The level of debt among Malaysian youth has been a matter of growing concern as of late with Asian Institute of Finance’s (AIF) statistics showing that the majority of our Gen-Ys are in the dark over money issues. Only 28% of the respondents aged between 20 and 30 years of age felt confident in their financial literacy and ability to handle day to day financial matters. Even more alarming; 75% of Gen-Ys have at least one source of long-term debt such as car loans and education loans.
Nor Fazleen Zakaria, GM of Operations at Credit Counselling and Debt Management Agency (AKPK) opines that a financially capable youth is one who keeps track of his/her money, plans ahead and is able to make informed financing decisions, besides understanding the risks and benefits of particular options.
When asked why is it that most Malaysian youths are less aware of financial matters, Nor Fazleen said that it is due to the changing landscape of youths’ behaviour and mindset as generations evolve. At a time where social media is rife, youths especially succumb to the need to impress and possess only the best. They do not realise that a branded car may impress their friends and win the approval of their colleagues, but it is at the cost of burning their own pockets.
Will Smith, a famous American actor once said, “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” “This quote just about describes the habit of most of our country’s youth”, said Nor Fazleen.
She agrees that Malaysian Gen-Ys’ need for financial education is essential. Nevertheless, she admits that this age group faces greater financial responsibility than the previous generation. They have more and easier access to credit and they have to deal with costs of higher education
Touching on financial education in Malaysia, she commented that there is no silver bullet in addressing the financial literacy issue and a ‘one size fits all’ approach will not succeed, as children respond to a range of learning styles.
Some of BNM’s efforts in the past included the Pocket Money Book for schools that were first launched in 1999 as well as the School Adoption Programme by a few local banks.
ALL HANDS ON DECK
Alfred Sek, President of the Association of Financial Advisors also believes that building a generation with financial competence needs to start from an early age. He opined that learning to handle money should be an established and permanent component of any child’s upbringing.
He shared that several researches have revealed that young people develop financial and economic understanding when they have undergone ‘personal economic experiences’ themselves. He added, “Knowing how much money coming in and how, and when and where it goes out is the key starting point for children to take charge of their finances”.
Thus, parents should incorporate a ‘tough love’ financial framework/education at home, from when their kids are in primary school. For instance; giving their children a weekly allowance (salary) and making them learn from experience on how to manage their weekly spending (meals/entertainment/ miscellaneous), without bailing them out (loan).
ROLE OF EDUCATIONAL INSTITUTIONS
Echoing this sentiment, Nor Fazleen shared that AKPK’s focus group studies show that in order to have behavioural and attitude changes in consumers spending, financial education alone is not enough. “The intervention of ‘hand-holding’ and personal guidance over a certain period is necessary for there to be behavioural changes,” she explained.
Therefore, she feels that more focus groups which monitor students’ behaviour towards financial management should be formed in higher learning institutions.
Alfred mentioned that the obstacle in the way ironically is money. It requires resources to train teachers to establish such frameworks, to conduct consistent activities year round and to supply school children with the necessary materials – which most schools do not have.
In encouraging participation of all stakeholders, he says that financial institutions and private companies should make an effort to provide for the required funding by schools throughout the country. He feels that financial education is an important corporate social responsibility effort as any; just like the preservation of the environment and assistance for the needy/disabled – it is vital for the future of Malaysian youth and our nation.
“The much-needed resources would enable schools to train teachers, establish special purpose clubs, and carry out year-long extracurricular programmes that would drive in good savings habits and to encourage responsible money management among school children,” said Alfred.
According to Nor Fazleen, financial education has begun to be incorporated into the school curriculum in stages, beginning in 2014. BNM in collaboration with the Education Ministry introduced it to Year 3 students in 2014 and the same will be done for secondary school students from 2017 onwards.
At this juncture, BNM together with the Education Ministry is looking to incorporate exemplary systems in other countries that have shown positive results when it comes to financial education.
“One prime example is Australia, where the Australian Securities and Investments Commission (the government agency responsible for financial literacy), created the MoneySmart Teaching website for teachers and educators in 2008,” shared Nor Fazleen.
Providing professional learning and other resources, the website helps educators to integrate consumer and financial literacy into teaching and learning programmes.
Singapore also has made significant inroads in the provision of financial education. The Singaporean government through the Monetary Authority of Singapore funded the setting up of the Institute for Financial Literacy in July 2012.
The institute aims to build core financial capabilities across a broad spectrum of the Singaporean population by providing free and unbiased financial education programmes such as workshops and talks to working adults and their families.
SOME TIPS TO GET YOU BY
Lending advice on how to better manage their finances, Alfred urges youths to take advantage of technology innovation by using a financial app to keep track of their expenses as well as saving apps that force one to keep aside money each month.
“Another tip for young working adults is to carry out an assessment to figure out how much you can afford to spend based on the amount of your monthly salary”, he added.
For credit card owners, one imperative step in exercising financial control is to set credit limits on ones’ account. On top of that, Alfred warns if your credit card has a rewards programme, avoid buying things you do not need just to obtain points. Highlighting the cardinal rule, he reminded that a credit card does not increase the amount of money you have available to spend!
Albert reckons that it is not that Malaysia’s young generation is unaware of financial matters – it is because most of them did not have a firm guiding hand from a young age. A financial adviser himself, he implores youth who are in a fix over money matters to seek help or professional financial advice in order to know how to cope and deal in the best way. As he blatantly states, being unable to manage one’s money can be a barrier to future success.