Survey shows millions of Malaysians in dire straits with poor financial management behaviour and little savings and mounting debts.

COMMENT

Debt-HutangA recent survey on financial management behaviour shows that only 6% of Malaysians can maintain their lifestyles for more than six months should they lose their sources of income, while 18% can last only three months.

This survey clearly shows that Malaysians are indeed not adequately prepared for rainy days.

Life is not always a bed of roses and there are times when we will be visited by some untoward incidents. As such, it is absolutely necessary for us to make hay while the sun shines, adequately preparing ourselves for any emergency that will befall us.

This is something very easy to understand, but unfortunately most Malaysians do not seem to have sufficient savings to tackle the unpredictable. This shows that many Malaysians have failed in their financial planning.

Cash is an indispensable element in modern-day living. The availability of cash affects everyone, but given its nature and scarcity, each and every one of us needs to learn how to make the best of our money and effectively manage our finances for our future protection and optimisation of our goals in life.

Statistics show that people get into financial trouble mainly due to poor financial management (49.7%) and business failures (15.2%). The other factors include exorbitant living cost after retirement, high medical expenses and unemployment.

We can see from here that enhancing financial planning awareness and learning how to manage our resources are absolutely necessary if we want to ensure a better and more comfortable lifestyle in the future.

The rising incidence of bankruptcies in recent years points to the fact that having the right financial management concept is all the more vital.

A total of 97,215 Malaysians went bankrupt between 2012 and September this year. Of this number, some 22,581 were youths, aged between 25 and 34, while as many as 1,157 individuals below the age of 25 were declared bankrupts.

This proves that many of our young people are indeed facing severe financial management issues.

Overspending as a result of materialistic temptation has become increasingly common in our society. Thanks to the vast popularity of credit cards, young Malaysians tend to spend their “future money” and, subsequently, find themselves deeply in debt.

Currently about 38% of young Malaysians have to shoulder their personal loans while 47% have excessive amounts of unsettled credit card arrears.

Judging from the phenomenon that as many as 70% of them pay only their minimum monthly dues, it is not hard to deduce that young Malaysians have incurred debts at levels way beyond their ability to cope.

It is therefore necessary for them to adjust their consumption habits while initiating effective financial management practices.

If a person is heavily in debt, strictly speaking only he/she and his/her family will be affected.

Nevertheless, if a majority of Malaysians are suffering financial difficulty, this will eventually evolve into a mounting social issue that will adversely impact our country. As we move steadily towards the status of a developed nation, we simply cannot afford to overlook this problem.

As a matter of fact, financial planning is not that difficult and complicated after all. Basically what we can do is to spend prudently, save our excess money, invest and explore new avenues to boost our incomes.

The key lies with our understanding of the importance of financial planning and management, and the practice of the same in our day-to-day lives.

Sin Chew Daily is a local vernacular publication

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