Last week, the Monetary Authority of Singapore got together with a bunch of us – the good folks behind 15HWW, BigFatPurse, MoneySmart, Tradehaven, TurtleInvestor, and yours truly.
Now, you have to understand that we’re personal finance bloggers. Which means that this session was way geekier than say, a Gushcloud meetup. For example, I think we spent about 10 minutes talking about yield curves. (yeah, I know).
Now, even though we know we can’t compete with “lifestyle influencers” in the looks department, we do our best to convey useful personal finance lessons to our readers every week.
However, we have no delusions: We know that the majority of Singaporeans don’t really care much about personal finance. So we started talking about why this might be the case.
Govt Gets An “A” For Effort
Look – I’m not a supporter of any particular political party or regime. But I AM an advocate for improving financial literacy among young people. (Why do you think I spend like 20 hours a week on this blog?)
In that area, I think the government gets A for effort in trying to improve financial literacy among Singaporeans. A couple of years ago, they launched MoneySense, a financial information portal. And if you look at the initiatives they’ve rolled out recently, they’re all meant to help contribute to financial literacy in some way:
- The Singapore Savings Bonds are meant to help new savers kickstart their portfolio and introduce them to the concept of bonds as an investment
- The insurance comparison platform is meant to make insurance
less painfuleasier to understand - The reclassification of investments to EIPs is meant to make it easier for investors to invest in simple, straightforward products
These are all great initiatives. It’s definitely a step in the right direction. But here’s the challenge:
It’s Really Tough To Get People To Care
Despite these initiatives, let’s be honest: most Singaporeans don’t care.
Think about it: Taking a week to learn the basics of saving and investing could make you richer for the rest of your life. Yet, the vast majority of Singaporeans would rather spend that time reading about the Xiaxue / Gushcloud saga than a good investment book.
Why is that?
I don’t really know the answer. Maybe it’s because we’re approaching financial education the wrong way?
I had a beer with Alvin and Jon of BigFatPurse earlier this week, and Alvin said something interesting, “Investments aren’t like shampoo. You can’t just throw information or a platform out there and expect people to get excited about it”.
Totally true. When it comes to personal finance, advertising and campaigns alone aren’t going to cut it.
It’s kind of like the ongoing campaign to get people to quit smoking. Healthcare officials have been trying to get people to stop smoking for decades. They used brochures and advertising and put scary pictures on cigarette packs. Yet, despite having all the information on the obvious health risks in front of them, people STILL continue to smoke.
It’s really interesting, and I wanted to delve deeper into it.
Soooo after thinking about this icky problem over a plate of soupy noodles on a Sunday afternoon, I came up with 3 hypotheses on why most people don’t care about personal finance, and some possible solutions:
1. Most People Find Personal Finance Boring
This is an obvious one. I don’t know who decided that financial texts should be made more boring than watching your toenails grow, but he screwed it up for the rest of us.
Today, most finance material is filled with lengthy explanations, complicated formulae, and something to do with “tax loss harvesting.” (Kill me now).
MAS themselves admitted that while they try their best to make their material simple, they also need to be legally precise because financial institutions rely on that information as well. So their material sometimes ends up sounding, well, a little government-ish.
Which is why they rely on bloggers like us to make it a little more interesting. To switch it up a little, to use a little Singlish, and to convey the lessons using dumb stories from our own lives. (Okay, maybe that’s just me).
It’s not a perfect solution – we bloggers might occasionally screw up on the accuracy front. And you could argue that people who read personal finance blogs are already interested, so we’re just preaching to the converted.
Still, it’s a start.
2. Most People Think Personal Finance Is Complicated
Here’s the thing – personal finance doesn’t have to be complicated. At its core, it’s about knowing your money, keeping it, and growing it.
But people like to overcomplicate things, so they introduce concepts like “gamma”, “bull/bear callable options” and “candlestick patterns”.
Let me assure you: 99% of the population will NEVER need to know concepts like these. Really. Much of these were invented because some professor needed to sound important, and he figured that the best way to do it was to confuse everyone.
It’s time to take a step back and pretend that we’re children again. I especially liked this article about how a dad taught his children about money. He withdrew a month’s salary in dollar bills, dumped it all on the kitchen table, and physically showed his kids where it all goes to every month.
Booya! Instant financial education, minus the complicated charts.
So we need tangible methods like these to teach kids (and even adults) what personal finance is all about. Companies like PlayMoolah are doing a great job in this area. And then, only when we’re ready, we can tack on the harder, more complex concepts.
3. Most People Wanna Get Rich Fast
In my opinion, this is the toughest one of ’em all.
Most people are only interested in finance to the extent that they can get rich… FAST. Most people probably start off their personal finance journey with this mindset, only to discover later that it’s really really hard to get rich overnight.
In some ways, we have ourselves to blame. Our greed for overnight wealth has spawned a whole industry that exists to sell you that dream, at whatever the cost. That’s why we have scammy forex trading courses on Groupon and bankers who try to sell you funds with ridiculous expenses and “meh” long-run performance.
That’s why I wholeheartedly believe in and preach about index investing. It’s the perfect antidote against this “I WANNA GET RICH NOW” mentality.
Patience is a virtue!
So Whaddaya Think?
So those are my hypotheses about why it’s so hard to get people to care about personal finance.
The fact that you’re reading this already means that you’re not one of those people. At the very least, you’ve taken the first step to figure out this personal finance thing. So good job you!
But I’m still a little curious to hear from you. Why is it so hard to get Singaporeans to care about personal finance? What made YOU start learning?
Let me know in the comments below.
Everyone has a different reason, but if we can bring all the different factors together, we can make personal finance a little more popular (and a little less boring) for everyone.
Image credit: Jaako, Vandy CFT, ChowKaiDeng, simaje, collegedegrees360,
I am put off by the technical terms used to explain investing, so I decided not to delve deeper.
1.Procrastination is one.
2.Then comes the myth that it’s not easy. To me its not that simple but i think it’s not THAT tough.
3.people don’t like to think much and take the easy way Out… want to get rich fast too.
Most people finances tied up in property , locally or overseas and not much left over for other investments .
Those who do not have enough to buy real estate feel what little they have has to be preserved for emergency
Those with balance left over after real estate will let their bankers advice on investments and rely on their knowledge so no need to educate themselves as they feel they will never have the time nor the aptitide of professional investors .
It could be due to a sense of helplessness in view of (i) poor financial state of oneself; (ii) and the forever increasing cost of living, such that someone is resigned to fate that they will forever not be rich, even w proper personal financial management. So they prefer to not think about it and live in the moment.
that would be the situation I was growing up in and currently living in
Actually I think pp do care about personal finance, it’s just there’s great inertia from just whinging to taking action.
Many that I meet at work are interested, but almost all of them are not motivated to make that effort. They would rather put their time in more “important” things than put some time to learn about their future.
There are also some who thinks that saving is impossible because of their “unique” circumstances or the “low” salary that they are earning.
Interesting! What sort of “important” things do they cite?
Taking care of kids or husband (I work in a mostly female setting) , relaxation therapy (shopping), watching TV, going out with friends, playing mahjong. Nearly anything and everything except reading up on personal finance during their free time.
I believe we do have our brain to blame for not doing the rational things. We tend to get tricked into irrational actions without even taking note of the trick. We simply fall too easily for mental shortcuts. Those cognitive biases make us do dumb things with our hard-earned money because we do not pause and think enough.
There are hundreds of biases we suffer from. Just some examples that do hamper our financial progress are:
Loss Aversion (losses weigh emotionally twice as heavy on us as gains)
Attentional Bias (we read too often about stock market crashes in the media and fail to take note of the slow and steady growth of stock investments over years)
Failure to understand the magic of compounding interest (why don’t schools emphasize this essential mathematical concept more instead of teaching all those other formulas which have little practical use after school?)
We can’t delay gratification (consumerism and the advertising industry are to blame here)
I better stop here otherwise I might embark on a rant.
Cheers
Andy
The government will have to take care of Singaporeans don’t they? Moreover many cant even save. So what is there to invest? By the way, I have a hot stock tip that can triple overnight the money that you can borrow if you are interested.
I usually speak with my friends and colleagues on personal finance during our coffee time. There are a few of them who are not so interested in this subject. They feel it is futile to grow their savings in the first place, so they would rather not spend so much attention on important matters such as personal finance. I can think of a few possible reasons for such a predicament.
1. The rat race. They are too pre-occupied with their work and career. They would prefer to talk about their work, exchange information on almost everything else except personal finance.
2. Insufficient savings. The savings are not significant enough to grow them meaningfully.
3. Other commitments. There are other heavy family commitments that do not permit them to grow their savings as fast as they wish.
4. No patience. Personal investment requires patience. Some would prefer magic formulae to get instant result.
5. Personal and family lifestyle does not permit them to save.
It looks like finance bloggers have a long road ahead to get more on board on the journey towards financial independence.
http://charlessizemore.com/why-dont-americans-save-more/
People don’t bother about investing because they expect someone or the government to bail them out.
So, they chase down the illusion of prosperity.
Great blog btw! I’ve been one of those passive readers that secretly lurk at the back of cyberspace and merely bookmark your page without actually ‘following’ it using any of the mediums (e.g. FB, Google+ etc).
Just my 2 cents (I largely agree with Andy Schmidt who posted earlier):
1. No one knows where to start. When you are just only starting to earn money, you are terrified of losing ANY money at all (because you have precious little) and as such if you don’t “invest” you can’t lose it right? What I like to call the biscuit tin mentality. Just store all your money in that Khong Guan biscuit tin and/or Milo tin because that way, no one can take it from you.
2. No one way of “planning” your finances. We all love our templates. This is all that we have been taught in schools. Follow the template and you are guaranteed a minimum grade. But if there’s no template, there is this sense of insecurity plunging into the deep unknown.
3. Financial products get a bad rep. After all the tumultuous years when we heard of the horror stories that were the financial markets, all financial products seem to be ‘bad’. Not to mention all these sales-driven pushy ‘financial advisors’. They scare us because we never know if they are gonna con us of our life savings just to get that commission. I don’t recall ever meeting a financial advisor whom I felt genuinely cared about helping me.
4. No idea what information to be looking out for when considering any financial product. If I don’t have a degree/diploma/insert qualification here in financial thingamybobs, I literally have no idea how to read those statement things. Links back to the sense of insecurity and the biscuit tin mentality.
5. Having to use so much of my brain after working so much. As a junior junior JUNIOR person, you have to do all the hard slog, put in your hours, get chained to your printer, work 6 days a week, 12 hours a day. By the time I get home, get on the bus/train I just want to lie on my bed and die. I don’t want to use my brain anymore. Weekends (i.e. only Sundays) are for convincing my parents that I’m still alive and that I’m still their child (i.e. cleaning the bedroom/toilet, ironing my clothes for the next week of work, driving them around to their next appointment etc).
If I think of more I’ll let you know!
I do not think that this problem is localised to Singapore, but rather a global phenomenon. I am not sure of the exact statistics but i remember reading reports from USA also mentioning about similar issues. It is not much of an issue in Europe presently as they have a generous benefits system but that may not last for long.
So we have to look at causes deeper than which are just local.
one of the reasons which comes to my mind is that managing personal finances was not an issue in the previous generation for most of the population as they had just enough money to survive. Saving money & investing is something which is very new to most of the families who are living right now.
Humans learn from environment & do what they observe in the family & peers. Many behaviours & thoughts take generations to disappear, while newer behaviours & thoughts take there place. (think racial segregation, Women rights, etc)
i see a similar situation in personal Finance. More & more people are getting aware about it, there children will learn from them, & then there peers. We have not yet reached a critical mass when it becomes the in thing to manage your finances prudently.
But on the flipside, do as personal investors who bank on irrationallity of Mr Market, do we really want that situation to happen when everyone becomes a prudent personal finance manager.
Here’s my opinion on your question. Essentially it’s a communications problem, that has several factors.
1. Guilt by association.
When the word ‘finance’ comes up, the first thing that pops to my mind is big money. This is probably due to the context in which the word is most often used in the media. It is a product of association. Personal finance then conjures up thoughts of either having lots of money, or making lots of money. And if I’m not in either position then ‘finance’ is probably not for me.
2. I just don’t relate.
When financial analysts and the like pop up on television or in the press they invariably sound really boring because they’re talking about things IN TERMS that make no sense to people with no interest in finance. It’s really hard to take an interest in what someone is saying when you have no idea what they’re saying in the first place. Finance communication is so interested in being informative that it totally forgets about trying to be interesting, approachable and easily understood.
3. We’re taught the wrong equations.
We’re taught to get a job so we can get the money to buy a house/food/better life/etc. As though those things were simple cause and effect. We were taught that money was the means to an end, not that it is a resource that needs to be managed and that working to attain it is only the first step. i.e. we’re taught work=money=stuff, therefore work=stuff. not, work=money, money=potential, potential harnessed=outcomes.
Potential approach.
While personally I have no interest in reading something like “How personal finance can provide dividends for your future.” I might be interested in reading something like “How to feed a family of four, pay off a housing loan, and save up for retirement, all on a $2000 a month budget.”
In order to gain the interest of “the average Singaporean” then personal finance articles have to be made appealing to the “average Singaporean”. Speak, or rather, write in terms that bear a direct connection or impact on their struggles, goals, desires, instead of using titles and terms that do not seem to have anything to do with what they experience.
Essentially, looking at it as a problem of getting people interested personal finance is coming at it from the wrong angle. The solution is not in making people interested in personal finance, it is in making personal finance interesting to people.
Hi, Jeff
Well said
The financial concept is easy to understand. But the route map is usually unclear, and when the steps to take, even little ones seem daunting, we will just freeze. Also, Singapore has very limited investment vehicles. What if I hate stocks, not many people are able to share their investment experiences in agriculture or art.
I guess you can bring the horse to the water but you can’t make the proverbial horse drink. The main driver needs to come from within.
If there’s a strong enough and persistent ‘why’, one would naturally suss out resources and gather courage to endeavour and build a new lifestyle or learn about things that matter.
Sometimes this impetus can be generated through a watershed moment or an event. Mine was after I finished my 10 week internship program back in junior year. I remember all I had back then was a few blogs (ERE and MMM) plus a couple of books (your money or your life, other investment books) to kickstart my own journey.
So yeah, do I think the Singapore government needs to do more to educate its citizens about personal finance? Nope, we got more than enough material on hand from google for the interested. Even from a local perspective there are quite a few good blogs such as yours that put things in perspective.
Anyhow if you flip the argument on its head, behind every capitalist, lies the existential requirement of consumers to support. It’s a one way relationship though, no prizes for figuring out who’s the power holder 🙂
So maybe good to maintain status quo no? Lol
1. When I was young, I equate financial planning to BS from Insurance agent, immediate turn off.
2. We were taught to save and keep our money in the bank by the elder. They did not know better, we did not know better. (We know all the story of people losing all their money in the stock market but not those who are successful; Hong Kong Drama?).
3. Delayed gratification – People cannot “see” the future benefit, addicted to spending.
4. Did not understand critical idea of compound interest. 5% of $1000 saving = $4.2 per month, why bother, it will not amount to anything?
5. Did not understand investment is not speculation, it is a step by step process.
I think the bulk of my friends understand the need for personal finance but they have no clue where to start. And somehow I feel the need to spoon feed them with certain details as they don’t take a proactive approach in finding out anything. Perhaps the government could implement something into the education system? After all, it’s something important in one’s upbringing (health education anyone?) that can be passed down from generation to generation. I believe the government is doing an “A” job is bringing awareness to the public but a “C” in getting Singaporeans to take action.
Personally I believe I wouldn’t have started if my parents did not ‘force’ me by offering plenty of incentives. They had to find out from scratch the hard way in their 40s.
You need to have a burning issue in your mind to push forward to achieve the financial goal that results in wanting to know more about financial world. A general statement of wanting to be rich or financial freedom is not sustainable and make you to rely on others help to fulfill the goals, leaving no pushing factor to educate themselves. Personally, not in the mercy of my boss to get my paycheck for my family esp in the 40s is my mission on financial freedom journey .
This is absolutely fantastic! So many different perspectives here and it’s taking me awhile to digest everything. Let me gather all my thoughts and post my response soon.
Polled my network , here’s what they thought about PF:
1. Right now busy in high income jobs which already cover all their immediate need (house,car,travel,etc).
So PF something can wait because they “feel” already ok with current financial situation.
2. PF is for “rich” people / business owners only.
3. What is PF exactly?
As for me, what motivated me to learn PF is because I want financial freedom, not being tied to a job.
Cheers
Congratulations Lionel, I think you’ve made it as a personal finance blogger to be invited by MAS!
So many reasons.. Personal finance is about delayed gratification, humans are not good at thinking long term. We’re too busy working so most times cheap and convenient beats the slightly harder but much cheaper options etc.
I think every other moneysmart article is talking discussing this and they are really spot on.
Thanks! 🙂 IMO, personal finances doesn’t really have to be about delayed gratification – it’s as much about how you spend on yourself NOW as it is for investing about the future 🙂
HI Lionel,
Nice post on trying your best to reach out to people for financial literacy. It will always be a thankless job however please keep up the good work.
Like you, i also tried to preach all these to my friends in hope of increasing their financial literacy and also be their circle of influence. The battle is indeed long and hard which is never easy.
I guess we only have our parents to blame where every parents tried to give the best to their children. Lucky for me, I came from a poor family and since young my parents had thought me on budgeting where I must say I rarely see many parents doing it nowadays. Seeing how my peers bringing up their children already says it all.
Since primary 1-5, my parents would allocate me a daily allowance for me to spend on. If I had to ask more they will ask me why and task me to break down the cost of the items before they decided to give me any additional allowances. I guess this is where my journey starts where budgeting really help me since young. After I reach P6, my parents allocate me a weekly allowance where I am not allowed to request for more if I used up my allowance.
As I move to sec1, my parents increase the pace to monthly budgeting with the transport allowances add in it. Even when i started at such a young age, it was never easy for me for my monthly budget. It really took me a while before I got used to it. Luckily for me, I also manage to save up some of my primary school allowances to tight me through my sec 1 days. With some adjustment and getting used to I remember by the 2nd half of the year I have no issues to deal with it. Along the way, transport cost increases where I learnt to also ask from my parents some “increment” when needed. The lesson also taught me some negotiation power as well. Till date, I am thankful that my parents taught me all these.
Personally, I guess parents do make a big difference where most people around might not be brought up that way. I am not trying to say this is the best way but I would imagine parents do have a huge influence. A lot of the time, I can see kids being given when they asked/requested or throw a tantrum.
Also I guess social media do make a great impact on our life’s. It will be more “cool” and great to have the latest consumer products (gadgets) and fancy cars than nothing to show off. That’s where you can see the marketing campaign showing all the fancy and “cool” stuff being marketed by the coolest actor/actress. Consumer behavior always like to enjoy the things they bought which are usually physical in nature as compared to any investment/insurance which is not something non physical thus it is harder to appreciate. With no physical “feel”, its tough for most consumer to apprehend or appreciate (not going to explain further or else it will be an endless writing :P)
For me of course, I benefited from consumer chasing all these items. with that it does somehow make my investment process a lot easier as I only need to use my eyes to see and than dig on further if I should invest on the companies. In fact, this had been my way of investment just by being more observant on my daily life which I call it “everyday investment”. Of course, big events in the news are also another way to invest like the recent case for Russia and Oil.
Just my 2 cents to contribute to your “survey”.
Sorry for the long story and thank you.
Regards
JS