Financial Education in Singapore - Yongtai
Stocks, shares, funds and bonds. If you immediately shun away from these topics or generally leave these investments to an “expert”, you are no different from the majority of Singaporeans, who will not touch such investment options if given a chance. This is so as stocks often have negative connotations such as incidents of individuals burning his fingers or filing for bankruptcy. This perception is in part enforced by the local press featuring such incidents. In this article, I will attempt to challenge the common beliefs that many young Singaporean may have regarding such investment options.
A common idea held by many is that after graduation, one will be able to find a stable job and start climbing up the corporate ladder. This will be a very successful and proven formula for people who are contented with living in a HDB flat. However, one should also consider that many would often spend many years thereafter paying off the debt. This is the mentality of the man in the street. This is what I feel that the Singapore Education system has neglected to impart to its citizens- the need for financial education.
Broadly speaking, people may lose money in 2 ways: short term or long term. A recent article published by Credit Counseling Singapore (CSS) stated that “Young employed adults below 30 are Singapore’s fastest-growing group of debtors”, this could easily be the situation that we may fall into after our graduation. Many believe that the only way to get out of debt is to earn more money. However, the case is that when one earns more money one usually spends more money as well. In essence, it is not the amount of money that we earn that prevents us from going into debt but rather it is how we control the outflow of money that we can minimize the short term lost.
Another common practice that Singaporeans adopt is to deposit their money in a bank and earn interest. Schemes such as Pay-as-You Earn allows you to have a higher interest rate provided you lock in your money for a designated period of time. This interest rate might seem reasonable at first glance but if one factor in just inflation, inflation alone will wipe away any interest that one earns from the bank after X amounts of years. The considerable effect of inflation cannot be ignored and long term planning in terms of personal finance is also critical for one to be debt-free.
To deposit the blame fully on the education system would be extremely unfair to the government since personal finance is a very individualistic choice. As such, the government will not intervene in the daily running in the private sphere save perhaps in the case of CPF. What the government could do to curb the increase in bankruptcy rates amongst Singaporeans of a younger age is to introduce personal finance to the young, probably in the secondary schools curriculum. As children nowadays have a higher spending power than children in the past, they could easier learn a thing or two how to properly spend their money and what to do with that extra cash, instead of blowing it away on mindlessly. Starting young definitely has its advantages as it prevents bad habits from being formed, but more importantly it helps to establish the foundation for the future.
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