Over 1 in 4 youths are financially unprepared: UOB study

There are 26% of Gen Zs who don’t follow MAS’ rule of thumb.

Over 1 in 4Singaporeans aged 18 to 25 feel financially unprepared, according to UOB's ASEAN Consumer Sentiment Study (ACSS) 2024.

A significant majority of Singaporean consumers were not taking adequate steps to secure their financial future, with Gen Zs most at risk, the study found.

Overall, only 1 in 10 of the over 5,000 respondents from across the ASEAN region meet at least three or all of four rules of thumb identified by the Monetary Authority of Singapore (MAS) for a secure financial future: namely, allocating 3 to 6 months' worth of expenses as emergency funds; obtaining insurance protection for death, total permanent disability and critical illness; investing at least 10% of take-home pay for retirement and other financial goals; and making wills and CPF nominations.

Just over 1 in 3 (37%) met two of these criteria or only one (35%). Almost 1 in 5 (18%) did not meet any. 37% met two. 

Gen Zs were of particular concern, with over 1 in 4 (26%) of the respondents not meeting any of these rules.

Lack of financial preparedness
Whilst the study recognized that Gen Z's as "new" to working and may still be finding their financial footing, UOB said that their lack of adequate financial preparedness is a cause for concern.

Less than 1 in 5 (17%) of Gen Z has critical illness insurance, versus the overall share of 37% of respondents across all generations. 

Even fewer (13%) of Gen Z have death and total permanent disability insurance, versus 22% of the total respondents.

Over 1 in 10 (12%) of Gen Zs also said that they did not possess any insurance at all.

Legacy Planning
Gen Z also lagged behind their older counterparts in terms of legacy planning, with only 29% having made CPF nominations.

In contrast, almost half of Gen Y (43%) have made CPF nominations, as well as over half of Gen X (64%) and Boomers (74%).

Gen Zers are also not as concerned about writing wills, with only 1 in 10 Gen Zs or 15

For will-writing, only 1 in 10 (10%) of Gen Zers and 15% of Gen Ys have prepared wills.

Emergency and investments a priority
Whilst they lag behind insurance and legacy planning, the younger generation are more up to date when it came to having an emergency fund and making investments.

About 6 in 10 of Gen Z (59%) and Gen Y (62%) said that they have sufficient emergency funds. Boomers are the most well-prepared for emergencies, with over 1 in 4 (77%) of respondents from this generation indicating such.

Gen X fared the lowest in emergency preparedness with just 54% of respondents saying that they hold sufficient emergency funds.

Overall, consumers are well equipped in terms of emergency funds, with 60% having at least three months' worth of expenses as a buffer for unforeseen events, the UOB study found.

On investments, Gens Z and Y were the most diligent, with 55% and 62% investing, respectively. 

Gen Z and Y were also more confident of their financial status, with 78% expecting to fare as well or better financially in the next year, a rise of eight percentage points (pp) from last year. 

Less financial worries
Amongst their Southeast Asian peers, Singaporeans appeared to be less worried against a set of financial issues.

Rising inflation was still the foremost concern of ASEAN consumers, with 63% of respondents indicating as such, followed by increased household expenses (58%) and a decline in savings and wealth holdings (52%). 

In Singapore, however, the proportion expressing concern over rising inflation fell 16pp to 55%, whilst those fretting over increased household expenses and declining savings or wealth holdings also dropped 12pp to 52% and 47%, respectively.

The top item Singapore consumers said they spent more on in the past year was utility bills, at 25% indciating this.

This was followed by daily commuting and child education tied with 11%; with household groceries coming in third with 7%.