Students must save more to cope with economic challenges, academics say

YOUTHS, especially fresh graduates, do not have much choice but to be frugal.

This, said Universiti Tunku Abdul Rahman (UTAR) Faculty of Creative Industries (FCI) Department of Mass Communication lecturer Tan Yang Sheng, is because prudence measures like saving money, taking up part-time jobs, and cooking instead of eating out may not be enough to cushion the impact of rising costs.

“At least they are taking some proactive steps by doing what they can.

“Developing a thrifty habit is always a good start to prepare for future commitments such as marriage and children,” he said, noting that it is heartening to see that youths are adopting a more reasonable approach to managing their finances.

Tan, who led a recent study by the varsity’s Tun Tan Cheng Lock Centre for Social and Policy Studies (TCLC), said the inflation has resulted in youths becoming more “calculative” as they attempt to make ends meet.

Based on the study conducted in August and September, young adults are reacting to the weakening economic system.

Over 80% of the 260 respondents were aged between 16 and 25, while 16.9% were aged between 25 and 30.

The online survey on how the youths perceived and coped with the rising cost of living in Malaysia revealed that a primary consideration when it came to taking on part-time work was to look at their expenses versus their income.

“Higher food, transportation, clothing and make-up expenses might make them consider part-time jobs but this is highly dependent on whether the individual prefers to adopt a passive or aggressive response in coping with inflation,” he said.

Universiti Putra Malaysia (UPM) School of Business and Economics Prof Dr Law Siong Hook said young adults know the importance of saving for a rainy day, but usually the money is set aside for holidays, marriage or as a down payment for a vehicle or property instead.

While noting that youths today are more financially literate and financially savvy, he stressed the importance of learning how to differentiate between needs and wants, and how to prioritise one’s consumption with a limited budget.

“Information is easily available online, which explains why youths today are more aware of current issues.

“It is undeniable that young people have been among the hardest hit by the consequences of the Covid-19 pandemic such as unemployment and the rising cost of living,” he said, but things are expected to improve.

Citing the International Monetary Fund, Prof Law said global inflation would likely fall to 6.5% next year and to 4.1% in 2024. Global central banks, he said, are also tightening their monetary policies to battle inflation.“The strong appreciation of the US dollar against other currencies won’t encourage import inflation – particularly for US goods – in Malaysia.

“Instead, it will result in consumers opting for local products.

“But if Malaysia continues to depend on imported goods and services, which causes these items to be expensive, and the exchange rate keeps depreciating, it would be difficult to weather the effects of inflation,” he said, sharing how saving money is the easiest way to combat the rising cost of living.

“Do not save what is left after spending, but spend what is left after saving,” he advised.

Prof Law, however, acknowledged that it would be difficult for some to save as they simply do not have any money left over to put aside.

“There are students who are unable to work because they are too young, and there are those who need to focus on their studies or juggle education and helping to run a family business. It would be a challenge for them to save,” he added.

He said an effective way to curb inflation is to control the money supply in the economy. This can be done by spending less on unnecessary items such as expensive mobile phones and branded clothing. If the demand for goods reduces, prices will fall.

A medium-term approach, he said, would be to set aside cash for an emergency fund and to explore inflation-proof investments such as gold and mutual funds.“Youths need to equip themselves with various skills to increase productivity if they are to hope for higher wages and boost their income.

“Be on the lookout for new ways to increase your income. The digital economy offers plenty of opportunities, especially for those who are tech-savvy.

“Youths now know how to create a business on the Internet, selling services or products without the need to invest in physical spaces.

“With a limited working capital, they are still able to generate an income and even provide job opportunities to others,” he offered.

Muhammad Hilmi Abdul Rahman from Universiti Malaya Faculty of Business & Economics Department of Development Studies said the TCLC findings indicate that the increase in the prices of goods and services has significantly reduced the purchasing power of our youths.

“As prices continue to rise, students’ quality of life and livelihoods continue to deteriorate,” he said, adding that inflation is still a major concern post-pandemic despite government efforts to control the prices of goods and services.

And he does not see prices dropping anytime soon.

“The impact of inflation is still alarming.

“Prices are expected to continue rising for a couple of years as we readjust to a post-pandemic economy. This is caused by multiple factors including political uncertainties, rising unemployment and interest rates, the weakening of the ringgit against the US dollar, supply chain disruptions, and increasing global energy prices,” he explained.

Suggesting that youths cut back on lavish lifestyle spending, Muhammad Hilmi said a focus on high-priority expenses such as food and transportation would go a long way in facing a challenging economy.

“More working youths have started to increase their savings including life and retirement insurance. They want financial security too.”


We’re tightening our belts...

It is hard to ignore the rising cost of goods. It is all around us. My usual commute to college involves taking the LRT, followed by an e-hailing ride. The e-hailing trip used to be RM5 but now, it has doubled to RM10. Food at the cafeteria has also become more expensive and I have been bringing food from home every time I go for class. It is a good thing I only need to attend college twice a week as most of my classes are online but I still feel the pinch. Being at home has helped me save a lot of my allowance and I have also cut down on going out with my friends. They are also trying to save money.

– Nur Atikah Mansor, 21

As a student, I have been trying to save as much as I can by bringing food from home. I have also stopped going out so much. The main expenditure which I cannot cut is for transportation. Knowing what is going on with the rising cost of living, not just in Malaysia but also around the world, has made me wiser and taught me how to manage money well and not spend on unnecessary items.

– Durgashree Balasubramaniam, 18

My family has been impacted by the high prices, especially when it comes to our daily necessities. I have cut down on my expenses and am more cautious with what food I buy. I have been working part-time as an event helper to earn some extra money. I have also switched to cheaper telco plans with basic Internet data access. I seldom eat out now and I avoid going out with friends if pricey restaurants and meals are involved. I’ve also taken to studying late into the night at university to reduce wasting electricity at home.

– Parveenn Balan Kumar Devan, 21

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