Malaysians' financial management ability in dire straits — Sin Chew Daily

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DECEMBER 12 — A recent survey on Malaysians’ financial management behaviors shows that only 6 per cent of people can maintain their lifestyles for more than six months after they lose their sources of income, while 18 per cent can last only three months. This shows that we are indeed not adequately prepared for the rainy days.

Our life is not always a bed of roses and there are times 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, showing that many 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 of scarcity, each and every of us needs to learn how to make the best of our money and effectively manage our finances for our future protection and optimization of our goals in life.

Statistics show that people get into financial trouble mainly due to poor financial management (49.7 per cent) and business failures (15.2 per cent). 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 a 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 these some 22,581 were youngsters 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 per cent of young Malaysians have to shoulder their personal loans while 47 per cent have excessive amounts of unsettled credit card arrears.

Judging from the phenomenon that as many as 70 per cent of them pay only their minimum monthly dues, it is not hard to deduce that young generation 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 and his family will be affected. Nevertheless, if 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. 

* This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail Online

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