'Youths feeling the strain'

Study: Young adults taking precautionary measures to cope with rising prices

REGARDLESS of age, Malaysians are feeling the effects of inflation with youths tightening their belts to stretch the ringgit.

Over 85% of youths surveyed by the Tun Tan Cheng Lock Centre for Social and Policy Studies (TCLC) of Universiti Tunku Abdul Rahman (UTAR) said they were aware of inflation issues and almost 85% of them felt pressured due to the rising cost of living in the country.

Over 80% of the 260 respondents were aged between 16 and 25, while 16.9% were aged between 25 and 30.

“Only less than 3% of the respondents disagreed that they felt pressured. This indicates that the impact of inflation has taken a toll not just on the financial state of the Malaysian youths, but also on their mental health,” the twoweek online survey, conducted between August and September this year, found.

Headline inflation, according to the Statistics Department, has slowed down year-on-year (y-o-y) to 4.5% for September 2022, while core inflation rose slightly to 4% y-o-y as compared to 3.8% in the month before. The highest consumer price index (CPI) this year was recorded in August, at 4.7%.

To cope with rising costs, the TCLC survey also found that 40% of the respondents were seeking or taking on more part-time work, while 80% started doing more to save.

It is understandable that responses to these challenges appeared to be passive, rather than active, because the majority of those surveyed were fulltime students or workers.

Realistically, they would not have much time or energy left to take on extra jobs no matter how keen they were to do so, the TCLC explained.

“Earning, saving and spending are the three main factors that determine one’s financial status.

“Undeniably, spending habits are the most important factor since people can’t avoid spending. Given the results of the study, the pressure on the youths in Malaysia due to the rising cost of living needs to be addressed,” the TCLC press release read.

Youths are becoming more prudent with their money and are taking on extra jobs to make ends meet but are these measures enough to see them rise above inflation?

“Youths have started to compare prices, check the ceiling price and list their daily or monthly expenses. They know that every sen counts,” UTAR Faculty of Creative Industries (FCI) Department of Mass Communication lecturer Tan Yang Sheng noted.

Rational, he said, is a word that best describes their current financial attitude.

Tan, who led the study, said most youths would prefer to stay home and spend less on entertainment nowadays.

This change in behaviour is likely to be a reaction to the weakening economy, he offered, as youngsters are also feeling the strain.

“It is wise of them to be more careful with their spending but this is the result of a sad and unhealthy phenomenon.

“The youths should be the group of people who are passionate, sociable, active and aggressive in pursuing a happier life.

“However, the rising cost of living has limited their capacity to do so,” he explained.

Tan called on policymakers to develop measures to improve the economy.

“It is important to find ways to assist our youths as most of them are still pursuing their tertiary education or are just about to enter the workforce.”

YOUTHS, especially fresh graduates, do not have much choice but to be frugal.

This, said Universiti Tunku Abdul Rahman (UTAR) Faculty of Creative Industries (FCI) Department of Mass Communication lecturer Tan Yang Sheng, is because prudence measures like saving money, taking up part-time jobs, and cooking instead of eating out may not be enough to cushion the impact of rising costs.

“At least they are taking some proactive steps by doing what they can. “Developing a thrifty habit is always a good start to prepare for future commitments such as marriage and children,” he said, noting that it is heartening to see that youths are adopting a more reasonable approach to managing their finances.

Tan, who led a recent study by the varsity’s Tun Tan Cheng Lock Centre for Social and Policy Studies (TCLC), said the inflation has resulted in youths becoming more “calculative” as they attempt to make ends meet. Based on the study conducted in August and September, young adults are reacting to the weakening economic system.

Over 80% of the 260 respondents were aged between 16 and 25, while 16.9% were aged between 25 and 30. The online survey on how the youths perceived and coped with the rising cost of living in Malaysia revealed that a primary consideration when it came to taking on part-time work was to look at their expenses versus their income.

“Higher food, transportation, clothing and make-up expenses might make them consider parttime jobs but this is highly dependent on whether the individual prefers to adopt a passive or aggressive response in coping with inflation,” he said.

Universiti Putra Malaysia (UPM) School of Business and Economics Prof Dr Law Siong Hook said young adults know the importance of saving for a rainy day, but usually the money is set aside for holidays, marriage or as a down payment for a vehicle or property instead.

While noting that youths today are more financially literate and financially savvy, he stressed the importance of learning how to differentiate between needs and wants, and how to prioritise one’s consumption with a limited budget.

“Information is easily available online, which explains why youths today are more aware of current issues.

“It is undeniable that young people have been among the hardest hit by the consequences of the Covid-19 pandemic such as unemployment and the rising cost of living,” he said, but things are expected to improve.

Citing the International Monetary Fund, Prof Law said global inflation would likely fall to 6.5% next year and to 4.1% in 2024. Global central banks, he said, are also tightening their monetary policies to battle inflation.

“The strong appreciation of the US dollar against other currencies won’t encourage import inflation – particularly for US goods – in Malaysia.

“Instead, it will result in consumers opting for local products.

“But if Malaysia continues to depend on imported goods and services, which causes these items to be expensive, and the exchange rate keeps depreciating, it would be difficult to weather the effects of inflation,” he said, sharing how saving money is the easiest way to combat the rising cost of living.

“Do not save what is left after spending, but spend what is left after saving,” he advised.

Prof Law, however, acknowledged that it would be difficult for some to save as they simply do not have any money left over to put aside.

“There are students who are unable to work because they are too young, and there are those who need to focus on their studies or juggle education and helping to run a family business. It would be a challenge for them to save,” he added.

He said an effective way to curb inflation is to control the money supply in the economy. This can be done by spending less on unnecessary items such as expensive mobile phones and branded clothing. If the demand for

goods reduces, prices will fall.

A medium-term approach, he said, would be to set aside cash for an emergency fund and to explore inflation-proof investments such as gold and mutual funds.

“Youths need to equip themselves with various skills to increase productivity if they are to hope for higher wages and boost their income.

“Be on the lookout for new ways to increase your income. The digital economy offers plenty of opportunities, especially for those who are tech-savvy.

“Youths now know how to create a business on the Internet, selling services or products without the need to invest in physical spaces.

“With a limited working capital, they are still able to generate an income and even provide job opportunities to others,” he offered.

Muhammad Hilmi Abdul Rahman from Universiti Malaya Faculty of Business & Economics Department of Development Studies said the TCLC findings indicate that the increase in the prices of goods and services has significantly reduced the purchasing power of our youths.

“As prices continue to rise, students’ quality of life and livelihoods continue to deteriorate,” he said, adding that inflation is still a major concern post-pandemic despite government efforts to control the prices of goods and services.

And he does not see prices dropping anytime soon.

“The impact of inflation is still alarming.

“Prices are expected to continue rising for a couple of years as we readjust to a post-pandemic economy. This is caused by multiple factors including political uncertainties, rising unemployment and interest rates, the weakening of the ringgit against the US dollar, supply chain disruptions, and increasing global energy prices,” he explained.

Suggesting that youths cut back on lavish lifestyle spending, Muhammad Hilmi said a focus on high-priority expenses such as food and transportation would go a long way in facing a challenging economy.

“More working youths have started to increase their savings including life and retirement insurance. They want financial security too.”