SINGAPORE has fallen to sixth place for financial literacy, recording the largest decline out of 16 Asia-Pacific markets, according to a annual survey by MasterCard.
The key reason for the overall decline in financial literacy here seems to be a fall in consumers’ understanding of basic money management, said MasterCard yesterday.
Going by the survey results, people in Singapore are finding it harder to keep up with bills, budget effectively and manage unsecured loans, it added.
Singapore slipped four points to score 68 points in MasterCard’s fourth financial literacy index. It was previously ranked second in the region.
But the struggle to improve financial literacy is taking place throughout the region, said MasterCard.
According to its survey, progress in improving basic finance knowledge and skills across the Asia-Pacific has stalled as 12 of 16 countries record lower scores in financial literacy.
While Singapore’s ranking saw the biggest decline, the survey also showed generally disappointing results in Australia, Japan, New Zealand, South Korea and Taiwan.
“Crucial to improving financial literacy is encouraging education at an early age,” said Ms Deborah Heng, group head and general manager of MasterCard Singapore.
“A practical understanding of how to manage money, including saving and borrowing, should be provided by parents and taught at school. The goal is to develop financial know-how so that people can effectively manage money matters such as household cash flow and loans.”
All seven developed markets, including Singapore, have not yet achieved gender parity in financial literacy, although in Japan, women are one point shy of achieving this against their male counterparts, the survey found.
In second place for gender parity among the developed markets was Taiwan, while Singapore, Hong Kong and Australia tied for third place, followed by New Zealand and South Korea.
Comparing gender parity scores with data from a year ago shows that there is in fact a widening gap between the sexes in financial literacy scores. Taiwan was the only market where improvement was seen, while all other markets declined by between one and six points.
Mr T.V. Seshadri, group executive of global products and solutions at MasterCard Asia Pacific, said: “While Asia-Pacific is a region of savers, the lack of retirement-planning should cause particular concern.”
The MasterCard Index of Financial Literacy is calculated out of the weighted sum of the three components: basic money management (50 per cent), which examines respondents’ skills in budgeting, savings, and responsibility of credit usage; financial planning (30 per cent), which assesses knowledge about financial products, services and concepts, and ability to plan for long-term financial needs; and investment (20 per cent), which determines respondents’ basic understanding of the various risks associated with investment, different investment products and skills required.
About 8,000 people aged 18 to 64 in 16 countries in Asia-Pacific were surveyed between July and August last year. In Singapore, some 500 respondents participated in the survey.
How they score
1. Taiwan – 73
2. New Zealand – 71
3. Hong Kong – 70
4. Australia – 69
5. Malaysia – 69
6. Singapore – 68
7. Thailand – 67
8. Philippines – 66
9. Myanmar – 66
10. China – 65
11. Vietnam – 65
12. India – 62
13. South Korea – 62
14. Indonesia – 61
15. Bangladesh – 60
16. Japan – 55