 2011b). In Switzerland, foreign citizens, especially immigrants with a non-German native language, exhibit lower financial literacy than native-born individuals (Brown and Graf, 2013). Students from an immigrant background also have lower financial literacy than other students (OECD, 2014).
The association between financial literacy and financial decision-making
Financial literacy is crucial for making sound financial decisions and avoiding costly mistakes. Empirical findings show that financial literacy is associated with various outcomes of financial decision-making, including day-to-day financial management, financial planning, using financial products, debt management, and detecting financial scams.
First, financial literacy can lead to better day-to-day financial management, such as responsible family budgeting, timely bill payments, and avoiding impulsive purchases (Akben-Selcuk, 2015; Atkinson and Messy, 2012; Hilgert et al., 2003; Perry and Morris, 2005). For example, a study of college students shows that those with higher financial literacy are more likely to pay bills on time and have a budget in place (Akben-Selcuk, 2015). Second, financial literacy is associated with better financial planning. Financially literate individuals are more likely to engage in savvy and active saving behavior (Akben-Selcuk, 2015; de Bassa Scheresberg, 2013; Deuflhard et al., 2019; Klapper et al., 2012). They are more likely to plan for retirement and save for emergencies (de Bassa Scheresberg, 2013). Third, financial literacy is related to better debt management. Individuals with better debt literacy will avoid high-cost borrowing, high transaction costs, and higher fees (Lusardi and Tufano, 2015; de Bassa Scheresberg, 2013). They also adopt better credit card behavior, which minimizes fees and interest charges resulting from late payments, cash advances, and paying only the minimum amount due (Lusardi and Tufano, 2015; Mottola, 2013). Fourth, financial literacy influences the use of financial products. Individuals with higher levels of financial literacy are less likely to be unbanked and use alternative financial services, such as payday loans (Kim and Lee, 2018). It is also associated with greater participation in investment and savvy investment decisions. Financially literate people tend to evaluate financial products carefully (Atkinson and Messy, 2012) and be more involved in the stock market (Almenberg and Dreber, 2015; van Rooij et al., 2011b). Finally, financial literacy can increase the ability to detect financial fraud. Findings show that a one standard deviation increase in financial knowledge increases the probability of fraud detection by three percentage points (Engels et al., 2020).
Financial decisions of racial/ethnic minorities
Research on financial decisions made by racial/ethnic minorities has mostly focused on using financial products, debt management and credit use, and retirement planning.
Regarding financial products, African Americans and Hispanics in the USA are less likely to have a bank account and hold asset investments, such as stocks, than Whites (Kim et al., 2016; Lusardi, 2005; Shanbhag, 2022). Another study examined community development credit unions providing affordable financial services, such as mortgages, to help African Americans save money and build assets (Nembhard, 2013). Newly arrived immigrants in Australia demonstrated low utilization of financial products and services, such as ATM cards, bank savings accounts, and credit cards (Zuhair et al., 2015).
As for debt, around 80% of Chinese American respondents in a study on debt ownership held some type of debt, such as credit cards, mortgages, and instalment loans (Yao et al., 2011). Age, the presence of children under 18, health, income, and amount of financial or non-financial assets are associated with the probability of borrowing. Other studies have explored the attitudes of Black and other minority ethnic entrepreneurs experiencing bankruptcy in England (Ekanem, 2013) or Pacific Island adults in New Zealand towards debt, money, or bankruptcy (Gaur et al., 2020). Significant racial/ethnic differences in credit use have also been reported. Approximately 75% of White, 80% of Asian, 50% of Hispanic, and 45% of Black households use bank credit, in terms of a credit card or a personal loan or line of credit from a bank. However, nonbank credit, such as payday loans, is more predominant among Black and Hispanic households (Goodstein et al., 2021).
Studies on retirement planning show that ethnic minorities have less savings for retirement than Whites (Gough and Adami, 2013) and are also less motivated to hold retirement savings even after controlling for different socio-economic characteristics (Kim et al., 2021).
Ethnic minorities in Hong Kong
Despite growing efforts to promote financial literacy among people in Hong Kong in recent years, such as establishing the Investor and Financial Education Council as a public organization to promote financial education in Hong Kong, ethnic minority younger adults are still largely overlooked. In terms of research, the financial literacy of ethnic minority young adults or even ethnic minority communities is underexplored. Existing survey findings only show disparities in financial literacy between younger and older adults in the general population, with the former performing poorly, particularly in timely bill payments, making ends meet without borrowing, and keeping up with their financial affairs (Investor Education Centre, 2018). Financial education programs targeting ethnic minorities are also limited. Only 0.6% of the 661 financial education initiatives conducted between 2011 and 2015 were intended for the ethnic minority population (Investor Education Centre, 2015).
Ethnic minorities in Hong Kong refer to the non-Chinese population, which makes up 8.4% of the total population (Census and Statistics Department, 2022). Most are Filipino and Indonesian, constituting 32.5% and 22.9%, respectively, and most (more than 90%) of these are foreign domestic helpers living in their employers’ homes. South Asians, including Pakistanis, Indians, and Nepalese, make up 16.5% of the ethnic minority population. The rest are mostly White people and other Asians, such as Korean and Japanese, who often enjoy a higher social and economic status in the city and are not the focus of this study. After excluding the Filipina and Indonesian domestic helpers, Pakistanis, Indians, Nepalese, and Filipinos represent the largest proportion of the ethnic minority population in Hong Kong and are the focus of this study. These individuals may have migrated to Hong Kong with their families or were born in Hong Kong. Some of them may have acquired a certain level of English and Cantonese, the local language, especially if they have received education in Hong Kong.
In Hong Kong, ethnic minority younger adults are likely to perform less well in financial literacy and financial decisions than the general population, which is largely made up of ethnic Chinese. This is because they generally fare poorly in terms of education and employment. For example, school attendance rates for ethnic minorities in the age groups 3–5, 12–17, and 18–24 years were 90.7%, 96.2%, and 29.2%, respectively, compared to 92.5%, 97.8%, and 51.8% for the whole population in 2016 (Census and Statistics Department, 2017). As regards occupation, 35% of Nepalese, 35% of Pakistani, and 25% of Indian individuals were engaged in elementary jobs, such as cleaners, laborers, and food preparation assistants, compared to 21% of the general population (Census and Statistics Department, 2017).
Drawing on the literature, this study examined the financial decision-making of ethnic minority young adults in Hong Kong and posed the following research questions:
- 1.
What are the experiences of ethnic minority young adults, in terms of practice or strategies and perceptions, in different areas of financial decision-making, including day-to-day financial management (personal budgeting and spending), financial planning, using financial products, debt management, and detecting financial fraud?
- 2.
What factors enable ethnic minority young adults to make sound financial decisions?
Methods
Approach
This study employed a qualitative approach, using individual in-depth interviews, to examine the financial decision-making of ethnic minority young adults in their daily lives. The rich data gathered from qualitative inquiry can provide a nuanced understanding of human behavior, which involves practice and judgement. Semi-structured interviews allow participants to express their thoughts in their own words, which is particularly beneficial for delving into a poorly understood topic.
Participants and data collection
In this study, Pakistani, Indian, Nepalese, and Filipino participants were recruited through NGOs that provided services for ethnic minority young adults and international offices of universities using purposive sampling. In addition to ethnicities, young adults who were 18 to 29 years old, permanent residents of Hong Kong, and students or employed were recruited. Table 1 summarizes the participants’ background characteristics. Fifty-three ethnic minority young adults aged between 18 and 29 years were recruited: 16 Pakistani, 13 Indian, 13 Nepalese, and 11 Filipino. Thirty-five were aged 18–23, and 18 were aged 24–29. There were 30 males and 23 females. Thirty-two were employed at the time of the interview, and 21 were students. The occupations of those in employment included elementary jobs (e.g., security guards), service workers (e.g., customer service), associate professionals (e.g., program workers in NGOs), and professionals (e.g., software developers). Many ethnic minority students had part-time jobs (n = 12), such as cashiers, tutors, football coaches, and delivery workers. Other students depended on their parents for financial support (n = 9). Most participants were pursuing or had attained at least a bachelor’s degree (n = 30). Sub-degree education being pursued or attained included associate degrees, higher diplomas, or foundation diplomas (n = 11). The education level of the remaining participants ranged from Secondary 3 to 6 (n = 12). Students’ monthly earnings ranged from US$90 to $2500; more than half received US$1250 or less (n = 18). Working participants’ monthly earnings ranged from US$625 to $3560, most receiving between US$1250 and $2500 (n = 16).
The Research Ethics Committee of the university to which the author was affiliated provided ethical approval before the study commenced. Before interviewing, participants’ informed consent was obtained after explaining the study’s objectives and principles of confidentiality and voluntary participation. Each interview took place in an NGO or university and generally lasted between 60 and 75 min.
Interview questions
The interview questions were developed to gather information on a range of financial decisions based on the literature on financial literacy and financial decisions, including day-to-day financial management (personal budgeting and spending), financial planning, using financial products, debt management, and detecting financial fraud. Participants were asked about their practices or strategies and perceptions of each area of financial decision-making. The interviews were conducted in English.
Analysis
The audio recordings of individual interviews were transcribed verbatim. Following Braun and Clarke (2006), thematic analysis was employed to identify, analyze, and report major themes within the data. The researchers first familiarized themselves with the data through repeated readings. They then developed initial codes to capture the meaningful aspects of the data. These codes were further organized into potential themes, and the relevant data associated with each code were collated within the potential themes. The potential themes were refined through careful review to ensure the coherence of data within each of them and that they were distinct. Once the refinements were finalized, the themes were named to accurately reflect their essence.
Findings
The following findings present the practices, strategies and perceptions of various financial decisions. Table 2 summarizes the major themes., which also align with particular components of financial literacy, including financial knowledge, attitudes, and behavior (Atkinson and Messy, 2012).
Personal budgeting
Spending- or saving-centric approach in practice
Most participants had developed habits of monthly budgeting, using saving- or spending-centric approaches. The former involves setting a savings amount and then spending the remainder, whereas the latter involves setting a spending limit and then saving the remainder. For example, one participant was more conscious of his savings:
I set in mind that every month I have a certain percentage to be saved and not to be touched. The rest is like spendable expenses, so I don’t have to go crazy saving mode. (18Indian, M/26 y, W, Degree)Footnote 1
Digital tools, parental monitoring, and mental bucketing as strategies
Participants employed various strategies in practice, including digital tools, parental monitoring, and mental bucketing. The digital tools they utilized included budgeting apps, Excel spreadsheets, online banking, and calendar or note taking apps in their phone. Some examples of budgeting apps to keep track of budgets were Zoho Expense, Ahorro, Mobills, Money Manager, Spendee, and Savings Planner.
I have this app Mobills …I just type all my expenses in where I spent the money so it helps me track if I have exceeded the monthly limit. (27Nepalese, M/20 y, S, Degree)
Some participants relied on online banking, e-statements, or Excel spreadsheets to keep track of their budgets. One participant primarily used credit cards for spending: “I check my monthly statement and like …oh, this month I spent more on food. I should cut it down a bit.” (18Indian, M, WA, 26 y, Degree) Another participant updated his budget sheet almost daily, “I make sure I don’t cross the budget for daily food expenditures, so I separate expenditures of breakfast, lunch, and dinner. (35Filipino, M/28 y, W, S7)
Parental monitoring in budgeting was common, where parents set spending limits or kept the money to prevent their children from overspending. Participants were positive about parental monitoring:
I gave all my earnings to my mom and she’ll help save for me. After deducting the savings, she’ll allocate some for my spending. (11Pakistani, M/20 y, S, S6)
They won’t let me spend my own money so that they can keep track of what I do. …I’ll always show my mom what I bought. …I can say it is ‘control’ …but it’s good to have monitoring. (1Indian, F/23 y, S, Master’s)
However, some participants simply allocated money into different categories mentally. One said, “I don’t like keeping notes. Everything is in my mind.” (47Indian, M/18 y, W, S4), while another responded, “I just keep them in my mind, divided by categories.” (40Nepalese, F/21 y, W, SD)
Parental influence and experiential learning
Participants indicated that they acquired budgeting ideas through observing their parents and learning by doing, especially after earning their first income.
I’m learning from him [father], like how to save up money, how to spend it wisely, and how to spend it on only the important things and not to waste the money. (2Pakistani, M/22 y, S, SD)
It was around my university years when I was doing a part-time job and earning some money …my own concept of saving started to form. (18Indian, M/26 y, W, Degree)
Perceptions of budgeting
Most participants perceived budgeting positively, agreeing that it could provide a sense of control against overspending, as one said, “If you don’t have a budget, it’s really easy to overspend on stuff and you can’t control your money.” (47Indian, M/18 y, W, S4). Budgeting was also seen as a form of psychological restraint, evoking a sense of guilt when budget limits were exceeded, and fostering discipline for conscious spending:
It makes me feel guilty …kind of a warning …a yellow light that you’re spending more than you’re supposed to. … It’s psychological when I see a big number in the amount of expenses. (29Filipino, F/22 y, S, Degree)
However, many expressed the difficulty of maintaining a budgeting habit due to economic and personal challenges. Limited funds and high living costs posed economic challenges as there was not a lot of money to go around, as expressed by one participant, “I don’t really have a lot of money. …I don’t know how I can track it.” (4Indian, M/21 y, S, Degree) Another said, “It’s very difficult because nowadays all the things are pricey, but you just have a limited amount of money.” (28Filipino, F/19 y, S, S6)
Personal challenges relate to feelings that budgeting is demanding, requires much self-discipline, and causes stress. Some participants found it demanding as it was time-consuming and involved excessive work.
It sounds, you know, ridiculous to me …somewhat a waste of time. There’s a lot of data. (15Pakistani, F/25 y, S, Degree)
It’s tedious and it takes time to write down all the details. …The effort needed to keep track of things demotivates me. (34Indian, M/30 y, W, Degree)
Others found it difficult because they struggled with self-control. One said, “I want to buy many things like this and that. …It’s hard for me as I could not control myself.” (42Nepalese, F/25 y, W, SD) Others were reluctant to budget because it induced too much stress:
I think budgeting gives me a lot of stress. I just want to focus on making money, so I don’t have to worry about it. (31Filipino, M/22 y, S, Degree)
Constantly checking is kind of torturing me. …If I check it too much, I’ll get sad about my expenditure. (18Indian, M/26 y, W, Degree)
Nevertheless, a smaller proportion of participants who showed qualities such as determination and mathematical competence did not find budgeting as hard.
It’s just the willpower of a person. I don’t think there’s too much difficulty for me. (32Indian, M/29 y, W, Degree)
I have a strong mathematical background since I studied math a lot, so I don’t think numbers are a problem for me. (17Nepalese, M/18 y, S, Degree)
Spending decisions
Modest spending
Many participants appeared to spend modestly and consciously. They generally allocated a higher portion of their budgets to basic needs. As many lived with their parents, they mostly spent money on food and transportation. Other major expenses included tuition fees, financial support for their families, rent, and personal entertainment.
I’d say 50% goes toward my food. …Insurance and everything, I’d say 20%. (38Indian, M/23 y, W, SD)
Half of my money goes to food and transportation, and the other half I’m saving for school fees and all that. (2Pakistani, M/22 y, S, SD)
Deferred purchase, bargain shopping, and one-time payment as strategies
Strategies in spending decisions included deferred purchases, bargain shopping, and one-time payments. One strategy employed was to re-evaluate spending decisions by deferring purchases:
When I shop, I double-think. … I’ll buy it a day or two later …to think about if I truly need it or not. (22Pakistani, F/25 y, W, S6)
Another common strategy was bargain shopping. Participants described how they bargain-hunted or waited for sales to get the best value for money.
If I go to buy a pair of shoes, then I like to go through the whole mall and see, you know, which one is really worth the money. (4Indian, M/21 y, S, Degree)
I’ll try my best to use as little money as I can. …I’ll check where I can get it the cheapest. (51Pakistani, M/25 y, W, Degree)
When making purchases, most preferred a one-time lump sum payment to avoid interest charges. One participant talked about the extra charges:
I used to buy in instalments with credit cards and I spent a lot, and I couldn’t pay some of the bills….Now I pay in lump sum, I find this very clear to your mind. …Nobody is calling you to pay for the minimum. (43Nepalese, M/28 y, W, Degree)
However, some paid in instalments, incurring interest on expensive products or when the budget was tight. Generally, an item costing more than HK$1000 (approximately US$125) was considered expensive.
If it’s around HK$500–$1000 (US$63–$125), I’ll spend a lump sum. But if it’s HK$5000 or HK$6,000 (US$625 or $750) like that, I’ll usually spend it on instalment. …When making it 12 months, I only need to pay HK$500. (51Pakistani, M/25 y, W, Degree)
Spending philosophies
Participants shared their perceptions about spending, revealing various spending philosophies such as differentiating between needs and wants, viewing spending as a work incentive, and embracing YOLO (You Only Live Once) spending. Conscious spenders distinguished between must-haves and nice-to-haves, ensuring they spent on what was necessary rather than what was desired.
When you buy something …you have to ask yourself whether you need it or want it, like you just think it’s cute. (25Pakistani, F/19 y, S, Master’s)
I often question whether I really need it …especially when it comes to luxury items like clothes and shoes. But for food, I do not compromise; for health, I do not compromise. (17Nepalese, M/18 y, S, Degree)
Some participants showed that spending was a motivation to work hard, as one said: “I base how much I work on my expenses. If I have many expenses coming up, I’ll try to work more.” (3Indian, M/21 y, S, Degree). Others embraced YOLO spending as a means of seeking happiness:
I didn’t want to decide how I was going to spend it. …You should never restrict yourself. Of course, you have savings. But for your spending, you should just go with whatever makes you happier. (18Indian, M/26 y, W, Degree)
You only live once! … It’s good to spend a little bit on something expensive. …With the money I earned …I deserve at least some to use on myself. (32Indian, M/29 y, W, Degree)
Financial planning
Savings habits and setting savings goals
Many participants established a habit of saving. More than half said they allocated at least 30% of their monthly salary or pocket money to savings. Some started to save in childhood, but many did so after their first employment while their earnings served as resources for hands-on learning. One participant said, “When I started to earn my own money, I didn’t want to spend all of it. I want to save and learn about investments.” (29Filipino, F/22 y, S, Degree)
Depending on their life stage, those who saved set various saving goals. In addition to saving for education, some saved to buy property, start a family, build a business in their home country, or for retirement. Some described the goals:
I’ve always wanted to start a piggery business. …In the Philippines, …a full roasted pig we call it Lechon. It’s in every celebration. …There’s a market for that. …I want to start one because my uncle, sisters, and brothers are good at that. (29Filipino, F/22 y, S, Degree)
For the very long term, like for retirement, I’m setting aside 20% of my salary to invest in stocks and bonds. (34Indian, M/30 y, W, Degree)
Gaining financial autonomy was also mentioned as a goal, as recounted by one participant:
I’m never going to focus too much on my future husband. I’m not going to be financially dependent on another person. …I always thought …I’d get educated and then earn money. I’d not be together [with someone] and be scared of splitting just because of money. (10Nepalese, F/21 y, S, Degree)
External restraints and personal tricks as strategies
Participants employed various savings strategies. In addition to saving money in bank accounts, they used external assistance or restraints as strategies by having their parents or boyfriend save it for them:
My parents don’t want me to be spoiled with so much money. We often see that people who start earning money do some bad stuff, like getting into drugs, gaming, or going out with friends a lot. …I’m not doing all these. …But still, they keep my money. (49Filipino, M/19 y, W, S6)
I’ll give half of it [salary] to my boyfriend so I won’t be able to touch it. The remaining is for my spending. …He has a better concept of saving than me …and he helps me save. (16Indian, F/27 y, W, Degree)
Participants reported using various personal hacks, such as opening separate bank accounts for specified uses:
I have two different bank accounts. One is strictly for saving money. …The other one is for paying bills and spending on things like necessities. (35Filipino, M/28 y, W, S7)
When I started my job, I only had a Hang Seng bank account. Then I specifically opened an HSBC account to keep my education savings there. …If you see a large amount of money, it makes you less intelligent about your expenditure because it projects an illusion that you have a lot of money. (48Indian, M/24 y, W, Degree)
Another example was a four-wallet strategy to divide money into smaller portions for designated purposes:
One wallet is for saving money. …If I buy something and I get some money left, I put it in the second wallet. The third wallet is for putting money that I couldn’t touch, like paying for my violin lessons and the dentist. …The fourth wallet is for transportation. (30Filipino, F/21 y, W, SD)
Another strategy was simply stashing cash away under the mattress or in other hidden places to reduce its accessibility:
I have like HK$10,000 (US$1250) under my mattress. Every month I have HK$1000 (US$12.5) …a hundred of $10 s …put inside my mattress, and I would sleep on it. My goal is …to the point if I can’t sleep properly, I have enough money. …Some people have their piggy bank I have my mattress. (31Filipino, M/22 y, S, Degree)
Sometimes I took all the money out and put it in a more hidden place like I can literally forget about it. (28Filipino, F/19 y, S, S6)
Perceptions of financial planning
Most participants agreed that financial planning and saving were important. Some thought of it as a grown-up responsibility. As adults, they were responsible for making financial plans and avoiding irresponsible purchases:
I already feel ashamed that I’ve been asking for pocket money from my parents. …I think it’s because we’re Asian, …we depend a lot on our parents. I don’t really want to live like that. …I want to be able to stand up on my feet. (10Nepalese, F/21 y, S, Degree)
I feel like after turning 18, …it’s important to budget your money, save it, invest it, and not make stupid and foolish purchases. (19Indian, M/19 y, S, Degree)
Financial planning was seen as a safeguard against financial shocks, offering a sense of emotional wellness or peace of mind as they knew they had backup resources. This was particularly important after they experienced the COVID-19 pandemic and became motivated to be well-prepared:
It taught me that no job is stable …even pilots get laid off. …Your income is not always there. You always have to be prepared for it. (41Nepalese, M/22 y, W, Degree)
You can have a fire break out in your house, you can have your stuff get stolen, you can get hit by cancer, and even this pandemic. So financial planning is extremely important. (21Pakistani, F/23 y, W, Degree)
It’s like a comfort …in case anything goes wrong in your life. It’s always good to have a backup plan …and you always have something to protect you. (35Filipino, M/28 y, W, S7)
Nevertheless, not all participants were positive about financial planning; some valued income generation over saving money:
Saving isn’t super important to me because I feel I should be earning more than I should be able to save. …If I am earning more, I don’t have to worry about saving. (31Filipino, M/22 y, S, Degree)
Some also felt they were not good at saving because of inadequate self-discipline and limited money: “The reality …is that my income is really not a lot at all. And I recognize there’s a limit on how much I can stretch, even if I really want to stretch it.” (36Filipino, M/26 y, W, Degree)
The use of financial products
A diverse range of financial products
Participants reported using various financial products or investments. Insurance was most frequently mentioned, followed by stocks, and other choices, including cryptocurrency, index funds, and forex trading. Buying property or gold in their home country as conventional investments was popular, as the older generations have done.
Different types of insurance, including life, medical, accident, and critical illness, were purchased and considered safe and flexible:
My insurance is three years old. …If something bad happens, I can use it. If I don’t use it after 20 years, it’s my money, so it’s like a saving. (43Nepalese, M/28 y, W, Degree)
All of them are index funds because the management cost is low and it’s simple to set up. It’s set and forget, no need to actively manage. (34Indian, M/30 y, W, Degree)
Buying property or gold in the home country was popular. Like their parents, they made or were planning to make these investments as they believed their value would steadily increase:
Dad bought properties in Pakistan and the values increase every year as it’s on the main side of the road. …The more convenient the properties, the higher the price it is. …Three are under my name, others under my siblings’ name. (22Pakistani, F/25 y, W, S6)
Buying property is safer compared to stocks. …Buying it overseas is a lot safer …because the property in Hong Kong is a lot more expensive. (31Filipino, M/22 y, S, Degree)
I can use this gold in my wedding … it’s kind of holding money because I don’t think the gold price will drop. It’s a good investment. (53Nepalese, F/25 y, W, Degree)
Parental support, peer mentoring, and self-education as strategies
Participants employed various means of obtaining information and experiencing financial products, including parental support, peer assistance, and self-education with online resources. Some parents were supportive by providing funds for hands-on learning in stock investment or opportunities for joint investment:
My dad gave me a small amount of money just to learn. …Because the only way you can learn is you do it yourself. …He helped me set up my account and everything and then I started. (19Indian, M/19 y, S, Degree)
I invested with the help of my mom. …She invested and got a return and she gave me the interests. (10Nepalese, F/21 y, S, Degree)
Assistance from financially savvy friends was also a way to enhance their knowledge and gain experience in stocks, insurance, or setting up a business:
I have a group of friends and we all invest in stocks. We like to give each other tips like, “I’m going to invest in this …maybe you should take a look at this.” Or sometimes before they invest, they ask “What do you think about this company?” And then I do my research …like we help each other. (19Indian, M/19 y, S, Degree)
My friends are in Pakistan …their family has been investing in property and stocks. …They bought their own shisha lounge recently. …I discussed with them: What was the cost? How much should I save for starting up this kind of stuff? (22Pakistani, F/25 y, W, S6)
Another strategy was self-education, by reading news, studying company information, and surfing the internet and YouTube for tutorials and knowledge:
I see the performance of their company around 5 or 10 years. Then I see the future analysis …how the company will perform in the future. (13Pakistani, M/23 y, W, Degree)
There are a lot of tutorials online or on YouTube. … There are also a lot of good pages that talk about investing. … It’s easily obtainable. (10Nepalese, F/21 y, S, Degree)
Perceptions of using financial products
Participants expressed different views about using financial products. The favorable view held that financial products acted as a passive form of income and could help protect against inflation, as one participant expressed, “It’s good to buy stocks because it’s like passive income. You can do your job when it also generates income.” (43Nepalese, M/28 y, W, Degree)
However, some viewed it unfavorably as they thought investment carried substantial risk. In particular, stock investment was akin to gambling, which involved taking chances and the possibility of losing hard-earned money:
You are literally gambling …the price of shares would rise or fall suddenly. …Just in days, you could lose so much. That’s why my aim is to look for a professional job so that I don’t have to depend on unexpected business. (17Nepalese, M/18 y, S, Degree)
Some others held unfavorable views due to their own or their families’ and friends’ negative experiences resulting from poor understanding of financial products:
I bought stock and I sold it. …If I had kept it a bit longer, I could have gotten a much higher return. …I just sold it based on rumors that the stock won’t go up. (27Nepalese, M/20 y, S, Degree)
My uncle didn’t know how to play it. He just went to the bank and was told to invest this and that without any explanation. …In the end, he lost a lot of money. (26Nepalese, F/21 y, S, Degree)
Sometimes, the lack of understanding of financial products could result from language barriers. One participant referred to the Mandatory Provident Fund (MPF), a compulsory pension fund in Hong Kong, as an example:
If you go to work, your employer won’t tell you what’s this or that. They just give you the MPF paper. …People don’t know what’s written there. They just sign it. Which product is better? They don’t know. (2Pakistani, M/22 y, S, SD)
Debt management
Borrowing money as a common practice
It was quite common for participants to take out loans from different sources, including family, friends, the government, and financial institutions. Some borrowed money from their parents or siblings. Due to close family ties and strong support, paying back the loan was not always expected. Some would also borrow from friends despite feeling uneasy about it:
I had zero income and my wife is jobless. …I felt it was a shame to borrow from my parents. …I asked my brother who is in Qatar. …It’s like a brother thing. He just sent it to me and …no need to return it. (14Pakistani, M/28 y, W, Degree)
To be broke on the 25th of the month but your salary only comes on the 31st. …Those few days you have to live …so I have to borrow from my friend. (38Indian, M/23 y, W, SD)
Some participants who were or had been students took out government student loans for educational expenses:
Hong Kong is so expensive, and so are school fees. I can’t pay it all at once so I had to borrow from the government. (23Filipino, F/23 y, W, Degree)
Some participants borrowed money from banks to buy an apartment. Others borrowed from lending institutions charging high interest rates to pay for tuition fees, buy iPads, or pay off credit card debts. They described their own or their friends’ experiences:
I have a period of time without a job. I have to pay with a credit card every month. I’ve skipped one month …and they started to call me and I was irritated. …Then I realized …why I wouldn’t start to do research tracking the annual rate, and at last, I decided to go to this loan company. (26Nepalese, F/21 y, S, Degree)
My friend found it hard to pay back because the interest rate was high. …She graduated last year and she has only worked for a few months. …She has to pay for the loan and to pay for her credit cards. (22Pakistani, F/25 y, W, S6)
Mostly safe credit card usage with some risks
Approximately one-third of participants owned a credit card. Occasionally, some used their parents’, siblings’, or friends’ credit cards, with approval, when they could not get their own, as illustrated by one participant:
My friend doesn’t use her credit card much. …I just took hers, bought things, and on the same spot transferred money to her account. (22Pakistani, F/25 y, W, S6)
Most credit card users could settle their bills on time, like one who said, “Unlike others who may pay it last minute. I pay it immediately after receiving the statements.” (48Indian, M/24 y, W, Degree)
However, some participants only paid the minimum due on credit cards, especially due to ignorance about interest charges. One did not know the consequences of doing so:
I was studying for an associate degree and I wanted to get as high marks as possible. I thought that if I got into the university then I could pay for them all afterwards, so there’s no pressure if I give minimum payment every month. …I didn’t realize about the interest. I swiped a lot. (26Nepalese, F/21 y, S, Degree)
Perceptions of debt management
Participants considered borrowing money was shameful and could hurt their social relationships. Borrowing money was associated with shame and guilt, especially for people capable of working, instead of borrowing money from others:
We have everything to earn money. … We’re healthy. We have all the physical and mental ability to work. …So we don’t have to depend on other people. (5Indian, M/22 y, S, Degree)
The shame is that …if God has given me a healthy body and I have my hands fine, if I can walk, if I can work, then why go ask someone for anything? (14Pakistani, M/28 y, W, Degree)
Others thought that borrowing money could create tensions with friends or relatives, especially if money was not returned:
Some friends of mine have taken money from me …but they don’t return it. … They’ll say, “I still don’t have money.” …What the bank does is good …charge the interest from them. (52Indian, F/29 y, W, Master’s)
You lend money to relatives or friends …but they might not return it to you. They might not pick up your phones. They might go away from the city. …That’s what I’ve heard….I don’t think they call the police …at the end they are family. (17Nepalese, M/18 y, S, Degree)
Participants considered credit cards to be convenient, and they enjoyed the reward systems. One said, “It’s like an Octopus cardFootnote 2 but is more widely used, especially for online shopping. And it’s convenient …you can accumulate points for more savings.” (35Filipino, M/28 y, W, S7) However, many were also aware that credit card use could lead to uncontrollable spending because they could easily overlook how much they had spent:
If I had one, I would go non-stop shopping because I have pressure at work. Who wouldn’t go shopping after work? (38Indian, M/23 y, W, SD)
When you take out your money, you know your limit. Like if your wallet has $5,000 and you’re using it, you’ll notice how much money you’ve left. But credit cards …you’ll keep using it. (8Pakistani, M/23 y, W, SD)
Detecting fraud
Fraud victimization experiences
Participants were vulnerable to fraud; some shared stories about falling or almost falling for scams or had heard about friends being scammed, relating to possible charity scams, unnecessary lab tests, online gaming, investment fraud, and money lent but not returned. One participant believed he had been scammed when he was asked for a donation on the street:
I’ve been scammed once on the street by a man who’s requesting money for their own institution from their own country. It involves children who are sick. …Because I was young and naive, I didn’t ask them for validation. Although he wanted to scam more money at the time, I didn’t carry too much. (35Filipino, M/28 y, W, S7)
There were unnecessary medical lab tests:
They said they got funding from the government. They did 10 different cancer tests on me for $4000. My mom was very angry about why I did it. She said it’s a scam because I’m so young. I won’t have any cancer right now. (1Indian, F/23 y, S, Master’s)
Money was lost due to an online scam:
There was once an email …saying if you put $10,000 on this account, we’ll give you $20,000 …that kind of scam …but I didn’t do it. …The second time when I bought a computer game online, they just asked me to send some money in advance. …They totally scammed me and then blocked me. (44Nepalese, M/20 y, W, S6)
Friends had also experienced investment fraud:
I have a friend who invested in …some sort of software soccer game. …He saw an advertisem*nt online in a newspaper. He invested and then the money was just gone. …He lost HK$5000. (6Pakistani, M/25 y, W, S6)
They called and encouraged my friend to put in money and said, “…This is very good. You can earn a lot. You can be a rich person. You can do whatever you want to do.” She put a little bit to see. After six months, they kept calling and saying she was doing well, she could do better. And they got everything on that scam and they never called back. (43Nepalese, M/28 y, W, Degree)
Strategies and perceptions for detecting fraud
Participants reported that the flood of suspicious calls and messages they received, and uncertainty about whether they were genuine or not, exposed them to potential scams.
I don’t know if it’s a scam. …I got calls for buying currencies from them. They told me the whole plan, and I’d even go into a discussion and I was close to paying them. I’ve been near that. (49Filipino, M/19 y, W, S6)
Once I borrowed money and after that many financial companies have my number. …They ask what my name is and ask for my information. …I didn’t give them because I know they might want to get my bank information … it’s not safe. (8Pakistani, M/23 y, W, SD)
They also talked about how to avoid scams by understanding their psychology as emotional manipulation to induce feelings of guilt:
They try to confuse you with a lot of situations to guilt trip you. They make you feel bad about other people. They try to trick you into thinking that your life is a lot better than theirs. …They can make you feel good about giving money. … They’re mentally threatening you not in a bad way. …If you have a strong personality, you can fight back easily. But if you’re naive, it can be quite difficult. (35Filipino, M/28 y, W, S7)
Participants reported pretending they did not understand Cantonese (the local spoken language in Hong Kong) or simply ignoring dubious calls or messages as tactics to tackle potential scams:
I think it’s funny because I can speak okay Cantonese. Whenever I get calls from banks or something, I always ask, “Can you speak in English?” and then they just disconnect. (22Pakistani, F/25 y, W, S6)
Some unknown WhatsApp messages are frequent. But I’d ignore them as I know they are dangerous. (30Filipino, F/21 y, W, SD)
Discussion
This study has various implications. It contributes to conceptual or theoretical understanding, provides insights into practical strategies, and offers directions for further research.
Knowledge or theoretical contributions
Financial decision-making experiences
This study has contributed knowledge to addressing the research gap by revealing the financial decision-making experiences of younger ethnic minorities in a non-Western context. We examined their behaviors, strategies, and perceptions across a range of financial decisions, including personal budgeting, spending, financial planning, the use of financial products, debt management, and detecting fraud. Many ethnic minority young adults practiced budgeting, using digital tools, parental monitoring, and mental bucketing. They learned about budgeting by observing their parents and gaining hands-on experience with their own earnings. Budgeting was challenging due to limited funds, high living expenses, time demands, stress, and self-control issues. Most were modest spenders, prioritizing basic needs like food and transportation and employing strategies like deferred purchases, bargain shopping, and lump-sum payments. Some opted for instalment payments for expensive items, and when their budget was tight. When spending, they differentiated between needs and wants, sought value for money, worked to meet their spending needs, and purchased for happiness. Saving at least one-third of their monthly income, they utilized external assistance and personal tricks. Their long-term saving goals encompassed education, housing, family, business, retirement, and female autonomy. Financial planning was perceived as an adult responsibility, a safeguard against emergencies, and ensuring peace of mind. They invested in insurance, stocks, cryptocurrency, index funds, forex trading, property, and gold. Parental support, peer mentoring, and self-learning influenced their investment decisions. Lack of knowledge and language barriers may contribute to negative perceptions or experiences of financial products. Informal borrowing from family and friends was commonplace, while others resorted to government or lending institution loans. Around one-third owned a credit card. Most used them safely, but risks exist when using someone else’s card, or they are ignorant about interest charges. They were aware of financial scams and employed preventive strategies like understanding the psychology of scams and ignoring scammers, although they occasionally fell victim to fraud.
Enabling factors to financial decision-making
Factors affecting financial literacy are widely understood in the literature, but less has been examined regarding the factors affecting financial decision-making. Based on the financial decision-making experiences, we further identified various factors or conditions that facilitated ethnic minority young adults’ financial decision-making and enabled them to make better financial decisions. While some other factors acted as barriers, awareness of these barriers and taking action to address them can transform them into enabling factors. The enabling factors include family social capital, intrapersonal characteristics, social dynamics factors, command of knowledge, and facilitative contextual circ*mstances. These insights can help devise financial literacy education for ethnic minority young adults.
Family social capital. Family social capital enables families to leverage both material and symbolic resources to benefit their members (Furstenberg and Kaplan, 2004). In this study family social capital played a crucial role in participants’ financial decision-making, as shown by the resources and support derived from the family relationships, including the passing down of money-related attitudes, norms, and behavior from one generation to another and between siblings. Both intergenerational support and sibling support are key components of this family social capital. In the study, intergenerational support was demonstrated through parental role modeling and involvement. While participants did not mention direct teaching of financial education by parents, parents served as role models from whom their children observed and learned financial attitudes and behaviors. This was how participants acquired their ideas of budgeting. Parents also actively coached financial decision-making by monitoring budgeting, setting spending limits, supervising saving, providing funds to help set up stock accounts, offering joint investment opportunities, and providing financial assistance. Sibling support refers to the emotional and practical support provided by siblings. Study participants sought help from their siblings or provided financial assistance to one another during financial difficulties, as shown by their lending money to each other to avoid unnecessary interest charges that may arise from resorting to other sources. Strong family social capital can be attributed to cultural values emphasizing family relationships, filial piety, and respect for parents.
Intrapersonal characteristics. Intrapersonal characteristics, which comprise personal attributes and life perspectives, are evident in facilitating ethnic minority young adults’ financial decision-making. Personal attributes such as self-motivation, self-discipline, and other competencies play a role. Self-motivation is an inner force that compels behavior (Waitley, 2010) and gives people energy to initiate actions and persist in efforts to attain a goal (Robbins and Judge, 2022). This study revealed self-motivation to be important in financial decision-making, such as budgeting, as it is difficult for those with lower motivation to sustain a budgeting habit when they consider budgeting as demanding, time consuming, and excessive in work. Self-discipline involves being able to control one’s impulses and desires in favor of long-term goals (American Psychological Association, 2023). Participants expressed the importance of self-discipline in successful budgeting, saving, and spending. Math competencies ease financial decisions. Those with numeracy skills tend to feel it easy to engage in budgeting.
Life perspectives are about people’s overall views of life, which include personal philosophies and future orientation and facilitate ethnic minority young adults’ financial decisions. Personal philosophies, which are values and attitudes that can be shaped by personal experiences and family and cultural influences, guide people’s decisions. Spending philosophies can be part of an expression of personal philosophies. Study participants exhibited various personal philosophies, such as simplicity-based, enjoyment-based, and work-to-spend philosophies, reflected in their spending philosophies. Simplicity-based living philosophy emphasizes a minimalist lifestyle over material possessions, as evident in the differentiation between needs and wants in spending philosophy. Enjoyment-based living philosophy values pleasures and living in the present moment, as reflected in the YOLO style of spending philosophy. A work-to-spend philosophy underscores the importance of working hard to support desired spending levels and is shown by the work-as-incentive spending philosophy.
Future orientation is the ability to anticipate future events, give them personal meaning, and operate with them mentally (Nurmi, 1991). It is associated with future-oriented behaviors, such as planning and delayed gratification (Strathman et al., 1994). This study suggests that individuals with saving goals tend to have a stronger future orientation as they plan for long-term objectives such as education, starting a family, property investments, and retirement. Those who practice delayed gratification by deferring purchases also show future-oriented tendencies.
Social dynamics factors. Social dynamics factors include peer support and vigilance within ethnic communities. Peer support involves ethnic minority young adults helping each other to make financial decisions through monitoring, mentoring, and collaborating to keep track of each other’s financial behaviors towards goals, offer practical advice in planning decisions, and share tips and efforts in decision-making, respectively. For example, peer monitoring serves as a social restraint to help those who struggle with saving. Peer advice is sought concerning investments in their home countries. Collaboration facilitates joint decision-making on buying stocks. Peers, along with parents, also serve as financial socialization agents.
Vigilance in ethnic minority communities is needed to prevent exploitation, as trust is often presumed within these communities. In the study, trust was demonstrated in the common practice of informal borrowing. Although informal loans can be enforced by social or community ties, they are not without risk. Without legal loan agreements, the possibility of bad debts or scams can arise, and did occur within participants’ communities.
Knowledge proficiency. Knowledge proficiency refers to the command of knowledge essential for making informed financial decisions. There are two types of knowledge. The first applies to a range of financial concepts required to navigate choices in everyday financial situations, such as knowledge of effective saving strategies, information on different financial products, and interest charges for instalment plans, loans, and minimum payments on credit cards. It is important, as the study revealed possible risks and negative experiences among participants stemming from a lack of caution or knowledge, like stashing cash away and ignorance of high interest rates when repaying minimum amounts on credit card debts or loans from lending companies. This type of knowledge is also important considering the potential issue of misinformation. Many participants were interested in using financial products such as insurance policies and stocks in Hong Kong and property investment in their home countries. However, their reliance on self-learning through online resources, such as YouTube’s KOL, or listening to peers exposed them to the risks of misinformation. For instance, one participant regretted making a poor decision to sell stocks based on hearsay, lacking proper knowledge of how stocks work.
The second type of knowledge involves protection against fraud. While participants tried to avoid suspicious messages and calls, some fell victim to various scams, accentuating the importance of being equipped with proactive measures, as the ones used, simply ignoring them, appear passive. Familiarizing oneself with common forms of fraud, exercising caution with offers that seem too good to be true, accessing scam alert information, knowing how to report scams, and understanding one’s legal rights when encountering scams would be good anti-fraud measures to learn.
Facilitative contextual circ*mstances. Various contextual circ*mstances, including leverage of real-life lessons, access to technology, and language accessibility, can be influential in ethnic minority young adults’ financial decisions. This study shows that the employment and pandemic experiences have been translated into real-life lessons to acquire financial knowledge and attitudes. The first earnings from employment nurtured the ideas of budgeting and financial planning, and provided opportunities for acquiring relevant skills. This suggests that promoting financial planning strategies and saving habits earlier, at least before starting employment, is beneficial. Individuals can avoid making unnecessary mistakes and enter smoothly the world of work that requires many financial decisions. Due to the pandemic, some participants experienced a positive change in their financial attitudes. They realized the importance of preparing for economic uncertainty and were eager to improve their financial planning.
Technology not only provides easy access to online financial materials, but can also facilitate financial decision-making using digital tools, which are particularly useful for following budgeting and tracking expenses. As many participants considered budgeting to be arduous, it can be made easier by adopting technological aids.
Finally, language accessibility can affect the acquisition of financial literacy. Participants’ negative experiences with financial products, such as bank products or MPF, for instance, largely stemmed from a lack of understanding that can also be compounded by a language barrier.
Enriched understanding of financial socialization
Family social capital as an enabling factor of financial decisions aligns with the theory of financial socialization, referring to the process of developing values, attitudes, standards, norms, knowledge, and behaviors promoting financial viability and individual well-being (Danes, 1994). Research shows that parents are important socialization agents influencing financial attitudes, such as credit attitudes (Norvilitis et al., 2006). Despite arguments suggesting that parental importance declines as children get older (Danes, 1994) and peers take on greater influence (John, 1999), this study shows that ethnic minority young adults continue to rely heavily on their parents for financial guidance. The findings of this study extend the understanding of financial socialization processes by recognizing the persistent and exceptionally influential roles of ethnic minority parents. Other research also supports that ethnic minority young adults seek parental advice on important education and employment decisions (Chan et al., 2020).
Practical implications
The findings on enabling factors and various behaviors shed light on practical suggestions for enhancing financial literacy education, which, in turn, improves the financial decision-making of ethnic minority young adults.
First, in relation to family social capital, if parental influence remains strong in young adulthood, it may be strategically beneficial to involve ethnic minority parents, either as target participants or partners, in tailored financial literacy education.
Second, to promote holistic financial literacy education for ethnic minority young adults, it is necessary to address their specific personal attributes and life perspectives as attitude components, in addition to increasing general financial knowledge and skills. Self-discipline, self-motivation, spending philosophies, and future orientation could be positively fostered by taking into account the unique challenges they face in financial literacy education.
Third, in response to social dynamic factors, while ensuring the accuracy of shared financial information, peer influence can be capitalized on for effective financial literacy education by utilizing collaboration as a learning approach and developing peer mentoring to optimize mutual learning experiences. Also, addressing vigilance in community trust and the potential risks associated with informal loans are important topics to be included in financial literacy education.
Fourth, concerning knowledge proficiency, financial literacy education should incorporate the two essential types of knowledge required for making financial decisions. This includes knowledge about everyday financial situations—such as the use of various financial products, the consequences of different credit card payment options, and the interest rate information associated with formal debts—as well as knowledge about proactive anti-fraud strategies.
Fifth, in response to facilitative contextual circ*mstances, the current post-pandemic period is an opportune time to offer ethnic minority young adults financial literacy education to capitalize on their increased motivation to learn and improve their financial decisions. Also, as smartphone use is indispensable among young people, including ethnic minorities, user-friendly budgeting apps that fit well their financial situations can help make budgeting efficient, stress-free, and engaging. Moreover, it is important to provide financial literacy education that takes into consideration language needs to ensure a thorough grasp of financial concepts. For instance, interpretation support can ease language barriers. However, in the long run, policy interventions in the educational system, such as remedial language support and learning Chinese at a young age, are necessary.
Last, various financial behaviors prone to mental accounting bias should be addressed in financial literacy education to equip ethnic minority young adults with the skills to make optimal decisions. Mental accounting refers to the cognitive operations to organize, create mental labels, and keep track of money or financial activities (Thaler, 1985). An important concept in this theory is that money is fungible or interchangeable, regardless of its source or purpose. However, people often violate this principle and see money differently, resulting in suboptimal decisions. For instance, some participants might treat credit cards as different mental accounts. They were willing to spend more on credit cards compared to cash, as there seems to be no loss at the time of purchase and the payment can be deferred. This could lead to overspending. Also, in saving, some might stash cash away under the mattress, ignoring the interest earnings from a savings account. Other possible behaviors could be funding a low-interest savings account while carrying high-interest debt.
Research implications
Further research can address several issues or limitations. First, since ethnic Chinese young adults did not participate in this study, their inclusion in future research would facilitate a more comprehensive investigation. As young adults, they likely share similarities, such as spending philosophies, self-learning about financial information, and exposure to potential scams. However, differences may also exist in certain areas. The use of external restraint and personal hacks in financial matters, such as strong roles of parents and boyfriends in monitoring spending, and stashing cash away was less commonly observed among Chinese young adults. Informal borrowing and property investment in their home country were also unique characteristics of ethnic minority young adults. Further research can confirm these possibilities.
Second, this study may not fully reflect the situation of ethnic minority young adults with a lower socio-economic status. This is because the sample was generally well educated, as half of the participants had an undergraduate degree, and almost one-fifth educated to secondary education. In addition, the interviews were conducted in English, indicating a good command of the language among the participants. Future research may include those who are less socioeconomically advantaged as they may have different mechanisms surrounding financial decision-making.
Third, the relative influence of parents and peers across life stages, as well as differences in intrapersonal characteristics as facilitating factors between ethnic minority and non-ethnic minority young people, can be investigated to offer insights into tailored financial literacy education.
Moreover, we acknowledge the limitation of small sample size in a qualitative study, which aims to reveal themes for the financial literacy of ethnic minority young adults, an underexamined group. A future quantitative study for a larger population will be needed to allow for a broader generalization.
Conclusion
This study examined financial decision-making among ethnic minority young adults in Hong Kong and identified major enabling factors for their financial decision-making. Ethnic minority young adults employed strategies for budgeting, but they also found budgeting challenging. They had various spending philosophies, while basic needs were mostly a priority. Saving at least one-third of their income was common, and they had long-term financial planning goals. They used financial products both in Hong Kong and their home countries. Informal borrowing was common, despite some turning to other sources of loans. One-third used credit cards, incurring occasional risks. They were aware of scams and employed protective tactics, but still fell victim to scams.
Enabling factors to financial decisions included family social capital, intrapersonal characteristics, social dynamics factors, knowledge proficiency, and facilitative contextual circ*mstances. To enhance financial decision-making among ethnic minority young adults, the following can be considered. First, leveraging parental influence by involving them in financial education efforts. Second, fostering positive financial attitudes alongside increasing financial knowledge for a holistic financial education. Third, optimizing peer influence through collaborative learning and peer mentoring and raising awareness about community trust and potential issues with informal borrowing. Fourth, covering financial concepts for everyday financial decision-making and mental accounting bias, as well as practical knowledge for fraud prevention. Fifth, capitalizing on pre-employment and post-pandemic periods for timely financial education. Sixth, developing tailored digital tools and language support for specific ethnic communities. Finally, conducting further research is necessary. This includes the inclusion of ethnic Chinese and ethnic minority young people from various socioeconomic backgrounds and investigating the relative importance of parental and peer influence across different age groups. Moreover, comparing the intrapersonal characteristics as facilitating factors between ethnic minority and non-ethnic minority young people and expanding studies to include a larger population to enable generalization are also important.
