A new study, HSBC FinFit Index, measures the financial fitness of Singapore residents based on four aspects - financial habits, financial knowledge, financial security & safety, and financial planning.
The study reveals Singapore residents have a moderate financial fitness score of 67 over 100, which is similar to their Hong Kong counterparts.
Conducted in the second half of 2020, HSBC FinFit Index took the views of more than 1,200 respondents residing in Singapore including employment pass holders. It aims to assess the current status of Singapore residents on personal finances management. A similar study was conducted in Hong Kong in the first half of 2020.
3 in 10 Singapore residents (33%) are considered “very fit” with a score of 80 or above, half of those surveyed are considered “moderate” with a score of 50 to 79, while 2 in 10 (18%) are “unfit” with a score below 50. HSBC FinFit Index financial fitness score shows a strong correlation to an individual’s level of satisfaction in relation to their quality of life, well-being, and retirement confidence.
The survey reveals that respondents with a higher FinFit score tend to be more knowledgeable about financial products, do more research before making any investment or wealth commitment, and deploy more methods to educate their children about financial management.
In particular, international-minded respondents tend to have a higher FinFit score of 72/100 compared to those that do not plan or have any intentions to invest or fund children’s education overseas, who achieved a FinFit score of 63/100. 54% of those with high FinFit score hold overseas investments, compared to 44% of those with moderate FinFit scores.
Interestingly, “Moderately fit” Singapore residents seem to be most stressed about their personal situation, expressing the highest number of financial concerns.
Mr Anurag Mathur, Head, Wealth and Personal Banking, HSBC Bank (Singapore) said: “COVID-19 has shown how unpredictable and fragile global economies can be. While Singapore has been fairly resilient, the HSBC FinFit study has shown that people here are starting to worry about job security and the implications of prolonged weakness in the economy. Financial fitness is a vital aspect of our broader personal well-being.
"It is even more important now for everyone to take charge of their financial well-being and take concrete steps to plan ahead and make their money work harder for them. While being disciplined about their expenses and savings is a good base to start off, people in Singapore need to make a concerted effort to do more active financial planning as it will lift their overall FinFit score.”
More active financial planning needs to be done
HSBC FinFit Index study shows that despite COVID-19, Singapore residents continue to be strong savers and discipline spenders.
Of the four pillars of measurement which contribute to the overall HSBC FinFit Index, Singapore residents performed well in having sound financial knowledge (69%), good financial habits (70%) and strong understanding on Financial Security & Safety (73%). However, Singapore residents only achieved a score of 59% when it comes to financial planning. Despite 1 in 2 (58%) not being confident of having sufficient savings for retirement, only 48% have an investment plan.
The key concerned areas are:
1. Having sufficient savings to fund their retirement based on their current lifestyle (68%)
2. Coping with unexpected expenses (70%)
3. Pay cut /income reduction (72%)
Mr Mathur added: “When it comes to managing your money, it is important to note that active financial planning can help you make the most of your assets and generate potentially better long-term returns than keeping your cash in the bank.
“A good starting point for novice investors would be to leverage the financial planning applications of different banks, including HSBC FinConnect, to obtain a clear view of your total assets and liabilities in Singapore. They should also look to work with a trusted financial advisor to map out a holistic plan that can meet their long-term financial goals.”
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