Saturday 13 September 2014

Singapore youth not confident about financial future: Nielsen survey 2014

Majority of 1,000 surveyed lack deeper understanding of financial planning
By Rachael Boon, The Straits Times, 12 Sep 2014

YOUNG and carefree? Hardly.

Singapore's young people fret over the future and are overwhelmingly pessimistic about their financial position, a new survey has found.

No fewer than 87 per cent of respondents feel financially unprepared for the challenges ahead, the NTUC Income survey found.

And almost as many - 79 per cent - are not even confident of their current financial situation.

More than 1,000 final-year polytechnic students, university undergraduates and workers between the ages of 18 and 29 were polled in the survey, which was conducted by Nielsen.

The poll found that young people have some financial awareness, but lacked a deeper understanding of proper financial planning.

Asked how much cash should be set aside for emergencies, 80 per cent responded that they need at least three months of their income for emergencies.

At a panel discussion on financial awareness, held yesterday at The Arts House, Ms Deniece Oei, NTUC Income's financial associate, said this falls well short of what financial planners recommend. She said: "I don't think three months is enough. Many people think that if they stop working, it's okay to have a three-month buffer.

"But what if it takes slightly longer than that to secure your next dream job? If you're able to set aside six to 12 months of emergency funds, it will give you a better buffer."

The survey also found that the average expected retirement age is 57, and that the respondents expect to be retired for 23 years.

On average, they believe a shade over $1 million - $1,005,890 - is needed for retirement expenses. However, the survey found that the mean projected savings by the time of retirement is $382,872 - a shortfall of more than $675,000 and only a third of what the young think they need.

They have also not hedged their assets against the wealth-eroding effects of inflation, with 68 per cent saying they have not taken measures to do so.

Barriers to financial planning include thinking that they need more savings before they can start investing or planning, with 49 per cent saying so, and 25 per cent of respondents not knowing where or how to start.

Mr Luca Griseri, Nielsen's head of financial services in Singapore and Malaysia, said: "What was the most surprising was the amount of the shortfall, it's just such a big gap. They also told us what they want to do, but don't know how to start."

He was also surprised by the pessimism youth had about the future, because "young people are normally positive, and people in South-east Asia are the most confident, and we track confidence too".

The lack of confidence is worrying, and Mr Griseri said "we certainly need to do something to help them help themselves".

Mr Marcus Chew, vice-president for strategic marketing at NTUC Income, also pointed out a gap in the school curriculum for financial literacy.

To fill that gap, the insurer has since May been conducting a programme called Cents and Sensibility.

NTUC Income also launched a new campaign to raise financial awareness among youth, called Future Made Different, which has its own website.

Besides a series of television and print commercials, the campaign also includes what is called a Future Starter venture fund.

The fund will grant $100,000 in cash to one person or team under the age of 35 to kick-start a winning business idea. The person or team will have to go through rounds of selection, and will be mentored by industry professionals on the ins and outs of setting up a business or social enterprise.

The winner will be picked by a panel of industry leaders including Ms Elim Chew, founder of fashion retailer 77th Street, and Mr Michael Ma, chief executive of restaurant and club operator IndoChine Group.

Ms Chew welcomed the new fund, saying if she had had $100,000 to start her business journey, things would have moved a lot faster. She began as a hairstylist, taking over a shop, with only $1,000 for chairs, a pair of scissors and a comb. She later started 77th Street, where she and her sister put in $15,000 each.

"If I had $100,000 as a start-up, I would have jumped ahead in terms of time, because time is money," said Ms Chew. "It's never enough but it's a good start for anyone with a dream, to take that action for $100,000."

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