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).
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|
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.
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).
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.
Celina Lim, Weber Shandwick, email@example.com, +65 6825 8075, +65 9099 7618
Nina Kaur, Weber Shandwick, Nkaur@webershandwick.com, +65 6825 8043, +65 9438 6942
 Scores are rounded off to the nearest one decimal point
Country ranking and score
Score breakdown by component
Overall Asia Pacific, Singapore, Taiwan, New Zealand, Hong Kong, Australia, Malaysia, China, Thailand
|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|
|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|
|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|
|Insurance is important||74||81||85||60||79||52||81||79||86|
|Retirement funds needed||45||45||37||27||52||33||49||44||82|
|Financial statements understanding||65||71||62||75||77||75||76||80||63|
|Financial products suitability||69||74||83||76||76||72||82||85||86|
|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
|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|
|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|
|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|
|Insurance is important||79||59||77||77||81||73||74||72||61|
|Retirement funds needed||19||44||50||38||81||34||51||49||33|
|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|
|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|
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