The research highlights that the majority of respondents are relying on high cost borrowing with 38% reporting taking out personal loans and 47% engaged in expensive credit card borrowings, while, only 28% felt confident in their financial literacy.
The study was done to better understand Malaysia’s Gen Y financial intelligence and their attitude towards finance. The “Finance Matters: Understanding Gen Y – Bridging the Knowledge Gap of Malaysia’s Millennials” surveyed more than 1,000 young professionals aged between 20 and 33 years old in Malaysia.
The report was launched by AIF chief executive officer Dr Raymond Madden, at the International Future Global Economics Development Conference held at Chiang Mai University in Thailand on Oct 14.
“Despite being the most educated generation to date, our extensive industry research indicates that Gen Ys are accruing debt at an earlier age and lack understanding when it comes to financial planning. Many of them are on the back foot when it comes to long-term financial security as they accrue debt before they even enter their professional careers,” said Madden in a statement issued on Thursday.
He added that there is a need for behavioural changes in money management among Gen Y, as millennials are more likely to bear more financial risk than previous generations with the ever-increasing complexity and diversity in financial products and markets.
Malaysia’s Gen Y make up the largest consumer pool, have a high spending power but are also lack confidence in financial literacy as the majority of Gen Ys (58%) rated themselves as having average financial knowledge.
An alarming 75% of Gen Ys have at least one source of long-term debt, such as car loans, education loans and mortgages, while 70% owning credit cards tended to pay the minimum monthly payment and 45% did not pay debt on time at some point.
“We hope our study will inspire policymakers and financial institutions to seek innovative approaches that will make meaningful impact in the financial future of Gen Ys and we have made a number of recommendations in our report. Understanding the current financial literacy levels of Gen Ys can better equip organisations to understand this important demographic group,” Madden added.