End of the ‘sandwich generation’

Giving out duit raya on Aidilfitri is a rite of passage in my family, a sign that one is finally becoming an adult.

You need not be married to dole out, a prerequisite some families practise. You just need to become a member of the “proletariat”.

Sure, receiving money without consideration is delightful (I certainly enjoyed my status as a preferred customer at the Bank of Daddy) but as I grew older, the hadith “the hand which gives is better than the one which takes” began to resonate with me.

Having given out duit raya for a few years now, it is a sad observation to make that the “sandwich generation” most definitely ended with my parents.

For those unfamiliar, the “sandwich generation” refers to a generation of people (typically in their late 40s or 50s) who are capable of providing financial care for both their ageing parents and their own children.

While my generation is compelled to be discerning givers, striking off layers of relatives from the duit raya recipient list, our predecessors could afford to give to all and sundry, without jeopardising the roof over their heads during the post-festive season.

To blame middle-class poverty on the dismal economy is always an easy route to take but consider this against the 2018 annual report published by the Credit Counselling and Debt Management Agency (AKPK).

It states that more than 80% of its clients’ financial problems were attributed to the misuse of financial products, such as credit cards and personal loans. About 40% of this misuse arose purely from poor financial planning, which only we can hold ourselves accountable for.

When my NGO, the Organisation for National Empowerment (ONE), collaborated with AKPK for our maiden financial literacy workshop in October, we were shocked to discover that an individual requires savings of roughly RM2,500,000 by age 55 to retire comfortably.

To achieve such financial resilience, a balance needs to be struck between savings and investments.

Given our Asian upbringing, I dare say most Malaysians are familiar with the concept of savings and diligently implement the “20% savings” part of the 50-30-20 cornerstone of what we should do with our salaries.

This dictates that 50% of our net salary should be allocated for paying for necessities (housing, utilities, etc), 30% for wants (entertainment or shopping), and 20% for savings.

The crux of most financial woes lies in the mismatch between financial knowledge and financial behaviour, with regard to the 50% and 30% proportion allocated for needs and wants.

Often, people tend to conflate the two and upon realisation of their over-leveraged state, dip their hands into their hard-earned savings meant for retirement. The RM10 daily latte admittedly feels like a necessity — until the costs are summed up in black and white on a personal cash flow statement.

Being disciplined in tracking your spending will inculcate more sustainable spending habits and potentially result in having more income left over to save at the end of the month.

Upon mastery of the art of budgeting and debt management, investments are a natural progression for the financially prudent as it has the ability to build one’s wealth and provide an alternative source of income.

For those unaware, inflation can eat away at savings; thus the need to keep abreast of the increase in cost of living. Lamentably, investments are often perceived to be solely the privilege of the affluent, middle-aged and the risk-takers.

The most precious asset in the world is time and the most powerful financial force is compound interest.

Getting into the game earlier on enables one to capitalise on both. Further, given that financial commitments tend to increase as you get older, this may make it difficult to set aside a meaningful sum for investment later on.

Not all investment products require substantial capital for entry. There are options out there for, believe it or not, as low as RM100 (Hi, Stashaway and HelloGold!).

Understandably, the risk of loss is a terrifying prospect. However, it should not be a deterrent, much like how intrinsic risks in meaningful experiences, such as falling in love and learning to drive, have not dissuaded people from such pursuits.

The easiest way to conquer the fear of loss is to diversify one’s investments. For instance, the extremely risk-averse may choose to pump all their money into a fixed deposit, which practically guarantees the principal invested.

Those with a moderate-risk appetite may opt for unit trust funds and for the daring, there’s the stock market.

The point is that there is a financial instrument out there which meets everyone’s individual needs. We just need to start getting educated about them.

The “sandwich generation” has done a great service of giving my generation a financial head-start. It is now time to pass the baton and realise that our money will only go where we take it.

  • ONE will be hosting a financial literacy workshop on July 21. For more information, please follow @oneonlinemy on Instagram or Twitter.

Alia Aishah Shahrir is vice-president of the Organisation for National Empowerment.

The views expressed are those of the author and do not necessarily reflect those of FMT.