SINGAPORE - 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 on Monday.
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 was previously ranked second in the region, sliding four points to score 68 points in MasterCard's Financial Literacy Index.
But the struggle to improve financial literacy is taking place throughout the region, said MasterCard.
According to its survey data, progress towards 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 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 eventually develop financial know-how so that people can effectively manage money matters such as household cash-flows and loans," she said.
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 compared to their male counterparts, the survey found.
In second place for gender parity amongst 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 to 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.
T.V. Seshadri, group executive, global products and solutions, for MasterCard Asia Pacific, said, "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."
He added: "In both developed and emerging markets, people are struggling to understand basic financial concepts such as inflation. 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."
The 4th MasterCard Index of Financial Literacy is calculated out of the weighted sum of the three components: Basic Money Management (50 per cenr weight) which examines respondents' skills with regards to budgeting, savings, and responsibility of credit usage; Financial Planning (30 per cent weight) which assesses knowledge about financial products, services and concepts, and ability to plan for long-term financial needs; and Investment (20 per cent weight) 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 (Australia, New Zealand, China, Hong Kong, Taiwan, Japan, Korea, Malaysia, the Philippines, Thailand, Indonesia, Singapore, Vietnam, India, Bangladesh and Myanmar) in Asia Pacific were surveyed between July and August 2014 . In Singapore, approximately 500 respondents participated.