Have you ever wondered how good young Singaporeans are at financial literacy matters? According to the MasterCard Index of Financial Literacy (2015), Singapore topped the region in financial literacy for 2015, the highest we have placed since the survey commenced in 2010.
Putting this to the test is a newly launched financial gameshow created by the CPF Board. Hosted on YouTube, the gameshow is called “Are You Cleverer Than A Typical Singaporean”.
It features young personalities such as Aloysius Pang, Joshua Tan, Xu Bin and Eunice Annabel, as they attempt to display their IQ, logic and financial literacy (or lack thereof), by answering tricky questions posed by the host, Elliot Tan.
So how did these young people fare on this show? More importantly, what can we learn from it? To find out, we took a look at all 6 episodes and picked out the 6 best (and funniest!) financial lessons for you.
Number 6: Janice Chiang (Tree Potatoes) & Maxi Lim (Ah Boys To Men) – Episode 2, Challenge 1 (1:09)
Winner: Maxi
For this challenge, both Janice and Maxi were asked to arrange items given to them in a logical sequence. Maxi won the challenge – simply by finishing first.
Why you may ask? Well, the idea behind the challenge was to show that people tend to take a long time to decide on a course of action whenever there are too many options given to them. This is also known as decision paralysis.
When applied to financial planning, many of us are guilty of procrastinating, simply because there are so many routes, options and opinions on the perfect financial plan. Instead of sitting down with a trusted advisor to plan your future based on your specific needs and wants, we back out altogether.
Lesson We Can Learn:
Decision Paralysis – Don’t let uncertainty be an excuse for the absence of any financial planning. The earlier you start planning, and executing on your plan, the better off you would be in the long run. Read more about overcoming it here or head down to CPF’s roadshow to get a taste of what your retirement will look like.
Number 5: Eswari Gunasagar (Vasantham) & Charlie Goh (Ah Boys To Men) – Episode 6, Challenge 1 (1:41)
Winner: Charlie
The Ah Boys To Men actor demonstrated good financial literacy knowledge as he and fellow contestant Eswari easily answered all the questions relating to the differences between Credit & Debit Cards.
While credit and debit cards appear similar, they are fundamentally quite different. Credit cards rely on banks giving you a pre-approved line of credit that you can use first, and then repay after the bills come in.
Debit cards, on the other hand, are tied to a specific account that you have with the bank. The ease and speed of how both contestants tackled questions such as “which card looks at your credit history” and “which card is typically better for people with controlled spending” provide comfort that some are at least familiar with how both these cards work.
Lesson We Can Learn:
Credit cards vs. debit cards – While credit cards generally offer better perks, the danger lies in the fact that you can spend beyond your means if you are not careful. You should consider your own financial discipline, and then decide if you should get a credit or debit card instead.
Number 4: Aloysius Pang (MediaCorp) & Xu Bin (MediaCorp) – Episode 3, Challenge 1 (2:44)
Winner: Aloysius & Xu Bin
The two MediaCorp artistes were caught in a classic “Prisoner’s Dilemma” on the gameshow. As with all prisoner’s dilemma scenarios, the point of the challenge is to see if both contestants would try to cooperate or work against one another to earn a favourable outcome.
In the scenario they were given, there was no dominant strategy involved. There was, however, a choice that would result in a favourable outcome for both. The question is, would they choose to work together?
Without spoiling what happens for you, we will only say that neither trust nor logic was found lacking in both of these young actors.
Lesson We Can Learn:
Prisoner’s Dilemma – There are times where the better collective outcome will result if all parties involved work with one another, instead of in their own interests.
The same logic applies to insurance products like MediShield Life. MediShield Life is a basic health insurance plan which protects you and your family from large hospital bills. When MediShield Life pays for your large hospital bills, you will pay less in Medisave or cash.
Although the chance of a large hospital bill is small, all of us may fall ill or be hospitalised at some point. Instead of trying to save for this unlikely but hefty bill, insurance can help us pool the annual premiums collected from all to help the few people with large bills that year. But if people choose not to participate in risk pooling, they would need to prepare on their own for the risk of large hospital bills.
Number 3: Aaron Khoo (Tree Potatoes) & Lydia Izzati (Actress) – Episode 4, Challenge 1 (1:29)
Winner: Lydia
We love this challenge because it provides a great analogy to the risks and returns of investing. Both contestants were given 5 durians each. Their task was to take aim and toss the durians into any of the three baskets laid out before them. Players stood to score up to 20 points per durian-toss depending on the basket they sank they king of fruits into. The first, closest to the contestants carried 5 points, the next, 10 and the furthest rewarded them with the maximum 20.
While Aaron shed his dignity and opted for the “granny toss” in hopes of sinking 20 points for himself, Lydia took the conservative approach and “leaned” her way to victory by gently dropping the durians into the closest basket worth 5 points.
Her less risky approach paid off as she ended up winning this challenge.
Lesson We Can Learn:
Risk Vs. Reward – All of us want to enjoy high returns from our investments. However, we must remember that higher returns always come with higher risks. Investors need to balance between the returns they want, and the risk they are willing to take.
For example, the CPF Special Account gives an interest rate of about 4 – 6% per annum. That’s a guaranteed return that CPF members enjoy. Alternatively, CPF members can also choose to invest the money under the CPF Investment Scheme (CPFIS). However, even though returns might be potentially higher, it comes with risk, since members may lose money on their investments.
Number 2: Eunice Annabel (Actress/Model) & Jonathan Cheok (Cheokboard Studios) – Episode 5, Challenge 2 (6:58)
Winner: Jonathan
Besides being amused by Eunice’s retort at being called a pageant girl, this lesson made us sit up and listen! The patient, Daniel, is covered by three different types of insurance including $400,000 for General Insurance and $100,000 for Critical Illness. How much could he claim for if he was hospitalised for a fever?
Before you get out your calculators to do the math, take a second and read through the question again! Thanks to Jonathan’s previous experience working in the insurance industry, he correctly pointed out that none of the insurance policies mentioned by Elliot actually covers the cost of hospital admission.
Lesson We Can Learn:
Different Types Of Insurance Policies – Similar to the scenario given in the challenge, it is possible to buy multiple types of insurance policies and still not be covered for hospitalisation or other essential aspects of your life.
Take stock of your insurance policies and make sure you buy the right ones that match your lifestyle. It’s good to also know exactly what is it that you have bought so you don’t buy insurance policies that overlap with one another.
Some important insurance needs include an integrated shield plan (which you can pay using your Medisave) and sufficient life insurance to cover for your dependents.
Read Also: Why You Should Care About Your Parents Health Insurance Needs
Number 1: Sylvia Chan (Night Owl Cinematics) & Joshua Tan (Ah Boys To Men) – Episode 1, Challenge 3 (7:02)
Winner: Sylvia
The contestants were asked a simple question that we can all relate to – what happens when we fail to repay our credit card debt?
The question is trickier than it seems. Simple arithmetic would suggest that 24% of $1,000 gives you $240, and hence, $1,240 ($1,000 + $240) is the right answer. This answer is gravely incorrect and ignores the fact that interest of credit card debt is actually calculated based on your daily outstanding balance at the rate of 0.066% per day! In addition, there is also the monthly late fee charge on credit card payment, which is usually $60 per month.
Taking all the added charges into consideration, you may be looking at paying almost twice the amount! Watch the video to see Elliot illustrate this.
Lesson We Can Learn:
Compound Interest – In recent years, Credit Counselling Singapore has reported higher number of delinquent debtors in Singapore. Most of them have got themselves into financial difficulties due to poor management of their credit cards debt. Even though it’s a simple matter of not spending beyond your means and paying off your bills on time, it can become a major problem if left unchecked.
Be Entertained And Educated At The Same Time
If you are keen to find out how these young Singaporeans fared for the other questions in the gameshow, we encourage you to head over to the CPF Board’s YouTube Channel and check out all 6 episodes. The amusing and engaging episodes will definitely make you laugh and put your financial literacy knowledge to the test! We understand that there would be more videos to be released so click subscribe and stay tuned.
This article was brought to you in collaboration with the CPF Board. All views expressed in the article are the opinions of DollarsAndSense.sg
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