LETTERS: The Federation of Malaysian Consumers' Associations calls on the youth and sports minister to include interventions on the financial behaviour of young workers in the revamp of programmes for youths.
Data on the financial behaviour of young workers is not encouraging. Between 2018 and 2022, out of the 48,791 people declared bankrupt, 57 per cent were below the age of 44.
In 2022, according to data, from the Credit Counselling and Debt Management Agency (AKPK) out of the 382,761 consumers that had participated in their debt management programme, 210,409 or 55.1 per cent were between the ages of 20 and 40.
According to a survey conducted on those aged 20 to 33 by the Asian Financial Centre (AFC), it was reported that:
1. Seventy-five per cent have at least one long-term debt and 37 per cent had more than one long-term debt;
2. To offset this debt, respondents were relying on high-cost borrowing — 38 per cent reported taking personal loans and 47 per cent engaged in expensive credit card borrowing;
3. Forty per cent reported spending more than they can afford; and
4. Seventy per cent reported they were living beyond their means.
In a study by the Consumer Research and Resource Centre on financial behaviour of youths, it was found that 47 per cent of young workers were excessively in debt.
In another study on young workers aged 20 to 40 living in public housing areas, 88.9 per cent paid bills late; 48.9 per cent reported needing to borrow to buy basic items; 61.1 per cent did not have money for medicines and 19.4 per cent were facing bankruptcy.
A new risk facing youths in Malaysia are the buy now, pay later schemes (BNPL). The majority of customers are younger and lower-income borrowers. BNPL is a serious problem that can lead to over-indebtedness and financial problems.
According to Bank Negara Malaysia, 44 per cent of BNPL users are aged between 18 and 30. More than 80 per cent of BNPL users earn less than RM3,000 per month and are therefore more susceptible to financial stress.
There is a dire need for youths' financial literacy to be strengthened to enhance responsible financial management as well as protection from scams.
For example, the current Rakan Muda programme has nine lifestyles. It is proposed that a 10th lifestyle be included, that is, financial empowerment.
This would focus on building financial responsibility among Malaysian youths.
PAUL SELVA RAJ
Secretary General, Fomca
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times