Financial literacy in Singapore slumps


Singapore is falling behind in financial literacy, according to MasterCard's latest Financial Literacy Index for Asia Pacific, which saw the wealthy city-state slip four notches to sixth place.

Singaporeans are most savvy in financial planning, but have little understanding of investment concepts such as inflation and diversification, the report showed.

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While the island nation posted the biggest decline among the 16 countries surveyed it was not alone; 12 countries on the list recorded a decline in financial literacy as their efforts to improve basic financial skills and knowledge stalled.

"There is no one reason for the falling level of financial literacy across the region," said T.V. Seshadri, Group Executive, Global Products and solutions, Asia Pacific at MasterCard. "Educating people so they can plan for the future is a crucial aspect of financial inclusion."

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"In both developed and emerging markets, people are struggling to understand basic financial concepts such as inflation," he added.

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Meanwhile, Taiwan regained the top spot on the list from New Zealand, which fell to second. Hong Kong ranked third.

Region of savers

MasterCard's financial literacy score is a measured through a weighted sum of three components: basic money management, financial planning and investment.

Myanmar scored higher than its peers in the savings category of 'Financial Planning', which the study attributed to the practice of saving amid a lack of social security benefits.

On the flip side, Japan was the biggest spender of savings and retirement funds. Organization for Economic Cooperation and Development statistics show that Japan's household savings rate is around 0.6 percent of disposable household income, compared with 9.3 percent and 5.3 percent in Australia and South Korea, respectively.

Under the financial planning component, most of Asia Pacific countries scored highly under 'Save Regularly' but have low knowledge of 'Retirement funds needed'.

"The lack of retirement planning should cause particularly concern," said Seshadri. "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 well-being can be secured over the long term."