Are Malaysians on the Brink of Financial Disaster?

Many Malaysians are still struggling from the financial impact of the pandemic. That’s based on the data from the RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2022. About 70% of respondents indicated that they save less than RM500/month or do not manage to save at all. This is the worst-ever result tracked by the RMFLS in 5 years.  

At the other end of the spectrum, the number of Malaysians who managed to save more than RM1,500 per month has also dropped significantly. From 20% in 2020, the figure has dropped to just 5% in 2022.

Source: https://bankunderground.co.uk

The RMFLS 2022 results also indicate that more Malaysians are struggling with less savings in hand, as 63% of respondents stated that they can survive for 3 months or less with only their savings (52% last year). A similar pattern is also seen where 55% of Malaysians spent exactly or more than what they earned each month (44% last year), essentially living paycheck-to-paycheck.

With depleted savings and higher cost of goods, the survey also highlighted a worrying trend where more credit cardholders are not paying off their bills in full – just 55% in 2022 compared to 70% last year.

With the challenges in cashflow and savings, the survey results show that Malaysians are choosing short-term monetary relief over long-term financial stability. A staggering 65% of respondents above 21 stated that they will consider applying for more Employees’ Provident Fund (EPF) withdrawals if the government allows it.

In addition, the survey also found that 52% of Malaysians above the age of 18 have not started investing. Meanwhile, a majority of those who are investing have low-risk appetites but medium-term investment horizons which is not optimal – though these may be influenced by current financial challenges and global economic outlook.

Financial literacy, higher wages, and an extended retirement age (to at least 65) are some of the points needed for better financial health of all Malaysians.

Reference:

RinggitPlus survey finds that Malaysians are on the brink of financial disaster, Alex Cheong Pui Yin, https://ringgitplus.com, 6 December 2022