EIGHTY four percent of Malaysians who claim to save regularly do so only for the immediate term, revealed a senior lecturer.

Citing the findings of the Malaysia National Strategy for Financial Literacy (2019-2023), Universiti Kebangsaan Malaysia Economics and Management Faculty senior lecturer Dr Wye Chung Khain said that these Malaysians (84%) typically withdrawn their savings at the month-end to cover their daily subsistence expenses.

The National Strategy for Financial Literacy’s ultimate aim is to intensify financial education to elevate the financial literacy of Malaysians.

Dr Wye said that 76% of Malaysians have a budget, but two in five people find it difficult to keep to the budget.

He said one in five Malaysian working adults did not save in the previous six months.

Saving for a better future: Chai (third from left) saves for her three children, Anson, 16 (left) Ancore, 10 (centre) and Ashley, 18, for their future tertiary education.Saving for a better future: Chai (third from left) saves for her three children, Anson, 16 (left) Ancore, 10 (centre) and Ashley, 18, for their future tertiary education.

In explaining the report further, he said, that one in 10 Malaysians believes that they are not disciplined in managing their finances.

Moreover, he said that a survey from Bank Negara had disclosed that only six percent of Malaysians have sufficient money to sustain their life for more than six months during an emergency period.

“This is a very serious condition. Malaysians should be disciplined to save for their future, ” said Dr Wye.

On the best practices to adopt for savings, he said this: “They should start to save early as they will have a longer time to accumulate funds. They will have less stress to meet their eventual goals.”

Dr Wye said that National Education Savings Scheme (SSPN) would be one of the best options for parents to save for the future tertiary education of their children.

“They can start to save with SSPN to enable them to support their children when they want to study a degree course at the institution of higher learning in Malaysia, and they can save up for a more expensive option for their children’s studies abroad when they enjoy higher salaries, ” he said.

“Education is a form of human capital investment; investing in children’s education is one of the biggest gifts ever rendered by parents to their children.

“The move will also encourage good savings habits among their children for a better future, ” he said, adding that parents could also consult with the banks and insurance companies to know more on the child education fund calculator, which could assist them for early planning of educational savings, such as SSPN.

“We want to give the best of everything for our children, so early SSPN savings will ensure they have sufficient funds for their education. SSPN is a syariah-compliant savings plan for education, which is appealing to a wider community, ” he pointed out.

Encouraging savings

He said parents should leverage on the tax exemption for deposits up to RM8,000 for SSPN savings, and another RM3,000 deductions in insurance premium for education related.

Dr Wye: Save early, save now.Dr Wye: Save early, save now.

“Most economic sectors posted an increase in employed persons since June 2020 as recovery movement control order took effect. According to the Department of Statistics, employment recorded a marginal increase of 0.5 percent month-on-month to 15.15 million persons (employed persons) in August 2020. The unemployment rate is at 4.7%.

“As the economic sector continues reopening, we see Malaysia’s labour situation improve further; we hope this will encourage more savings among the parents and guardians, ” he enthused.

“Although there is macroeconomic uncertainty caused by the spread of Covid-19 may adversely affect savings behaviour among Malaysians, but one’s beliefs in his or her own abilities to accomplish a financial goal - coined as the financial self-efficacy - may encourage savings behaviour among Malaysians, ” he explained.

On the National Higher Education Fund Corporation (PTPTN) recent launch of its SSPN 2020 Savings Month programme with the theme “Superhero” to encourage parents to safeguard their children’s future through early financial planning, he said: “It is a very commendable effort by PTPTN.”

He said the SSPN 2020 Savings Month programme would be beneficial, especially with the challenges posed to the labour market by the Covid-19 pandemic.

Property agent Kevin Leong, 47, from Johor Bahru, said his three stepchildren, aged between 10 and 18, have SSPN savings for their future studies since two years ago.

Leong said his wife, property agent Chai Hsie Yee, 36, saves for the three children, as “It will be easy for them later when they want to further their studies.

“The dividend for SSPN is also higher than other educational saving scheme, ” he highlighted.

He said Chai has also won over RM15,000 during the SSPN prize draw last year.

“We have split equally the cash prize for the three children, as it will be additional cash available for their education. This has motivated us to save more.

“My wife found out about SSPN from her brother and found it to be a good way to save for education, ” he added.

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