Expert: Unhealthy financial lifestyle a miscalculated cliffhanger

Expert: Unhealthy financial lifestyle a miscalculated cliffhanger

November 20, 2017 0 By User

Maybank Foundation chief executive officer Shahril Azuar Jimin said in an exclusive interview with Malay Mail the level of financial literacy in Malaysia is not that low but the unhealthy financial lifestyle of some Malaysian is a miscalculated cliffhanger.

The World Bank has produced a financial literacy test in 2015 which was conducted on 150,000 people in 140 countries and the result was a surprise. It showed that Malaysia scored 36%, a slightly above the global average pass rate of 33%.

Even with the result slightly above the average pass, Malaysians still need to be educated about the dangers of not properly budgeting.

For instance, debt is one of the great concerns on why some Malaysians, especially youngsters, are becoming financially illiterate these days.

“The cycle starts after they have finished studies, some of them will start looking for a job, and the fallacy occurs when they apply for a personal loan — it is due to their desire to buy luxury things until finally, they start to rely on credit cards but are unable to pay every month.

“Besides that, there is also the rising matter on some youngsters who are still falling for scams to get rich quickly. Two reasons behind this are peer pressure and the lack of financial knowledge.

“Technology these days drive everyone to show off their success and luxurious lifestyle in social media which leads to reason number one,” said Shahril.

For the latter, some Malaysians are ignorant towards financial knowledge even though there is sufficient financial counseling available for free, Shahril told Malay Mail.

Emergency fund

The Maybank Foundation CEO advised that there are six things that can be done to practice financial literacy. Firstly, one needs to practice self-control like think before purchasing something; secondly, know where your money goes, either going to the right way or not; and the third is to be very careful with credit card usage.

Malaysians also need to start an emergency fund in case of unforeseen circumstances in the near future; there is the requirement to start thinking about investments such as insurance protection; and lastly, to refer to local financial consultants to get help on financial knowledge.

Debt management programme

The Credit Counselling and Management Agency (AKPK) empowers Malaysians through consumer financial education, financial counseling and debt management programmes to enable them to regain control of their finances.

AKPK offers its services free of charge — which includes financial education on the responsible use of credit and basic money management skills; counseling and advice on financial management, including financial budgeting to manage expenses; and its debt management programme (DMP).

“The DMP assists borrowers to work out budgets that will help them meet their loan obligations and living expenses, thereby minimising non-performing loans and foreclosure of houses,” said AKPK head corporate communication Mohamad Khalil Jamaldin

As at Sept 30 this year, 631,386 individuals have attended their counseling services and from that, 198,915 customers have applied to enroll into the DMP with 14,688 cases successfully exiting from the programme.

Previously, Bank Negara Malaysia raised their concern on the level of financial literacy among Malaysians and the importance to introduce financial education from an early age.

With sufficient basic financial knowledge and relevant skills ingrained into the behaviour of younger individuals, they will b

e more prepared and empowered to lead a healthier financial lifestyle as they move into adulthood.

Similarly, all the experts who spoke to Malay Mail said greater attention should also be accorded to long-term financial and retirement planning from young or when entering the workforce as there should be greater awareness on the importance of saving for the future.

This article by Jamny Rosli first appeared in Malay Mail print edition