PETALING JAYA: Malaysian millennials have little in their bank accounts to show for whatever they earn. For most of them, saving up for the rainy days is an alien concept.
A 2019 survey by international research outfit Statista shows that millennials find it hard to save money because most of their income goes to paying debt.
This has a lot to do with their lifestyle, according to personal finance author, educator and blogger K. C. Lau.
Millennials land themselves in debt by spending on products and services to define a certain lifestyle, one that presumably helps them to achieve happiness and satisfaction.
Those aged 15 to 40 account for 9.4 million of the 15.8 million workers in the country. Although they are presumably more savvy, most are said to be financially illiterate.
On a scale of one to 10, Lau rates anyone who can save more than 20% of his income every month as six to 10, referring to them as “above average”.
He estimated that only 32% of millennials achieve that rating.
“Millennials are constantly bombarded with ads and marketing messages on social media and other such avenues. Just from the smartphone, you get to see endless choices of goods, even within the same brand,” he told theSun.
He said the problem could have been addressed if parents could play a bigger role in instilling financial planning skills in their children from a very early age.
“Unfortunately, there also are parents with bad money managing skills themselves. They may pass on the wrong financial habits to their children,” he said.
On the other hand, he said, the government could help by providing financial literacy programmes for secondary school students and undergraduates. “They will certainly benefit from such an initiative,” he added.
Lau said that by introducing such a programme and making it a compulsory subject, students could learn to be smart with credit cards, mortgages, car loans, investments, budgeting, savings and taxes. “Money managing skills are essential for success,” he said.
He said children must be taught what it means to be financially smart. “They should be taught the basics of good financial planning, like learning how to save extra cash they get during the festive seasons or unused allowances,” he said.
Undi18 movement co-founder Qyira Yusri said millennials are also victims of the current economic condition.
“Many do not understand the differences among the many kinds of borrowings. As a result, many have been declared bankrupt for failing to service credit card or personal loans that come with high interest rates,” she said.
She said wages have also not risen in tandem with cost of living for decades, making it harder to save. “People tend to forget that millennials have commitments too with many still at mid-level jobs but having to supplement the family income.”
She agrees with Lau that a financial literacy programme should be introduced at school.
Qyira said the economy should be transformed to increase competition, reduce government interference and boost investments in industries that require high-skill labour.
“Wages have not risen because we have failed to evolve. We have moved into the service industry prematurely, we have under-developed industrial, agricultural and manufacturing sectors that are overly reliant on cheap foreign labour,” she added.
