According to the central bank, this is because a significant number of Malaysians display short-sighted tendencies
By KEVIN WONG / Pic By MUHD AMIN NAHARUL
Financial education is vital for Malaysians as more than 75% of them find it a challenge to even raise RM1,000 of immediate cash money for emergencies, said Bank Negara Malaysia (BNM).
The central bank’s Capability and Inclusion Survey 2015 revealed that about 32% of Malaysians can only cover a week’s worth of expenses, at most, should they lose their source of income.
“Additionally, the survey revealed that a significant number of Malaysians enjoy to live for the moment and display short-sighted tendencies — focusing on instant gratification — where it is more prominent among the millennial generation,” BNM deputy governor Shaik Abdul Rasheed Abdul Ghaffour said yesterday.
“This is because they are mainly more passionate in keeping pace with the latest digital lifestyle. In a study by the Asian Institute of Finance in 2015, it found 38% of youth rely on personal loans and 47% engage in expensive card borrowings,” he said, adding that they would eventually find the debts to be burdensome, which will result in financial problems.
Shaik Abdul Rasheed said Malaysians are also lacking the knowledge regarding risk and return, thus it is difficult for them to make rational financial decisions.
“Additionally, Malaysians remain prone to financial fraud and abuse with a total of RM379 million from 2015 to the first quarter of this year.”
According to police data, the statistics suggest greed and ignorance are factors that led to irrational financial decisions for many victims.
Data from the Credit Counselling and Debt Management Agency from January to August 2017 indicated about 3,400 borrowers between the ages of 20 and 30 have sought the agency’s assistance, compared to 3,450 borrowers in 2016.
The deputy governor said most Malaysians do not practise long-term financial planning, where only 40% consider themselves financially ready for retirement.
“The lack of awareness on financial literacy regarding sufficient savings for retirement will eventually become a struggle to meet the post-retirement standard of living,” he said during the Federation of Malaysian Consumers Associations Conference 2017 in Kuala Lumpur yesterday.
BNM believes that educating financial literacy will be an intricate and long-term journey.
“However, through continuous and effective financial education, Malaysians will then improve their understanding of financial matters where they will be able to make informed financial decisions,” Shaik Abdul Rasheed said.
Thus, a five-year national strategy to elevate financial literacy is underway, which will be coordinated and driven by the Financial Education Network (FE Network).
The national strategy for financial literacy will cover all stages of life — from nurturing values among young children, to inculcating positive behaviour for adults and preparing Malaysians to retire comfortably.
“At the same time, specific actions will be formulated as well in order to reach out to the masses and to meet the needs of the specific target groups,” he said.
The FE Network was established at the end of 2016, where it will serve as an inter-agency platform to increase the impact of financial education initiatives and identify new opportunities for improving financial literacy among the Malaysian public through greater alignment, closer collaboration and a strong focus on impact assessments.