Thursday, 20 June 2024

Singlife Financial Freedom Index 2023: Singaporeans need 27.3 years to feel financially free

5 min read

Singlife’s inaugural Financial Freedom Index has revealed that consumers in Singapore scored 60 out of 100 in terms of feeling financially free.

For the average consumer to feel financially free, it would take approximately 27 years to accumulate a median savings of SGD 566,640 ($423,914), provided they save at least SGD 1,733 ($1,296) per month.

The findings are based on a survey conducted by Singlife between December 2022 and January 2023, which involved 3,000 Singaporeans and Permanent Residents (PR) aged between 18 and 65. The survey aimed to understand the attitudes of individuals from diverse income levels towards achieving financial freedom amidst inflation and the rising cost of living.

Singlife has identified three distinct consumer groups in Singapore based on their current levels of financial freedom, measured on a scale from one to ten.

  • The financially free: Constituting 29% of the surveyed population, this group rates themselves between eight and ten on the scale. They have an average monthly personal income of SGD 9,067 ($6,783).
  • The everyday consumer: Making up 54% of consumers, this group rates themselves between four and seven on the scale. They have an average monthly personal income of SGD 5,652 ($4,228).
  • The financially constrained: Comprising 17% of consumers, this group rates themselves between one and three on the scale. They have an average monthly personal income of SGD 3,442 ($2,575).

The survey identified six key themes of financial freedom: retirement, income, spending and saving, managing recurring expenses, managing unexpected events, and giving back to society. A total of 25 indicators were assessed across these themes.

Among consumers, the ability to retire at any time and having enough money to give back to society were ranked as the top two indicators of financial freedom. Additional insights from the Singlife Financial Freedom Index indicate that while 73% of consumers acknowledge the importance of financial freedom, only 29% feel that they have actually achieved it.

Pearlyn Phau, Group CEO of Singlife, said: “Financial freedom can mean different things to people at different stages of life. Singlife aims to empower Singaporeans to take control of their financial well-being through our products and services, regardless of their life stage or financial situation. The Financial Freedom Index helps us to understand the evolving needs of Singapore consumers on an even deeper level.”

Consumers consider savings a crucial factor in their pursuit of financial freedom. Around half of them save approximately SGD 3,000 ($2,244) or less per month, while 25% save SGD 1,000 ($747.99) or less per month. The median monthly savings amount is SGD 1,733 ($1,296), suggesting that the average consumer would need about 27.3 years to accumulate enough savings to feel financially free.

Financially free individuals save 51%, or roughly three times more than the average consumer, with average monthly savings of at least SGD 4,629 ($3,462).

Everyday consumers save 45% of their monthly personal income, resulting in an average monthly savings of at least SGD 2,593 ($1,939).

Financially constrained individuals save 50% of their monthly personal income, resulting in an average monthly savings of at least SGD 1,728 ($1,292).

Interestingly, both the financially free and financially constrained groups save more than 50% of their monthly personal incomes, despite the difference in income levels.

Within the financially free group, 38% feel comfortable spending on their needs and wants, while the figure is slightly higher at 43% for the everyday consumers group. This indicates that a higher proportion of financially free individuals exercise greater prudence in their spending habits compared to everyday consumers.

Additionally, the survey revealed that 80% of financially free individuals feel confident in their ability to pay off monthly bills. In contrast, this confidence is reported by 51% of everyday consumers and only 39% of financially constrained individuals.

"More than half of consumers are uncertain how to attain financial freedom. This highlights the need for more personalised products and services that can better support consumers in their journey towards financial freedom," commented Phau. "We recognise that our customers' needs are ever-evolving, inspiring us to innovate according to their unique goals and empower them to take control of their financial well-being at every stage of life."

Re-disseminated by The Asian Banker

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