“The Republic scored 68 points out of 100, a drop of four points from the previous survey conducted in 2013” (Singapore Sees Decline In Financial Literacy: Survey, Matthias Tay).
That Singapore has recorded the largest decline in the MasterCard Financial Literacy Index should concern many. “Basic Money Management” – which examines skills of “budgeting, savings, and responsibility of credit usage” (TODAY, Apr. 28) – accounted for a large part of the decline, and it is moreover worrying that respondents scored “particularly low in the areas of managing unsecured loans and saving for big purchases”. The national financial education programme MoneySENSE might have published educational articles and organised sessions as part of its awareness campaigns since 2003, yet it may be necessary to re-examine whether citizens can attain financial well-being and consumer protection.
Defining financial literacy as “the ability of individuals to make informed judgements and take effective decisions in managing their finances” the first National Financial Literacy Survey was conducted in 2005, wherein Singaporeans achieved a mean score of 67 out of 100. Oddly, opposite to what the MasterCard survey found, higher scores were achieved for basic money management (74) compared to financial planning (62) and investment know-how (58).
The scepticism expressed by the credit counsellors who were interviewed by TODAY seems a little misplaced. With other socio-economic and regulatory factors to consider it would of course be ludicrous to suggest that education is the only way to address the decline in financial literacy, but they should consider the state of financial education in Singapore. At the moment, concepts taught in schools rarely go beyond the basics of saving and borrowing, and even at the institutes of higher learning the economics subject shares little about day-to-day financial knowledge and skills. Young Singaporeans seem poorly equipped to handle such responsibilities, or – progressively – apply concepts learnt in the classroom.
There is also a common misconception that financial literacy only involves the complicated investments in or management of stocks, debts, or derivatives, though – as the MasterCard index has shown – individuals should be familiar with basic money management, financial and retirement planning, and investment. MoneySENSE has also focused on the same three tiers in its endeavours. With decisions to be made on study loans, housing, and retirement in Singapore, poor financial management could prove to be costly in the long run.
And while MasterCard’s commitment to reach out to schools is commendable, one would reckon that the onus is now on the government: to ascertain and verify – 10 years after the first MoneySENSE survey – the level of financial literacy, perhaps across different demographics; to assess if there is appropriate instruction in schools; and ultimately to plug any gaps. This is not just an assessment of the efficacy of the MoneySENSE programme, but also an opportunity to equip more with adequate financial abilities for the future.