Why financial literacy is important for young Singaporeans

Why financial literacy is important for young Singaporeans. (PHOTO: Getty Creative)

SINGAPORE — In today’s financial landscape, millennials need to be more responsible with their finances. Longer life expectancies and rising costs of living amid turbulent geopolitical events and an accelerating climate crisis have created uncertainty about the future of markets.

As such, financial literacy has definitely been a hot topic in recent years. You need to have the knowledge and the confidence to make informed financial decisions. This includes knowing how to manage money responsibly while planning and investing for the future.

This is part of a series where Yahoo Finance Singapore will focus on different aspects of millennials and their finances. In this sixth part, we explain why financial literacy is important for millennials.

Not taught in school

Despite the importance of money in our lives, the basics of finance are usually not taught to us in school. This is why many financial experts who Yahoo Finance Singapore all agreed that young people need to do more to acquire financial literacy.

This includes reading articles on how to better manage your finances and tips on budgeting, as well as talking to various professionals for advice. The key is that young people get a combination of knowledge and access to financial products to ensure their own financial success.

Additionally, for those looking to trade on an investment platformhaving financial knowledge enables them to make smart business decisions and grow independently in their careers.

“It is important that younger generations have the knowledge that can help them avoid bad financial decisions and, more importantly, build a solid foundation for financial success,” said Salim Dhanani, CEO and Co-Founder of BigPay. , a financial mobile application.

This is especially important in today’s financial landscape where today’s young people are in a radically different situation than their parents and grandparents.

Have the future in mind

As such, it is important to always have the future in mind. Even if one is not into wealth building, there are external life risks beyond one’s control that can steal one’s income. For example, inflation can erode a person’s purchasing power and an unfortunate accident can quickly deplete savings.

This means millennials need a financial plan to support their life goals. To do this, they must have enough financial knowledge to come up with a plan that suits their needs. This is especially true given our limited resources in Singapore.

There are also many companies and advisors who are incentivized or coerced into offering certain products to their consumers. Generation Y must therefore discern when it is normal not to do more than necessary. Finance experts have indicated that it’s entirely possible that a non-product solution like Spend Management or a national system like CPF could already suffice.

“Money is like fire – it can be either a good servant if you know how to handle it, or a terrible master if it gets out of hand, and a danger if you leave it unattended,” Chuin Ting Weber advised, CEO of MoneyOwl, a bionic financial advisor.

“Having financial literacy therefore helps you understand your needs and gaps, gives you the clarity and framework to critically assess what is recommended for you, and allows you to optimize your scarce resources to implement the solutions. the most suitable for your life goals,” she added.

For 25-year-old recent graduate Reuben Tay, investing in cryptocurrency is his way of planning his future. Despite the high-risk gamble, Tay thinks the payoff is worth it as long as you know what you’re doing.

“Whenever I invest, I always go there with my eyes open and check the fine print to make sure I don’t fall for a scam or false promises of high returns,” Tay said. .

Understand the risks

Similarly, Gregory Van, CEO of Endowus, a Singapore-based fintech company, indicated that understanding risk is an important part of financial literacy.

“Unfortunately, not all millennials truly understand the risk of investing in riskier products such as cryptocurrency. Regulatory oversight and risk disclosure are still catching up in this rapidly changing space,” Van warned. .

“Young people need to take greater personal responsibility for how they want to manage their wealth and this can only be possible with greater financial literacy,” he added.

For example, 23-year-old Lilian Tan has been investing under OCBC’s Blue Chip Investment Plan (BCIP) for two years. Under this scheme, investors can purchase shares in bulk for S$100 each month depending on the amount they wish to purchase.

“I decided to invest in something ‘small’ because I think it’s important not to take huge risks when I’m younger with a smaller financial base. I also want to be able to have cash on hand for emergencies,” said Tan, a science student from the National University of Singapore (NUS).

Echoing a similar tune, Gavin Chia, Managing Director of Futu Singapore, an online brokerage platform, said: “Being powered by a steady stream of financial literacy resources that are both current and digestible is important for young people execute long-term financial planning for retirement, saving for health care and medical treatment, and having extra money for rainy days.

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Geraldine L. Melton