More Malaysians unable to save, millennials worse affected

Many are still susceptible to financial shocks, and a considerable amount continue to spend more than what they earn

by ASILA JALIL

THE economic impact of the pandemic still derailed savings ability for most Malaysians where the number of individuals who cannot save at all rose to 21% this year from 19% in 2020, while 31% of respondents save less than RM500 a month.

According to the RinggitPlus survey on Malaysian Financial Behaviour, 25% of respondents are able to save between RM500 and RM1,000, 8% are saving between RM1,001 to RM1,500 monthly and 15% managed to save more than RM1,500.

Meanwhile, about 51% of respondents indicate that they cannot survive more than three months if they lose their job and conversely 28% can last six months being unemployed.

“Malaysians’ personal financial habits remain worrying. Many Malaysians are still susceptible to financial shocks, and a considerable amount continue to spend more than what they earn,” said RinggitPlus co-founder and director Liew Ooi Hann (picture) during the virtual launch of the 2021 RinggitPlus Financial Literacy Survey yesterday.

“Meanwhile, Covid-19’s economic impact meant that most Malaysians are not able to save as much as they used to, and more than one in five Malaysians are considering taking up the loan moratorium,” he added.

As for millennials between 18 and 35 years old, the responses recorded were worse than the national average.

About 24% of them cannot survive beyond a month on savings alone, higher than the 20% of survey average and 57% cannot survive beyond three months on savings.

45% of them spend exactly or more than what they earn and 55% have not started retirement planning compared to 44% of the national average.

Liew, however, noted that millennials are more digitally savvy and should utilise their skills on the platform to gain more insights and avenues to have a better financial position.

The survey also found that 63% of Malaysians have made building an emergency fund their financial priority. This is followed by 45% who found it a necessity to save for retirement, 41% saved for travel purposes while 39% saved for a new property.

It added that in 2020, 27% of Malaysians realised the importance of an emergency fund during the onset of the pandemic which pushed them to take emergency funds more seriously this year.

“In last year’s survey, we saw that a large majority of Malaysians finally realised the true value of an emergency fund but the prolonged pandemic continues to take a huge toll on the economy and finances for everyday Malaysians,” Liew said further.

The survey was conducted using a self-administered questionnaire online to a total of 3,000 Malaysians nationwide. Of the total, stratified sampling of 1,518 was conducted to achieve a more representative sample of the Malaysian population.

It also revealed that there was a considerable decline in credit card ownership in 2021, with 45% of Malaysians not owning a credit card, down by 10% compared to last year.

A similar pattern emerged among existing credit cardholders, with fewer holding multiple credit cards.

The survey also concluded that there is heightened awareness of retirement planning but a lackadaisical attitude remains among the respondents.

About 30% of respondents realised that their Employees Provident Fund (EPF) savings are not enough for retirement compared to only 15% of them last year.

Liew said this is likely due to the increased awareness on the subject matter from the various EPF withdrawal schemes in 2020 and 2021.

Despite the realisation, 45% of respondents have not yet started any retirement planning, which is an unchanged figure from last year.

“What we did not know until the survey was done was what was the impact of the withdrawal schemes.

“It is important to note what the quantitative impact of those schemes have on Malaysian retirement savings and how it has impacted their confidence to retire,” he said.