Singaporeans' understanding of basic money management getting worse: Survey

Singaporeans' understanding of basic money management getting worse: Survey

POSTED: 27 Apr 2015 15:45
UPDATED: 28 Apr 2015 09:11

“Going by the survey results, people in Singapore are finding it harder to keep up with bills, budget effectively and manage unsecured loans,” says MasterCard.

SINGAPORE: The Republic has recorded the largest decline in financial literacy in the Asia Pacific - dropping from second to sixth place, according to the MasterCard Financial Literacy Index.

In a news release on Monday (27 Apr), MasterCard said Singapore slid four index points to score 68 index points in financial literacy, while New Zealand ranked second with 71 points, losing the top spot to Taiwan.

The annual survey, conducted between July and Aug 2014 on 8,087 respondents aged 18 to 64 in 16 countries in the Asia Pacific, covers three components: Basic Money Management, Financial Planning and Investment.

The key reason for the decline in Singapore’s financial literacy is the fall in consumers’ understanding of basic money management, said the release. “Going by the survey results, people in Singapore are finding it harder to keep up with bills, budget effectively and manage unsecured loans.”

Singapore is not the only country that experienced a drop, as MasterCard revealed that the struggle to improve financial literacy “is taking place throughout the region”. Progress towards improving basic finance knowledge and skills across Asia Pacific has stalled as 12 of 16 countries recorded lower scores in financial literacy, the release added.

Other countries that saw a decline include Australia and Japan, both down by two points to fourth and sixteenth place respectively. This was also attributed as the reason behind Hong Kong’s advancement from fifth to third place.

While developed markets tend to rank higher than emerging markets such as Myanmar and Vietnam, Japan remains the outlier, staying in the bottom spot for the 3rd consecutive year.

“There is no one reason for the falling level of financial literacy across the region but the data clearly shows that the young and unemployed need additional support. Educating people so they can plan for the future is a crucial aspect of financial inclusion,” said Mr T V Seshadri, Group Executive, Global Products and Solutions, MasterCard Asia Pacific.

“In both developed and emerging markets, people are struggling to understand basic financial concepts such as inflation," he said. "In addition, while Asia Pacific is a region of savers, the lack of retirement planning should cause particular concern. It is not enough to provide access to financial services, we must ensure that everyone knows how to save, budget and invest so that their wellbeing can be secured over the long term.”

MasterCard Singapore group head and general manager Deborah Heng, added that a practical understanding of how to manage money, including saving and borrowing, should be provided by parents and taught at school.

“Crucial to improving financial literacy is encouraging education at an early age. The goal is to eventually develop financial know-how so that people can effectively manage money matters such as household cash-flows and loans,” she said.

- CNA/ct

- wong chee tat :)