SINGAPORE: While more Singaporeans are optimistic about the economy than last year, a new survey reveals that Gen Z individuals are financially unprepared.
According to UOB Asean Consumer Sentiment Study 2024, which involved 1,000 participants from Singapore, over one in four aged 18 to 25 lack sufficient savings, life insurance, investments, and other financial plans.
According to The Straits Times, the study refers to a basic financial guide recommended by the industry and the Monetary Authority of Singapore.
This guide suggests maintaining an emergency fund of three to six months’ worth of expenses, securing insurance for death, total permanent disability, and critical illness, investing at least 10% of take-home pay, and making wills and CPF (Central Provident Fund) nominations.
However, about 26% of Gen Z did not meet any of the four recommendations outlined in the guide.
Although Gen Zs are new to the workforce and may face large expenses like marriage and housing, their lack of financial preparation is concerning.
Among all age groups, only 10% of respondents met at least three of the recommended financial practices, while 37% met two, 35% met one, and 18% did not meet any.
The study found that 60% of respondents have saved at least three months’ worth of expenses. Baby Boomers (aged 58 to 65) were the most prepared, while Gen X (aged 42 to 57) were the least prepared.
Insurance coverage was notably low among Gen Z, with the group lagging behind older generations in this area. However, younger people aged 18 to 41 showed higher investment activity.
In addition, half of those surveyed have made CPF nominations, and 19% have completed wills.
The survey was part of a larger Asean Consumer Sentiment Study, which included 5,000 participants from Indonesia, Malaysia, Singapore, Thailand, and Vietnam.
The study was done in partnership with Boston Consulting Group and was conducted online over three weeks from mid-May. It found that Singaporeans are more optimistic about their local economy than their regional counterparts.
Around 68% of Singapore respondents are positive about the economy, an increase of 20 percentage points from 2023 and a 14 percentage point higher than the regional average.
Most (78%) Singapore respondents are optimistic about their financial outlook for the next year, an eight percentage point increase from 2023. The study found that Gen Z and Gen Y (aged 26 to 41) were the most optimistic, whereas Baby Boomers were the least positive.
The positive outlook is partly due to recent support measures introduced in Singapore’s Budget 2024, such as additional CDC vouchers, a 50% personal income tax rebate, and various schemes to assist low- and middle-income households.
Ms Jacquelyn Tan, head of group personal financial services at UOB, commented that consumer sentiment generally remains strong and spending has remained resilient despite global uncertainties.
She noted that inflation is lower than in 2022, the Singapore dollar is stronger, and the labour market is tight, all contributing to a more positive economic outlook.
She said, “In the second half of this year, if the more developed economies start looking at rate cuts, together with the other factors (mentioned earlier) coming together, (this) probably reflects a little bit of the optimism in consumer sentiments.”
The study also pointed out some changes in consumer spending in Singapore.
While spending on utility bills, daily commutes, children’s education, and groceries increased over the past year, there was a noticeable drop in the number of people who increased their spending on utility bills and groceries, with decreases of six and seven percentage points, respectively.
Singaporeans are also spending more on experiences such as travel, fine dining, and entertainment, with 43% reporting increased spending in these areas, compared to the regional average of 35%. /TISG
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