Vital to strengthen financial literacy, say experts

KUALA LUMPUR: One out of three Malaysians are not comfortable with their financial knowledge, while half of the population (52%) say they face difficulties raising even RM1,000 for emergencies.

These were among the findings in a Credit Counselling and Debt Management Agency (AKPK) survey last year.

AKPK chief executive officer Azaddin Ngah Tasir said when it comes to sustainability and preparedness after one loses his major source of income, only 24% said they could survive for up to three months with their own savings, and only 10% were confident of lasting six months unemployed.

“The other component is preparations for retirement, where 68% of Malaysians who retire at 55 do not even have at least RM240,000 in their Employees Provident Fund (EPF) account.

“And we have situations where 70% of those who withdrew their EPF money use up the money within five to 10 years,” Azaddin said during the launch of the National Strategy for Financial Literacy 2019-2023 at Bank Negara here yesterday.

He added that one out of every five Malaysians also did not manage to save any money for the past six months.

Azaddin stressed the importance of elevating the level of financial literacy to improve the people’s financial well-being.

“While it is improving, it is still at a very moderate level,” he added.

Director at Universiti Malaya’s Social Wellbeing Research Centre Emeritus Prof Datuk Dr Norma Mansor said the country should impart financial literacy even to children, including kindergarteners.

“In preschools in England and Wales, children are taught how to use money, save and donate, which are all part of the education of living responsibly,” she said.

In his welcoming remarks, Finance Minister Lim Guan Eng said financial literacy is how one should manage their finances and spend within their means.

“If we want to ask Malaysians not to spend, then it will be bad for our economy. After all, we want an increase in consumption and spending, but let it be increased in a prudent manner so that it does not exceed your income,” he said at the event.

Also in attendance was Inspector-General of Police Datuk Seri Abdul Hamid Bador, who said that those who succumb to temptations such as gambling also suffer financial stress.

“Some even borrow from loan sharks until it affects their performance at the workplace,” he added.