The Financial Capability and Inclusion Side (FCI 2021) survey revealed these debts were acquired during their early working life or during their youth, often for unproductive purposes, said BNM financial inclusion department director Nor Rafidz Nazri.
“This behaviour is often driven by fear of missing out on lifestyle. Besides, some debts were for unexpected expenses, such as accident or death of sole breadwinner.
“Such risks could actually be managed affordably through insurance protection, such as Perlindungan Tenang scheme,” he said during a #NoFOMO Social Wellness Challenge (#NoFOMOChallenge) campaign launch recently.
Through the basic protection plan provided under Perlindungan Tenang, Malaysians could protect themselves and their families with a premium/contribution as low as RM30 per year, for coverage of between RM10,000 and RM30,000.
Lack of personal financial risk management
Nor Rafidz further said the FCI 2021 survey also found personal financial risk management is not a norm among Malaysians, with 47% of Malaysians having difficulty raising RM1,000 in emergency funds while one-in-three were not interested in getting insurance or takaful protection.
Additionally, 27% of Malaysians were worried on their ability to meet their old-age expenses, whereby 50% of Malaysian youths have not thought of any retirement strategies.
“Attitudes like living for today and letting tomorrow take care of itself should be avoided.
“We should actively manage our personal financial risks to provide a financial safety net during unexpected events, in order to achieve our financial well-being,” said Nor Rafidz.
As a member of the Financial Education Network that aims to raise the level of financial literacy in Malaysia, Nor Rafidz said BNM conducts FCI surveys periodically to measure the progress of financial literacy among Malaysians.
Two FCI surveys were conducted in 2015 and 2018, while the latest one was conducted in 2021, right after the economy re-opened following the Covid-19 pandemic.
Financial knowledge for youths
Meanwhile, the #NoFOMOChallenge campaign, organised by the Life Insurance Association of Malaysia (LIAM) and 16 LIAM member companies, is targeting the younger generation as the group is a key target segment in the industry’s consumer education agenda.
LIAM president Loh Guat Lan said the association has been actively engaging with the younger generation for many years because it is crucial for them to be well-equipped with financial knowledge and should be exposed to personal financial planning as early as possible.
She said this is to ensure they can make better informed decisions and become financially responsible adults.
The objective of the campaign, which runs until May, is to inculcate social wellness habits and promote the importance of financial planning through physical, emotional or financial means.