Towards a Financially Literate Nation - Speech by Lee Chuan Teck, Chairman, Financial Education Steering Committee and Assistant Managing Director, Monetary Authority of Singapore at the launch of the MoneySENSE – Singapore Polytechnic Institute for Financial Literacy
1 Mr Lim Peng Hun, (Deputy Principal of Singapore Polytechnic), Dr Alex Lum (Director of the MoneySENSE – Singapore Polytechnic Institute for Financial Literacy), fellow members of Financial Education Steering Committee (FESC), ladies and gentlemen. It gives me great pleasure to be here at the launch of the Institute for Financial Literacy. This marks another milestone in our journey towards a financially literate nation.
2 What characterizes a financially literate nation? The FESC envisions a state where every adult in Singapore is equipped with the knowledge and skills to be able to perform four fundamental financial tasks in a prudent way:
- How to manage your cash flow and live within your means;
- How to plan ahead for sufficient income for life;
- How to buy a home that you can afford; and
- How to be financially prepared should unforeseen events like accidents and illnesses occur.
3 The goal is lofty but well worth pursuing for three reasons. First, having sound financial health, just like having good physical health, is critical to the well-being of the individual and family. Every individual will need to make key decisions on some or all of those 4 tasks sometime in his life. How well he does it will affect his ability to pursue his aspirations and also to withstand setbacks in life. Second, having well-informed consumers will enhance the functioning of the financial sector in general and financial advice industry in particular. Lifting the standards of financial advisers and building the knowledge of consumers are two sides of the same coin. It is important that financial advisers take the time to understand a consumer’s needs and financial circumstances before recommending investment products. As consumers, we too have a key role. We understand our own financial situation, preferences and needs best. When we discuss these with our financial advisers, it is important to ask key questions to enable us to better understand the products available and consider how they may or may not meet our needs, before making a decision on which products to take up. Third, having a population that is financially prudent and knowledgeable contributes to the financial resilience of the country. It will help us better ride through global economic turbulence. It will also help rein in excessive household leverage, which was one of the root causes of the financial crisis in the US and parts of Europe.
4 The journey towards this goal is long and challenging. It is challenging because we live in an environment where there is an overabundance of information, constantly bombarded through multiple channels: Traditional media, new media and social media. We need to rise above this cacophony to be heard. It is also challenging because every individual is unique. He has different needs, different levels of knowledge, different circumstances and different aspirations. So we cannot just broadcast a single message to all. We need to customize the messages so that they will resonate with the individual. Finally, it is most challenging because we need to not just provide the individual with the knowledge but also to persuade him to put these into practice. Shaping behaviour takes time. Our message needs to be persuasive enough to stir the individual into action and also persistent enough so that he does not regress.
5 In short, our financial education effort needs to be cogent, targeted and compelling. Money Sense tries to do this through a variety of media channels. Last year, we had a “Mind Your Money” TV programme on Channel 5 and CNA. It was fairly well received with about 1.15 million viewers. This year, we plan to commission another programme on Channel 8 to reach a different set of viewers. We will also have radio initiatives in four languages, and continue with educational articles in the newspapers. Online media is also important. In this regard, we have just revamped the MoneySENSE website to make it easier to read and navigate. Amongst others, the site provides objective information on common financial products and things to watch for before deciding whether to take up a product.
6 But MAS cannot do this alone. Financial education needs to be a national effort. We have a growing list of partners that we leverage on for their reach and expertise. For example, the Ministry of Education (MOE) infuses financial education into the teaching curriculum, and works with us to arrange skits and talks to school going children at all levels. Further, we work with the People’s Association and CDCs help bring financial education to lower income consumers. The Central Provident Fund helps to educate its members on retirement planning and the National Library Board hosts financial literacy talks on its premises. Industry associations, consumer and investor associations, tertiary institutions and financial institutions have also pitched in by organizing talks and seminars.
7 Today, I would like to welcome Singapore Polytechnic into this network of partners. The Institute for Financial Literacy (IFLS) is a full-time, dedicated effort in financial education. It will start with a segment of the population that our programme so far, may not have sufficiently reached. This is the middle and lower income working adults segment. We found that this group is typically too busy with their families and their work to attend financial talks. Thus, IFLS will bring the talks to them in the work-place. When it is fully operational, IFLS will be able to conduct 220 lunch-time talks per year, 10 times what we are currently doing. In addition, for participants that are interested we will also organise workshops to help them translate what they heard into practice. All the talks and workshops will be provided free of charge to participants. I wish the Institute every success in their endeavours.
8 Finally, allow me to just leave you with two key messages. First, if you have not already done so, take the time and make the effort to get yourselves financially educated. This will be the best investment you will ever make in your lifetime. Second, join us in our efforts to bring financial education to your employees, your members, your constituents. Together we can make Singapore a financially literate nation. Thank you.