3,400 youths sought financial help in first 8 months

PETALING JAYA: The financial position of youths has taken a further beating with over 3,400 of youths aged 20-30 years seeking Credit Counselling and Debt Management Agency’s (AKPK) assistance from January to August this year, which is close to the 3,450 reported for the full year in 2016.

This commiserates with a study done by the Asian Institute of Finance in 2015, which found a majority of youth to be living on high borrowing costs – 38% of youths rely on personal loans, while another 47% engage in expensive credit card borrowings.

Bank Negara Malaysia deputy governor Abdul Rasheed Ghaffour shared the statistics in his keynote address at Fomca Conference 2017 yesterday, which addressed the much-to-be-desired state of financial literacy in Malaysia and measures being done to elevate financial literacy.

He announced that work is underway to formulate a five-year national strategy to boost financial literacy which will focus on promoting responsible financial behaviour through collaboration of all stakeholders with full commitment.

Set up by BNM in 2006, AKPK helps borrowers who have financial problems to get back on their feet and manage their finances and debts. It also provides free financial education, counselling and debt management programmes.

Citing more than 75% of Malaysians find it difficult to raise even RM1,000 of immediate cash for emergencies, which were the findings of BNM’s Financial Capability and Inclusion (FCI) Survey conducted in 2015, Abdul Rasheed highlighted that Malaysians tend to have low financial resilience and are vulnerable to financial shocks.

“An ideal situation is to have a financial buffer that is sufficient to cover living expenses of at least three to six months in the event of loss of income.”

Furthermore, Abdul Rasheed said majority of Malaysians do not practice long term financial planning, noting that only 40% of Malaysians consider themselves financially ready for retirement, despite the steadily increasing life expectancy of Malaysians.

He said the poverty line in Malaysia is at RM950 per month, and based on the Employees Provident Fund (EPF), a retiree would need RM228,000 upon retirement to generate sufficient investment income to live above the poverty line for the next 20 years.

However, he said the average EPF savings of those in the 51–55 age group is only about RM160,000, according to Khazanah Research Institute.

Abdul Rasheed said Malaysians still lack of understanding on risk and return, and are not able to make rational financial decisions while being prone to financial fraud and abuse, with the number of financial scams reported in the country rising to 1,883 cases from 2015 to the first quarter of 2017, which resulted in accumulated losses of RM379 million.