A recent survey by the Institute of Policy Studies (IPS) and CNA revealed that younger adults in Singapore are generally financially prudent. Most respondents demonstrated responsible financial behaviors, such as spending within their means for day-to-day expenses and avoiding impulsive loans or credit card usage. However, many young adults are willing to buy things that make them happy without worrying about the future.
According to the survey, 88.8% of respondents said they spend within their income every month. Food emerged as the top expenditure for nearly half of the respondents (46.2%), followed by loan payments (25.5%), clothes and footwear (18.9%), and allowances for dependants (17.4%).
Over 90% of respondents have been affected by the rising cost of living, with higher-income earners being less affected. To cope with these expenses, most respondents prefer to stick to a fixed budget and defer purchases until prices become affordable.
Notably, nearly 90% of respondents would cut down on spending if they noticed they were exceeding their means. However, 60% said they prioritize spending on things that bring them happiness without worrying about the future.
The survey, conducted online from November to December 2022, involved a representative sample of 2,001 Singapore residents aged 21 to 39. The IPS researchers who conducted the study, Dr. Teo Kay Key, Dr. Mathew Mathews, and Ms. Samantha Nah, highlighted that the findings debunked the myth of reckless spending among younger people.
Dr Teo emphasized that young people are conservative and thoughtful about their spending, making efforts to stay within budget. However, she also noted that while loans for big-ticket purchases are accepted, some young adults need long-term retirement plans, with only a third having a definite retirement savings plan.
The survey also revealed differences in attitudes towards loans. University-educated respondents were more likely to view taking out loans as healthy financial behavior and less likely to consider borrowing undesirable. Dr Teo attributed this difference to a better understanding of financial instruments among university-educated individuals.
The IPS researchers emphasized the importance of financial literacy programs to help individuals make better choices regarding credit purchases. Proper awareness of the risks associated with buying on credit, especially among those with limited financial capacity, is crucial to avoid undesirable economic outcomes.
Overall, the survey indicates that while young adults in Singapore exhibit responsible financial habits, further education and guidance are needed to ensure long-term financial stability and prudent decision-making.
