When financial knowledge alone is not enough


Only 24% can survive up to 3 months with own savings and only 10% can remain unemployed within 6 months


FIFTY percent of Malaysians admitted to having difficulties to raise RM1,000 for emergencies. One in five working adults said they did not save in the past six months. Three in 10 individuals have to borrow money to buy basic needs.

Many are burdened with huge debts. Cases of loan defaults have been a concern with thousands have been declared bankrupt.

If these statistics are not worrying enough, according to a Credit Counselling and Debt Management Agency (AKPK) survey last year, only 24% could survive up to three months with their own savings and only 10% could remain unemployed within six months.

If these gloomy figures do not rock the concerns of many Malaysians, the police’s recent announcement that Malaysia lost up to RM2 billion annually due to telecommunications scams and e-commerce frauds would make many stand up.

The widespread incidents of such thefts and how easily victims are duped by these criminals have triggered alarm bells on the susceptibility of the public to such cons.

Many have lost their life savings to promises of fast cash and instant wealth despite repeated warnings by the authorities.

To address the problem, the government has initiated the National Strategy for Financial Literacy 2019-2023, a framework aimed to improve financial literacy across all segments of the society.

According to studies by the OECD International Network on Financial Education, AKPK and the Malaysian Financial Planning Council between 2015 and 2018, the financial literacy level among Malaysians has yet to reach a satisfactory standard.

The AKPK Financial Behaviour Survey 2018 — which focused on the financial behaviour of Malaysian working adults in terms of their spending, savings and debt management — also revealed that there are areas which need to be enhanced for Malaysians’ financial wellbeing.

“It is important for us to promote good money management among the public. It’s our mandate to make prudent financial management a way of life,” AKPK GM for the operations division Nor Fazleen Zakaria (picture) told The Malaysian Reserve.

Nor Fazleen said Malaysians in general know they are supposed to budget, manage their finances and be disciplined in terms of lifestyle.

She said what is worrying is some individuals are not planning their finances and are buying too frequently.

“I know in this age and time there are many distractions and the desire to keep up with the lifestyle, but ultimately, you have to decide whether your purchase will impact you financially or not.

“What’s concerning is the fact that sometimes people just don’t plan at all. That’s wrong. That behaviour is something we (AKPK) want to correct and inculcate since young,” she said.

National Strategy for Financial Literacy

The National Strategy for financial literacy launched by Prime Minister Tun Dr Mahathir Mohamad last month outlines five main plans to equip Malaysians with the knowledge to make informed financial decisions and nurture healthy attitudes in financial management.

Dr Mahathir said the National Strategy supports the government’s aspiration for shared prosperity by ensuring that Malaysians are empowered with the right knowledge and skills to confidently make responsible financial decisions at every stage of their life.

“It is imperative that financial education is accessible to Malaysians across all ages and life stages, and this can only be achieved by working together,” he said.

Financial Education Network co-chairs, Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus and Securities Commission Malaysia chairman Datuk Syed Zaid Albar, stressed that improving financial literacy across all segments of society requires a systematic, sustained and coordinated approach that focuses on engendering long-term behavioural change.

“The call to action to enable Malaysians to better cope with greater uncertainty and financial complexity has never been timelier. We all play a crucial role in promoting the financial literacy and capability of current and future generations,” they said.

With the strategy, Nor Fazleen said AKPK will be able to leverage on its partners to conduct more outreach programmes as they are tasked to focus on financial education for adults.

“The strategy provides a structured framework on what we need to do, the type of reach we can aim for and what kind of messages we are sending out to the public,” she explained.

“We do a lot of outreach programmes with government agencies and universities — and as the Education Ministry is also involved, we can work together to ensure that not only students, but educators (too) would be equipped with good financial skills, so it can be taught to the young as well.”

Why Financial Literacy Matters

According to the National Strategy, financially literate individuals make informed financial decisions throughout their life and lead to sustained improvements in their standard of living.

Financially capable households interact responsibly with financial service providers, which in turn builds financial resilience.

The rise in cases of bankruptcy among working adults — especially around the ages of 25-40 — is something that could be prevented, said Nor Fazleen.

“At this age, having financial literacy is a living skill not only for the young, but also older generations,” she stressed.

“For AKPK, we offer a financial education programme that is designed and catered to all life stages, from young to retirement age. Apart from that, we offer counselling and debt management programmes as well, especially to those who are facing financial problems,” she said.

For example, AKPK’s module for tertiary education focuses on preparation for graduates before entering the workforce. Meanwhile for working adults, the module encompasses the right types of investments and how to boost their retirement portfolio, among others.

“That’s why acquiring literacy is a continuous process. What more with various challenges each day,” Nor Fazleen said.

Nor Fazleen noted that despite various campaigns and the authorities’ warnings on financial scams, many including professionals still fall victim due to the lack of awareness and inevitable skills to face it.

“It is alarming that those scam activities target people who are close to or in retirement age because they have a certain amount of savings in the EPF (Employees Provident Fund),” she said.

She reminded the public to not be deceived by those who claim to be AKPK agents.

“We are doing our services for free, so please do not engage third party agents. Sometimes, they have your data and ask (for) 10% out of your outstanding loans.

“AKPK does not look for customers, one should engage with us and we will provide our consultations and services for free,” she added.

Malaysians’ Financial Behaviour

AKPK’s financial behaviour survey on Malaysian working adults also revealed that financial behaviour is at 7.02 points out of 10 points, which is rather satisfactory.

However, for the wellbeing index, the survey showed Malaysians only scored 6.21 points.

“It is not something that we should be satisfied (with), although it means we are okay, we have to empower ourselves more,” said Nor Fazleen.

Financial problems is cited as one of the contributors to bad wellbeing.

“We don’t want to have bad wellbeing just because we are not managing our money well.

“Interestingly, we found that people with a lower income are happier despite the cost of living,” she said The survey also found that high pay does not necessarily correlate with happiness.

“Even though your pay is meagre, if you are not prone to any lifestyle issues or live within your means, you tend to score better in the wellbeing index. Wellbeing does not mean you have to make more, but (it’s) how you manage it,” she said.

The other aspect of financial wellbeing is debt management. According to Nor Fazleen, one with a higher pay would still have financial problems if the person tends to over-borrow, compared to someone who has lesser pay, but with limited debt.

“It is important that as a consumer, we are empowered, we know what is right or what is wrong, and we make the right financial decision.

“To be empowered, we need knowledge. So, seek knowledge — because AKPK has it when it comes to financial literacy. Everybody has to play a role, individually. The employers and the ecosystem should be supported too,” she said.