FINANCIAL literacy or knowledge in personal finance has not grown despite more sophisticated financial offerings to individuals in this area.
This stark gap serves as a reminder that knowledge in these matters can be further improved among the Malaysian people.
The programme manager for the Creador Foundation Shobana Sivanendran said that there can be a big impact on a person’s wellbeing if financial literacy isn’t given enough attention.
“Times have changed quite a bit over the past few decades.
“We are seeing things like the rising cost of living, we are seeing household debt growth and we have seen a lot of new financial products coming into the market as well. “And I think at the same time on the side of providing eduction on these matters, it hasn’t really matched up with the rate at which all these new things have been developing, ” she said.
A survey that was conducted by Creador’s financial education website called Multiply revealed that only about a third of 3,333 respondents had a firm grasp of basic financial concepts.
“Financial literacy has a big impact on other aspects of a person’s life since we all need money to survive.
“If you take for example one area is like credit card, this has grown a lot since the 1990s in terms of Malaysian’s spending habits, ” Shobana said.
“But there isn’t really a place or outlet where we learn the importance of paying off one’s credit card bills on time, or what the interest charges actually mean. And if you can afford it do pay off your full credit card bill each month. These sorts of things, ” she added.
Shobana cited some important discoveries in the survey which revealed there is a big gap in terms of people having enough emergency savings or only 47% who are having enough for a rainy day.
She also highlighted other concerning areas that was revealed in this survey noting that there was a sizeable number or 41% of respondents who had concerns of having enough money to last until their next payday.
While another area of concern is that about 43% of respondents did not realise that taking a longer term car loan actually meant them having to pay a lot more in overall interest charges.
She said this showed people in general were not really educated on the importance of tending to their own personal financial wellbeing.
“The result of this is that when you make bad financial decisions, you will end up having a lot of problems in your life.
“This affects your health, your relationships and even work productivity as financial problems can cause a lot of stress in your life, ” she said.
“Good financial literacy will mean a worry free financial future and also leads to improvement in quality of life in a sustainable manner. And this should carry on (as a habit) and not just be applied to a specific point in time, ” Shobana added.