Singapore topped the Mastercard Index of Financial Literacy for the first time in 2015 since the survey began in 2010, coming ahead of the 17 Asia-Pacific markets polled. With an overall score of 71.3 index points, Singapore moved up from sixth place in the previous survey to replace Taiwan in the top spot.
Said Mastercard Singapore group head and general manager Deborah Heng: "The improvement in financial literacy in Singapore is encouraging, with more people realising the importance of budgeting, financial planning and managing their money better."
The bottom three in the region were Bangladesh (60 points), Vietnam (58 points) and Japan (56 points). Japan remains the exception to the general observation that developed markets have better financial literacy.
The index was based on a survey of 8,718 respondents aged 18 to 64 years and was conducted between May and June 2015. Four hundred and twenty-two of these respondents were from Singapore.
The survey polled consumers on three aspects of financial literacy: basic money management skills (50 per cent weight), financial planning (30 per cent weight) and investment knowledge (20 per cent weight). The index is calculated based on a weighted sum of the three components.
The Republic is the only market in the region to show improvement in all three literacy components.
The investment component saw the largest increase of five points, contributed largely by consumers' understanding of financial statements and a keen interest in monitoring their investments.
The basic money management component saw an increase of four points, as consumers in Singapore continue to do well in the areas of budgeting, saving for big purchases, tracking expenditure and managing unsecured loans.
Although Singapore showed improvement in the overall financial planning component, with an increase of two points, there is still room for improvement when it comes to retirement planning, said Mastercard. The scores for the retirement planning component rose from 40 to 48, but it is the only component that falls under the 50-mark.
At the same time, the survey found that people under 30 years are less financially literate than those over 30 in all markets except Sri Lanka. The study notes that this general trend can be attributed to the fact that younger people may see insurance, investment and financial planning as less urgent in their current stage in life.
Ms Heng said: "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."
This article was first published on June 24, 2016. Get The Business Times for more stories.