The republic is the only market out of 17 in the region that showed overall improvement in money management, financial planning and investment

Singapore, 9 June 2016 – Consumers in Singapore have achieved significant progress in financial literacy, compared to their counterparts in the region. According to the MasterCard Index of Financial Literacy (2015), Singapore secured the top spot in the index for the first time since the survey commenced in 2010.

Progress towards financial literacy has been stagnant across 17 markets in Asia Pacific, with the overall literacy score retreating by 1 point to 64, hitting a record low. Singapore was an exception, securing a score of 71, an increase of 3 points from the results in 2014, moving up from sixth place in the previous survey and replacing Taiwan in the top spot. It was closely followed by Taiwan (71.1, ranked 2nd) and New Zealand (71.1, ranked 3rd)[1].

Across the region, developed economies showed largely unchanged scores while emerging markets showed the biggest declines in scores. The most disappointing performances were observed in Vietnam (58, down -7 points), Myanmar (60, down -6 points), Philippines (62, down -4 points), Malaysia (67, down -2 points) and India (60, down -2 points).

Singapore performs well but lags behind in retirement planning

In Singapore, overall financial literacy increased from 68 points in H1 2014 to 71 points in H1 2015, with the republic climbing from the sixth place in 2014 to the first place in 2015. The index also revealed that Singapore is the only market that showed improvement in all three literacy components – Basic Money Management (+4 points) , Financial Planning (+2 points) and Investment (+5 points).

The ‘Investment’ component saw the largest increase of 5 points, contributed largely by consumers’ understanding of financial statements (+7 points from 64 to 71), and a keen interest in monitoring their investments (+6 points from 55 to 61).

When it comes to ‘Basic Money Management’, consumers in Singapore continue to do well in the areas of budgeting (+6 points from 83 to 89), saving for big purchases (+2 points from 59 to 61), tracking expenditure (+6 points from 68 to 74) and managing unsecured loans (+3 points from 60 to 63).

While Singapore showed improvement in the overall Financial Planning’ component, doing well in terms of starting early with financial planning and showing prudence in savings and insurance; there is still room for improvement when it comes to retirement planning (+8 points from 40 to 48). Even though the scores for retirement planning have increased from last year, it is the only component that falls under the 50-mark. This result may be attributed to the high degree of uncertainty and lack of confidence in financial management, resulting from a possible lack of employment security, risk of over-dependence on others during retirement years and lack of awareness or exposure to financial resources.

Deborah Heng, group head and general manager, MasterCard Singapore said, “The improvement in financial literacy in Singapore is encouraging, with more people realizing the importance of budgeting, financial planning and managing their money better. However, the results also revealed that people still struggle in other areas and have to make greater effort to increase financial knowledge around retirement planning, especially given the uncertain economic outlook.  Ultimately the goal is for more people to develop the necessary know-how to save, budget and invest so that they live well, both while they are employed and when they decide to retire.”  

SINGAPORE 2015 Current Status Rank 2014 Status Rank Change in score
Overall Financial Literacy 71 1 68 6 +3
Basic Money Management 71 3 67 5 +4
Financial Planning 79 4 77 7 +2
Investment 62 4 57 10 +5


Top findings across Asia Pacific:

  • While developed markets maintain their lead over emerging markets, Japanremains the outlier staying in the bottom spot with 56.5 points.
  • Asia Pacific consumers exhibit the most amount of knowledge about matters pertaining to ‘Financial Planning’ (score of 74) compared to ‘Basic Money Management’ (61) and ‘Investment’ (53), for the fifth year in a row.
  • Consumers in Taiwan continue to top the region as the best financial planners (82), followed by Thailand (81) and Malaysia (80), while Vietnam experiences the biggest drop in ranking from 2nd to 15th, with a 12-point deterioration to 69 points.
  • Indonesia shows the biggest improvement in ‘Financial Planning’, increasing from 70 to 78 points; however it also experiences the largest decline in the ‘Investment’ component which dropped from 55 to 47.
  • New Zealand (75) and Australia (72) retain their top two positions when it comes to ‘Basic Money Management’, while Singapore’s gain of 4 points to 71 points places it in 3rd place, overtaking Hong Kong (69) which was previously the 3rd highest. Some of the largest declines are observed in the emerging markets of Myanmar (50-neutral point mark, down -7 points), the Philippines (59, down -7 points), Vietnam (55, down -4 points) and Malaysia (62, down -4 points).
  • Understanding of ‘Diversifying assets’ and ‘Inflation’ worsens across Asia Pacific to barely-acceptable levels of 35 and 36 points, respectively.
  • Asia Pacific women make progress towards closing the gender gap, with the regional average score increasing by 2 points to 100. Women in emerging markets are more at par with their male counterparts compared to women in developed economies, with the biggest improvement shown by women in Vietnam (+13 points to 121).
  • In terms of age, people under 30 are less financially literate than those over 30 in all markets, except Sri Lanka, where the younger cohort is more financially literate.
  • With regards to employment status, generally “Working” professionals are found to be more financially proficient than those who are “Not Working”. While Indonesia, Philippines and Bangladesh exhibit no difference between the two groups, India stands out with working consumers being less financially literate than their counterparts. On average, working consumers in developed markets (except Japan and South Korea) are more financially savvy than their peers in emerging markets. India, Vietnam and Bangladesh form the bottom tier of financial literacy with regards to working consumers.

Full Index data can be found on final page.

Issue specific insights

  • Indonesia’s newfound prudence in Financial Planning­ – Indonesia has shown marked improvement of 8 points in the ‘Financial Planning’ category, which has propelled it from 13th to 5th place. This could be a result of the insecurity in terms of income and employment prospects arising from the economic slowdown and tight labor market conditions in the 12 months prior to the survey. These conditions may be the driving force behind Indonesians being particularly prudent in financial planning, feeling the need to save regularly and set aside emergency savings, as well as develop an attitude of starting to save early, irrespective of one’s wealth. This progress is likely to continue with governmental reforms such as the five-year plan to encourage merger of the country’s three large state-owned Islamic banks in order to increase efficiency and develop innovative Islamic financial products.
  • Explaining low financial literacy among the young cohort – Matured consumers (aged above 30) are more financially literate than their younger (aged less than 30) counterparts in the Asia Pacific region, with the exception of Sri Lanka. This lack of financial prudence amongst the young cohort might simply be attributed to the fact that they are at a different life stage, where insurance, investment and retirement planning may seem like less urgent needs. Moreover, in emerging markets, the reason why the young may be lacking in financial know-how could be poor banking, IT and telecommunications infrastructure, which curbs opportunities for them to be exposed to financial concepts. In fact, studies by the Centre for Banking Studies show that improving the banking penetration as well as the IT and telecommunications infrastructure has helped boost financial literacy in Sri Lanka. Measures such as the Micro Finance Act that help young Sri Lankans, set up their business, have further enabled the country to enhance financial literacy amongst the younger cohort.

Methodology

MasterCard’s Financial Literacy Index was conducted this year for the 5th consecutive time, during the period May and June 2015 on 8,718 respondents aged 18-64 in 17 countries in Asia Pacific (Australia, New Zealand, China, Hong Kong, Taiwan, Japan, Korea, Malaysia, Philippines, Thailand, Indonesia, Singapore, Vietnam, India, Bangladesh, and Myanmar, Sri Lanka). The Index comprises questions covering three components: Basic Money Management (50% weight) which examines respondents’ skills with regard to budgeting, savings, and responsibility of credit usage; Financial Planning (30% weight) which assesses knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs; and Investment (20% weight) which determines respondents’ basic understanding of the various risks associated with investment, different investment products and skills required. A Financial Literacy Index Score for each market is calculated out of the weighted sum of the 3 components.

MasterCard and its Suite of Research Properties

The MasterCard Index suite in Asia Pacific includes the long-running MasterCard Index of Consumer Confidence, as well as the MasterCard Index of Women’s Advancement, MasterCard Index of Financial Literacy, and the MasterCard Index of Global Destination Cities. In addition to the indices, MasterCard’s research properties also include a range of consumer surveys including  Online Shopping, Ethical Spending and a series on Consumer Purchasing Priorities (covering Travel, Dining & Entertainment, Education, Money Management, Luxury and General Shopping).

About MasterCard
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardAP and @MasterCardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

Media Contacts

Celina Lim, Weber Shandwick, celim@webershandwick.com, +65 6825 8075, +65 9099 7618

Nina Kaur, Weber Shandwick, Nkaur@webershandwick.com, +65 6825 8043, +65 9438 6942

[1] Scores are rounded off to the nearest one decimal point

Index data

Country ranking and score

Rank Country Score
1 Singapore 71
2 Taiwan 71
3 New Zealand 71
4 Hong Kong 69
5 Australia 68
6 Malaysia 67
7 China 67
8 Thailand 67
9 Sri Lanka 67
10 Indonesia 62
11 Philippines 62
12 South Korea 61
13 India 60
14 Myanmar 60
15 Bangladesh 60
16 Vietnam 58
17 Japan 56

Score breakdown by component

Overall Asia Pacific, Singapore, Taiwan, New Zealand, Hong Kong, Australia, Malaysia, China, Thailand

APAC SG TW NZ HK AU MY CN TH
Overall Financial Literacy Score 64 71 71 71 69 68 67 67 67
Basic Money Management (Overall) 61 71 68 75 69 72 62 62 63
Budgeting ability 85 89 87 92 83 88 84 95 90
Keeping up with bills 62 66 66 74 74 68 58 60 71
Saving for big purchases 53 61 55 60 62 61 49 61 39
Tracking expenditure 65 74 57 78 49 75 68 60 78
Unsecured loans 41 63 73 71 76 67 52 32 35
Financial Planning (Overall) 74 79 82 72 70 66 80 76 81
FP is not only for the rich 73 76 85 86 64 70 80 71 78
Starting early with FP 79 85 94 88 54 78 87 89 73
Save regularly 88 93 95 89 88 85 95 89 77
Emergency savings 86 89 94 82 83 78 92 84 92
Insurance is important 74 81 85 60 79 52 81 79 86
Retirement funds needed 45 45 37 27 52 33 49 44 82
Investment (Overall) 53 62 64 60 66 60 60 67 56
Financial statements understanding 65 71 62 75 77 75 76 80 63
Financial products suitability 69 74 83 76 76 72 82 85 86
Investment monitoring 61 61 73 55 74 55 68 83 77
Concept of diversification 35 52 39 44 43 48 36 38 32
Concept of inflation 36 54 63 52 59 52 36 50 24

Sri Lanka, Indonesia, Philippines, South Korea, India, Myanmar, Bangladesh, Vietnam, Japan

LK ID PH KR IN MM BD VT JP
Overall Financial Literacy Score 67 62 62 61 60 60 60 58 56
Basic Money Management (Overall) 65 59 59 57 53 50 55 55 58
Budgeting ability 97 90 87 70 95 74 90 81 57
Keeping up with bills 72 74 55 68 40 32 46 56 67
Saving for big purchases 64 65 45 39 37 48 41 54 60
Tracking expenditure 66 39 80 71 74 47 72 61 62
Unsecured loans 28 25 29 39 21 0 24 23 44
Financial Planning (Overall) 77 78 72 74 73 76 72 69 63
FP is not only for the rich 88 92 79 69 45 76 72 60 54
Starting early with FP 85 95 49 88 74 91 66 75 74
Save regularly 95 91 89 88 80 97 89 79 80
Emergency savings 94 86 88 86 78 87 83 81 76
Insurance is important 79 59 77 77 81 73 74 72 61
Retirement funds needed 19 44 50 38 81 34 51 49 33
Investment (Overall) 56 47 53 50 56 N.A. 54 49 43
Financial statements understanding 92 74 64 52 91 N.A. 76 52 28
Financial products suitability 80 55 83 65 79 N.A. 55 67 47
Investment monitoring 69 49 78 57 72 N.A. 66 60 43
Concept of diversification 28 24 20 43 23 N.A. 38 37 49
Concept of inflation 9 33 22 35 16 N.A. 35 29 48