PETALING JAYA: A survey by Bank Negara Malaysia (BNM) has revealed that a vast majority of Malaysians would run out of funds in under a week should they lose their source of income, The Malaysian Reserve reported.
Calling for financial education to be prioritised, the central bank said only 32% of the people surveyed said they will be able to cover at least a weeks’s worth of expenses if they lose their job.
“More than 75% of those surveyed said it would be a challenge to even raise RM1,000 of immediate cash for emergencies.
“Additionally, the survey revealed that a significant number of Malaysians live for the moment and display short-sighted tendencies, focusing on instant gratification,” BNM deputy governor Shaik Abdul Rasheed Abdul Ghaffour was quoted as saying by the financial publication.
He revealed the results of BNM’s Capability and Inclusion Survey 2015 during the Federation of Malaysian Consumers Associations (Fomca) Conference 2017 in Kuala Lumpur yesterday.
He said that the short-sighted tendencies were also more prominent among the millennial generation.
“This is because they are mainly more passionate in keeping pace with the latest digital lifestyle. In a study by the Asian Institute of Finance in 2015, it found 38% of youth rely on personal loans and 47% engage in expensive credit card borrowings,” he said, according to TMR.
Rasheed attributed their poor financial position to the lack of knowledge on the issue of risk and return.
“Thus it is difficult for them to make rational financial decisions.
“Additionally, Malaysians remain prone to financial fraud and abuse with a total of RM379 million being lost from 2015 to the first quarter of this year,” he was quoted as saying.
Citing data provided by the police, the BNM man suggested that most of the losses were due to greed and ignorance that led to irrational financial decisions by the victims.
Rasheed also said only 40% of Malaysians consider themselves financially ready for retirement, with the rest admitting to not practising any form of long-term financial planning.
“The lack of awareness on financial literacy regarding sufficient savings for retirement will eventually become a struggle to meet the post-retirement standard of living,” he was quoted as saying.
Expanding on the issue of financial education, Rasheed said a five-year national strategy to elevate financial literacy is under way.
“The national strategy for financial literacy will cover all stages of life, from nurturing values among young children, to inculcating positive behaviour for adults and preparing Malaysians to retire comfortably.
“At the same time, specific actions will be formulated as well in order to reach out to the masses and to meet the needs of the specific target groups,” he said.