A personal confession
“I did not feel financially ready when I graduated from Business School”
That was how I felt as a working graduate personally after 25 years growing up in the Singaporean education system. I realised this trend only as I was working on financial articles daily and interacting with my peers around me. I was curious that as a first-world developed nation, financial literacy seemed to be lacking at many levels.
And even more worrying, if a finance graduate did not fully understand the various money potholes that lay ahead… how much worse would it be for others with no proper financial or economics training?
FYI: I was the typical Study-hard prototype of the SG education system: From a neighbourhood school… PSLE T-score 206, Scoring 7 A1s at ‘O’ levels, 5 distinctions at ‘A’ levels and BBA grad and minor in Technopreneurship from NUS.
You mean Singaporeans are financially illiterate?
When we started Seedly, it started with just the concept to help people manage cash flow better. But soon as we went along, we started to realise that this was a whole lot deeper problem which we were aiming to solve – financial literacy.
A report by Mastercard it seems that Singaporeans are top in investment knowledge for Asia Pacific but not retirement planning (most probably sponsored and skewed). To me that seems strange, it’s like knowing how to run but not knowing how to walk.
3 Key reasons
After much research and reading into the economic landscape. I have concluded with these reasons why financial literacy seems to be lacking. Feel free to disagree and would love to hear your opinions below! Oh yes, at this point it is important to note that I have removed entirely the notion that personal finance is not sexy. Math, Science, Geography etc. to my knowledge was also not sexy or trendy back in the 2000s.
Reason 1: Personal finance cannot be tested meaningfully
Unlike other subjects like Math, Science or English language, it cannot be really identified or tested meaningfully. Let me just grab a screenshot from Mediacock on facebook where if this was a real PSLE question, many parents would probably be up in arms. But this is actually the real world. The closest would be either Economics or Principles of Accounting (POA) which I know are not traditional subjects which you can easily score an ‘A’, thus this becomes an afterthought.
Source: Mediacock Singapore
Reason 2: Probably not enough qualified instructors/teachers
For personal finance to be taught well, there would need to be a standard to adhere to. But right now it varies too much. Current educators would also probably not be in the best position to teach this if they may also be struggling with their own financial situations. Also, Personal finance is often confused with investing (but this is really not the case) in fact it’s about a holistic view of your finances from cashflow management, savings, to a basic understanding of the market around you.
Reason 3: The economy would suffer dramatically
This is probably one of the conspiracy theories out there but some community members suggested it and actually, it makes sense. In economics, as seen in the chart above, we learn that one of the biggest drivers is really Consumption. And that comes from you and me – people on the street. Every dollar spent is used to oil the economy and of course grow the economy on a macro scale. An economy of savers will just reduce demand, thus supply and the economy becomes depressed.
What happens next – A Money pandemic
This will probably be a very painful situation which the smarter gets better and the less informed goes down the value chain.
“The Rich get richer, the poor just survive from paycheck to paycheck”
And it does not get any better from there. Economists argue that this is actually a necessary evil for the economy to function. For it to grow in the long run – there will be casualties.
Where should you start?
By now you would realise who should be responsible for your basic financial knowledge. Not the government. Not your parents. YOU! No one else really wants you to get better financially. And to be honest, why should they care? Especially when you have been brought up in a rather sheltered environment in Singapore’s education context.
The Learning Mindset
- Join a community of fellow Singaporeans to discuss these money issues and learn together – The Singapore personal finance community is a good place to start. Friendly people helping answer each other in an unbiased way, on a platform you are familiar with (Facebook)
- We highly recommend also to follow financial bloggers, here’s a list of them here
- It’s not all complicated numbers and charts. It’s actually about how you allocate your monthly paycheck and planning for the future
The Needs-Principled Mindset
- Learn how to separate the needs from the wants
- Live a frugal life to understand what you really need, but not be stingy
- Have fun while learning to allocate your monthly cash flow, one example is learning about daily money-saving tools
The Critical thinking Mindset
- Don’t take things as they are or just because your financial planner or a blogger has told you so
- Do you really know how much you need to be insured? What your CPF does? Don’t be afraid to question and be opinionated about your money
- Are you sure you are on the best financial products? How can you make a simple switch to save tons every year? A simple example would be choosing SIM ONLY plan vs the other plans
Conclusion – Start making smarter financial decisions
Singaporeans have been known to be Kiasu. I would highly argue that having been through the education system and recently graduated, this holds even more true as you step out into the working world.
“There are no stupid questions, only unanswered ones” -Anonymous
The real learning starts here and your livelihood is at stake. It’s like when you step out into the world, you would ideally know how to manage your own finances and discern scams from real opportunities. Let’s make this happen together! In fact, as part of our mission, if I were you, I would seriously think about joining our community and ask questions and learn.
Further Reading: Unbiased views on your financial life
Here are some good articles for you to get started on the basics:
- Overall: Seedly Money Framework
- How To Allocate Your Monthly Salary: Pay Yourself first
- Insurance: Which policies are really the most essential for me?
- Investments: When should I begin investing?
- Roadmap: How much debt will an average Singaporean most likely get into?