In revamping the intervention programmes for youths in the Ministry of Youth and Sports, as well as relaunching of the Rakan Muda Programme, FOMCA calls on the Youth and Sports Minister to include interventions on the financial behaviour of young workers.
The data on financial behaviour of young workers is not encouraging.
Between 2018 and 2022, out of the 48,791 being declared bankrupt, 57% were below the age of 44.
In 2022, according to data, from the Credit Counselling and Debt Management Agency (AKPK) out of the 382,761 consumers that had participated in their debt management programme, 210,409 or 55.1% were between the ages of 20 to 40.
According to the survey conducted on those aged 20 to 33 by the Asian Financial Centre (AFC), it was reported that:
- 75% have at least one long term debt while 37% had more than one long term debt;
- To offset this debt, respondents were relying on high cost borrowing – 38% reported taking personal loans while 47% engaged in expensive credit card borrowing;
- 40% reported spending more than they can afford;
- Shockingly, 70% of respondents reported they were living beyond their means.
In a study by the Consumer Research and Resource Centre on financial behavior of youths, it was found that 47% of young workers were excessively over-indebted.
In another study on young workers aged 20 to 40 living in Public Housing areas, the study found that:
- 88.9% made late bill payments;
- 48.9% reported needing to borrow to buy basic items;
- 61.1% did not have enough money for medicines
- 19.4% were facing bankruptcy procedures
Further a new risk facing youths in Malaysia are the Buy Now Pay Later Schemes (BNPL) with the majority of users being the younger and lower income borrowers. BNPL is a serious growing problem that can lead to over-indebtedness and serious financial problems.
According to Bank Negara Malaysia, 44% of BNPL users are aged between 18 and 30 years old. More than 80% of BNPL users earn less that RM 3,000 per month and are therefore more susceptible to financial stress.
Clearly there is a dire need for intervention to empower youths through financial literacy programmes to enhance responsible financial management as well as protect youths from scams.
For example the current Rakan Muda programme has nine lifestyles. It is proposed that in the context of the current financial behavioural issues of youths, a 10th lifestyle be included, that is, financial empowerment. This would serve to focus on building financial responsibility amongst Malaysian youths.
FOMCA would very much appreciate if the Honourable Minister could include financial literacy programmes to empower and build financially resilient youths in the national youth agenda.
