All polytechnic and Institute of Technical Education (ITE) students will be taught financial literacy from next year. Why I think this is a fantastic implementation: a thread 🤧
Just some quick context: financial literacy will be an ungraded module teaching budgeting and financial basics such as the effect of compound interest on debt and savings. The module also consists of information regarding insurance, investments or national schemes like CPF. 😸🤑 As a current year 1 polytechnic student, I am grateful this change is being implemented while I am still here. With this module, my juniors would definitely be able to make better financial choices which is ever so important in Singapore. Even though Singapore is a financially developed country, students not being taught proper financial literacy and fail to demonstrate a strong grasp of financial principles would not effectively manage financial risks and land in unnecessary trouble. The Nielsen survey of about 2,800 Singapore residents aged between 17 and 75 found that they generally had good money habits, with about two in three saving regularly, but had difficulty planning ahead. 😫😣
Firstly, we simply need to stop depending on our parents. Understanding our finances and having a better grasp of our savings overall means less dependency on our parents to handle our money. 🤨👩â€ðŸ‘§ðŸ‘¨â€ðŸ‘§ And on the topic of parents, financial literacy is important when we ourselves become parents. Learning at least the BASIS budgeting can seriously cut down unnecessary expenditures/frivolous spending (if we follow it). Budgeting would allow us to set aside funds and amounts for expenditure every month, which we can even make use now with our allowance/part-time jobs. If it becomes a habit, it can really give us a great overview of our account in the future when we get a steady job and more outlets to spend our money on (electricity bills etc.) All in all, instead of depending on our parents, we could find out more about how they budget and perhaps give our inputs. 💴💶ðŸ˜
Secondly, for our country! 🇸🇬 Learning financial literacy means that the people of our generation would hopefully be able to make well-informed, beneficial contributions to our country such as making reasonable investments, adding funds into our local economy. 🤓 Perhaps this is one of the main reasons why MOE has implemented this module — it really sets our citizens a notch apart and could contribute to Singapore’s economy greatly. As Singaporean citizens, we all have a social responsibility to make financial decisions that at the very least, do not make financial decisions that harm the country’s economy. âš–ï¸
Thirdly, to reasonably pick and choose from the numerous complex financial options given. 🤔 Various investment and saving products are much more sophisticated than in the past, and the numerous plans with varying interest rates are difficult for people with inadequate financial literacy to choose. 💸😠There are simply so many choices. Banks, credit unions, insurance firms, credit card companies, financial planning companies, mortgage companies… 😱😨 Just thinking about it now is confusing for someone who has not had much experience handling financial decisions. With such a dynamic financial landscape, the importance of discerning the correct options to take up becomes much more crucial. The same goes for approaching the right companies for an appropriate financial situation. 🙀☠ï¸ðŸ¤¯
Lastly, for our retirement! It may seem very far-fetched currently to think that far into our future, but there are so many reasons why being financially literate can help us in our last years on earth. Just that fact that we are having longer life spans means that we need more funds for retirement than our previous generations. Retirement planning is also much more important, with consumers
Being a financially literate consumer means that
gg in developed or advanced economies also fail to demonstrate a strong grasp of financial principles in order to understand and negotiate the financial landscape, manage financial risks effectively and avoid financial pitfalls. Nations globally, from Korea to Australia to Germany, are faced with populations who do not understand financial basics. (The U.S. Ranks 14th In Financial Literacy, by the way).
The level of financial literacy varies according to education and income levels, but evidence shows that highly educated consumers with high incomes can be just as ignorant about financial issues as less-educated, lower-income consumers (though in general, the later do tend to be less financially literate). And it seems consumers are hesitant to learn. The Organization for Economic Co-operation and Development (OECD) cited a survey conducted in Canada that found that choosing the right investment for a retirement savings plan was more stressful than a visit to the dentist.
Read more: Why financial literacy is so important | Investopedia https://www.investopedia.com/articles/investing/100615/why-financial-literacy-and-education-so-important.asp#ixzz5XfGr8wZh
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More modules will be piloted with some Year 2 and 3 students over the next few years, to help them become more savvy consumers and learn how to use insurance, investments, and national schemes such as the Central Provident Fund.
This was among the new initiatives announced at a roadshow yesterday by MoneySense, the national financial education programme, as part of government efforts to boost financial literacy among Singaporeans and help them manage their money well.
An online financial health check tool for all Singaporeans and permanent residents was also launched at the roadshow at Our Tampines Hub, which will run until today before moving to the HDB Hub in Toa Payoh on Dec 8 and 9.
The questionnaire, which is available on the MoneySense website, helps users assess progress in areas like money management, insurance, investment, retirement and estate planning, and gives recommendations to address the gaps identified.
Government agencies will also enhance their services to help Singaporeans better understand their financial options when making important decisions such as buying a flat and preparing for retirement.
MATTER OF INTEREST
Do you know how long it will take to double your money at an annual interest rate of, say, 2 per cent per year? Five years? Ten years? It will actually take 36 years. How about at an annual interest rate of 4 per cent? That would take you about 18 years. So this is the "rule of 72". Divide 72 by the annual interest rate, and that is the number of years to double your money.
EDUCATION MINISTER ONG YE KUNG, speaking at the launch of MoneySense initiatives at the roadshow yesterday.
DO YOUR SUMS
When you receive your credit card bill, there is always a minimum sum you must pay. That is not the recommended sum to pay. If you pay only the minimum sum every month, it takes you a long time to pay off your bill. If you receive a $5,000 credit card bill – and every month you pay only the minimum sum – how long do you think you will need to pay off the bill? 15 years!
MR ONG, on credit card bill payments.
These moves follow a survey commissioned by the MoneySense Council last year which found that half of working adults here aged between 17 and 29 had not started planning for their future financial needs.
The Nielsen survey of about 2,800 Singapore residents aged between 17 and 75 found that they generally had good money habits, with about two in three saving regularly, but had difficulty planning ahead.
Launched in 2003, MoneySense runs campaigns, talks and workshops on financial education, and is overseen by the MoneySense Council co-chaired by the Monetary Authority of Singapore and Manpower Ministry.
Singaporeans "generally understand what it takes to be financially healthy, but may not translate knowledge into action", said a MoneySense Council spokesman.
Education Minister Ong Ye Kung said at the launch that the roll-out of the new curriculum follows a successful pilot project involving 7,000 polytechnic and ITE students earlier this year. "They learnt how to budget and review their expenses, save towards their goals, and discovered their personal spending habits… This helps to better prepare them to manage their own money when they grow up later," he said.
The Ministry of Education said in response to queries that the polytechnics and ITE will jointly develop the modules, and have the flexibility to decide how to incorporate them into their existing programmes.
From next year, the first module will also be made available to all pre-university students through the Singapore Student Learning Space portal, a spokesman said.
Singapore Polytechnic student How Shi Yun, 17, who completed the pilot module last month, said it helped her to create a savings plan.
Ms How, a first-year student in the Food Science and Technology programme, now sets aside money she earns from her part-time job manning a food cart and limits her spending to her $200 a month allowance.
"The module was quite useful as previously I would save some money but wasn't sure how much I was spending and how much I should be putting away. Now, I know how to save the money I earn and when I look at my bank balance going up, I feel happy," she said.