Five Stats That Show Malaysians' Shocking Financial Habits

To gain a better insight on how Malaysians from various age groups and income levels manage their money, and their perception of financial products, RinggitPlus conducted a Malaysian Financial Literacy Survey last year and below are what they found:

1. Malaysians have no choice but to own a car

“This was one of the strongest patterns we found in the entire survey, with a total of 84% of respondents aged 25-44 currently servicing a car loan. This issue isn’t merely a financial one, as the public transportation network in the country is still limited, and alternatives such as Grab have been increasing its fares progressively.”

Kuala Lumpur had one of the world’s least reliable public transportation systems, ranked #95 out of 100 cities in the 2017 Sustainable Cities Mobility Index. However, we can see a transformation in the public transportation services in recent years, where more frequency trips are offered by both MRT and LRT, especially during peak hours. Also, on Dec 2018, the government introduced the unlimited public transportation pass: My50 and My100 in order to reduce the cost of commute for many Malaysians.

2. The more you earn, the more you save? WRONG

According to the survey, the “middle income trap” is very apparent among Malaysians: increased salaries do not equate to proportionally increased savings.

·         88% of Malaysians earning between RM2,000 to RM5,000 a month save less than RM1,000 monthly.

·         67% of Malaysians earning between RM5,000 to RM10,000 a month save less than RM1,000 monthly.

·         31% of Malaysians earning above RM10,000 a month save less than RM1,000 monthly.

Nearly a third of Malaysians who earn more than RM10,000 a month – widely considered a high-income group – do not even save 10% of their salaries.

3. More than 30% of ALL Malaysians currently live paycheck to paycheck

Delving further into the survey responses they found another adversse statistic: 30% or more respondents across all age groups have admitted to spending equal or more of what they earn each month!

4. Women DO spend more than men!

There is a huge difference in the number of men and women who save more than RM1,500 a month: only 8% of females compared to 19% of males. At the same time, more Malaysian men own credit cards compared to women (67% vs 46%). People tend to think that the more credit cards you own, the more you spend. Clearly, this isn’t the case for the men and women in Malaysia.

5. Retirement planning? What’s that?

According to the survey, a staggering 47% of Malaysians aged 35 and above have not started saving for retirement. Of this amount, 13% of them are aged above 45. Based on estimates by the Employees Provident Fund (EPF), an individual requires savings of at least RM240,000 by age 55 in order to retire comfortably. However, more than two-thirds of the EPF members aged 54 had less than RM50,000 in their EPF savings! 70% of members who withdraw their funds at age 55 used up their savings less than a decade after retiring. Given the standard retirement age of 55 or 60, can these Malaysians even retire by then?

What can you do? Estimate your actual need for retirement, set your financial goal, create a budget that really works, control your expenses, set up emergency fund, etc.  In fact, there are many online resources to help improve your knowledge about financial literacy. The most important tip is: Start Now! Before it is too late.

Reference:

5 Stats That Show Malaysians' Shocking Financial Habits. Ringgit Plus https://ringgitplus.com

Most Malaysians cannot afford to retire, The Star, 25 Oct 2017