Saturday, February 5, 2022

How Singapore's Financial Literacy Rate Soared


Many Singaporeans worry about their financial management skills. But research shows they're doing pretty well. The 2019 GoBear study has found that Singaporeans had the highest financial literacy rate in Southeast Asia. Interestingly, Singaporeans also have a lower perception of their financial literacy than their actual knowledge and skills.

We can't blame Singaporeans for feeling this way, though, especially today. The pandemic had also hit them hard. In 2021, one in two Singapore residents believed they couldn't cope financially if they unexpectedly got sick or lost their job. This might've contributed to the rise of personal loan and overdraft balances among Singapore's young adults.

But the fact that Singaporeans are more financially-savvy compared to their SEA peers remains true. How did they achieve such success?

Financial Management Skills Are Developed in Childhood

Schools around the world don't usually teach personal finance. But Singapore has a different game plan. Singaporean schools didn't always teach financial management, but they've changed that in 2013.

In that period, the Ministry of Education proposed teaching financial management to secondary one and two students. They would also help teachers gain the skills needed to teach the subject. 

Mr. Tharman Shanmugaratnam, the Minister of Finance at the time, added that under the national financial education program, more avenues would be given to people undergoing financial distress.

A pilot program was developed to train social workers and counselors on financial literacy. It has allowed social workers to give guidance to low-income households. In addition, MoneySense delivered targeted messages at key points in an individual's life. For example, if a Singaporean were about to get married, MoneySense would recommend affordable vendors for them.

Citi Singapore and Singapore Management University (SMU) also launched financial literacy programs. But they're targeted at young adults aged 17 to 30. The program seeks to help young adults develop a firm foundation in managing their money early in their working lives.

Thanks to these initiatives, Singaporeans learn essential financial skills early in their lives. They don't have to wait until earning their first salary to understand financial management. Not every Singaporean may have perfect financial health, but they sure know how to save for a rainy day.

Easy Access to Debt

Singaporeans are big credit card users. According to YouGov, 73 percent of them own at least one credit card. Fifty-six percent owned more than one, while 10 percent held six or more. Their research suggests that the more Singaporeans earn, the more likely they will obtain more credit cards.

When it comes to paying their credit card bill, Singaporeans are highly disciplined. Eight-eight percent pay their debts in full, and only nine percent pay them partially. The ones who pay the minimum amount stand at just three percent.

Given all these, Singaporeans make low-risk borrowers, granting them easier access to debt. True enough, personal loan delinquency rates remained low in the country, despite increased borrowing activity during the pandemic. Overdraft delinquency rates, however, rose.

Young adults borrowed too freely during the pandemic. But authorities didn't worry. Even during the peak of COVID-19, the unemployment rate in Singapore was only around five percent. That meant that most borrowers could still repay. The worst-case scenario was the unemployment rate rising as the pandemic carried on, which fortunately didn't happen.

As of November 2021, it went down to 2.5 percent, down from 2.6 percent in October. This had indicated that Singaporeans could pay their loans back easily.

Diverse Options for Those Who Can't Repay a Debt

Since Singaporeans are financially literate, they can avoid defaulting on a loan most of the time. But if things spiral out of their control, they know their options.

One of the easiest ways to get out of debt is to get a debt consolidation loan. In Singapore, you only have to be at least 18 years old and employed to qualify for this loan. Only one valid ID, payslip, CPF contribution for the last 12 months, and income tax notice are your requirements. Some providers may or may not ask for more documents, but often, these would suffice.

The easy access to this kind of loan allows Singaporeans a sense of security when borrowing money. They know that they don't have to run or rely on friends and family if they can't pay. Loan providers are more than willing to help them, breaking the stigma toward financial troubles.

Singaporeans indeed can serve as role models when it comes to financial management. Their educational programs should inspire other countries to do the same for their schools. If students are taught how to manage their money, no one will grow up feeling lost when it's time to build their wealth.


  1. I'm glad that they're really taking advantage of the opportunities they have and learning how to make their money work for them.

  2. This is all interesting to know. I never really knew much about Singapore at all. It's interesting to know about the financial stuff too.

  3. What a great idea of teaching finaninces in the school. That it so important to do.


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