Saving awareness still lacking
KUALA LUMPUR: Head of the Financial Education Department of the Credit Counselling and Management Agency (AKPK), Nor Akmar Yaakub, said based on AKPK's 2018 Financial Behavior Survey (AFBes'18), the level of financial well-being among adults working in the country was still at a low level.
"Three out of 10 working people having to borrow just to buy their basic necessities. Those who are earning below RM2,000 faced the biggest challenge to save. "The survey also found that those who were more serious in planning their expenses were those between the ages of 50 and 59, and those who with higher incomes were found to have less planning. Women were found more likely to plan and track their expenses," she said.
Nur Akmar said an online study in March by the Department of Statistics Malaysia to assess the impact of Covid-19 on the economy and individuals found that 71.4 per cent of those self-employed have savings that can last for a month, while 82.7 per cent of those in the private sector had sufficient financial savings for the period of two months.
"In general, Malaysians do not have enough emergency savings in the event of long-term unexpected events," she added.According to Nur Akmar, the Covid-19 pandemic has hit home the importance of having savings during times of emergencies.
The AKPK Post-Moratorium Survey in August showed that 29 per cent of respondents used the moratorium money for savings purposes and this was supported by an increase in the percentage of savings and deposits in Tabung Haji, the National Education Savings Scheme (SSPN), and Permodalan Nasional Bhd (PNB).
"This shows that people have begun to show awareness of the importance of savings, especially in times of crisis. Awareness to change is the first step in financial planning," she said.
Meanwhile, Universiti Malaysia Sarawak (UNIMAS) Senior Professor of the Faculty of Economics and Business, Prof Datuk Dr Shazali Abu Mansor, said that most Malaysians do not have enough savings to deal with emergencies, especially when the pandemic struck, thus forcing them to rely on government assistance and subsidies.
"The culture of saving among Malaysians is still low because some, such as civil servants, were relying on their pensions. Those in the private sector felt their Employees Provident Fund (EPF) savings were enough to support their old age.
He said Malaysians were also more interested in borrowing with banks or other institutions when they needed money, rather than saving from a young age. "When there is an emergency situation like now, they will rely on government assistance and subsidies because the savings they have may only be able to last for a short period of time, a few weeks or months.
"We can see that some are still spending extravagantly, not having reduced their spending or eliminating unnecessary purchases such as a new mobile phone or even a car," he added.
Shazali said it was important for children to be inculcated with the culture of saving from young.
resident of the Malaysian Muslim Teachers Association (iGuru), Mohd Azizee Hasan, said the challenges faced by parents were greater these days as the cost of education is much higher.
He said the higher cost of living has resulted in parents saving less, especially those living in the city.
Mohd Azizee said the absence of a good savings plan for their children's education could prevent them from pursuing higher education.
"We need to change the mindset of society. There must be an exit plan so that we are ready to face any future challenges. "The government has prepared a financial planning plan for education.
Parents should take this opportunity to start saving early for their children's education," he said.
"This culture is about being careful and spending wisely, and should start with the family institution," he said.
More needs to be done to increase awareness among parents and guardians about the importance of saving for their children, including for their further education.