SINGAPORE: A new study by United Overseas Bank (UOB) has revealed that over one in four Singaporeans aged 18 to 25 feel financially unprepared.
According to UOB’s ASEAN Consumer Sentiment Study (ACSS) 2024, a significant portion of Singaporean consumers are not taking adequate steps to secure their financial future, with Generation Z emerging as the most vulnerable demographic.
The study surveyed over 5,000 respondents across the ASEAN region and highlighted a worrying trend: only one in ten respondents met at least three or all four of the financial rules of thumb identified by the Monetary Authority of Singapore (MAS).
These rules include having emergency savings equivalent to three to six months’ worth of expenses, obtaining insurance for critical illness, death, and total permanent disability, investing at least 10% of take-home pay for retirement, and making wills and CPF nominations.
The findings show that just over a third of respondents (37%) met two of these criteria, while 35% met only one. Alarmingly, nearly one in five (18%) failed to meet any of the financial guidelines set by MAS.
The financial vulnerability of Generation Z was particularly concerning. More than one in four (26%) of respondents from this age group failed to meet any of the MAS financial guidelines, highlighting a critical gap in their financial preparedness.
UOB noted that while Gen Z is relatively new to the workforce and may still be finding their financial footing, the lack of sufficient financial planning in this group is cause for concern.
When it comes to insurance, the study revealed stark gaps between Gen Z and the broader population. Only 17% of Gen Z respondents had critical illness insurance, compared to 37% of respondents across all generations.
The gap was even more significant for death and total permanent disability insurance, with just 13% of Gen Z covered versus 22% overall. Disturbingly, over one in ten Gen Z respondents (12%) reported not having any insurance coverage at all.
The study also highlighted that Gen Z lags behind older generations in terms of legacy planning. Only 29% of Gen Z respondents had made CPF nominations, compared to 43% of Gen Y, 64% of Gen X, and 74% of Boomers.
Will-writing was similarly under-prioritized among Gen Z, with just 10% having prepared a will, compared to 15% of Gen Y.
Despite their challenges with insurance and legacy planning, younger Singaporeans appear to be more proactive when it comes to emergency savings and investments.
Approximately six in ten Gen Z respondents (59%) reported having sufficient emergency funds, comparable to 62% of Gen Y respondents.
Baby boomers, however, were the most financially prepared, with over three-quarters (77%) holding sufficient emergency funds. Gen X fared the worst in this area, with only 54% reporting adequate emergency savings.
On the investment front, Gen Z and Gen Y were the most active, with 55% and 62% of respondents, respectively, stating that they are investing.
Both groups also expressed confidence in their financial future, with 78% expecting to fare as well or better financially in the coming year—an eight-percentage-point increase from last year.
Compared to their peers across Southeast Asia, Singaporeans were less concerned about a range of financial issues.
Although inflation remained the top worry for ASEAN consumers, with 63% of respondents indicating it as a concern, only 55% of Singaporean respondents shared this worry—a drop of 16 percentage points from the previous year.
Concerns about rising household expenses and declining savings or wealth also saw declines, with 52% and 47% of Singaporean respondents, respectively, expressing concern, down 12 percentage points from the previous year.
In terms of spending, the study found that the top expenditure for Singaporeans over the past year was utility bills, with 25% of respondents indicating that they spent more on this category.
Daily commuting and child education followed at 11%, with household groceries coming in third at 7%. /TISG
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