Millennials facing financial woes
Statistics show that there is an unprecedented debt accumulation amongst Malaysia’s millennials or Gen Ys. These young people are experiencing significant financial stress early in their life, with many living beyond their means and trapped in emotional spending, according to a study by the Asian Institute of Finance (AIF).
The survey showed a majority of Gen Ys were relying on high-cost borrowing, with 38% reported to be taking personal loans and 47% engaged in expensive credit card borrowings, while only 28% felt confident in their financial literacy.
It also showed that an alarming 75% of Gen Ys have at least one source of long-term debt such as car loans, education loans and mortgages, while 70% of those who own credit cards tended to pay the minimum monthly payment and 45% did not pay debt on time at some point.
Bank Negara’s debt counselling agency, AKPK, has recorded an alarming increase in young people joining its debt management programme. Half-yearly figures show that almost 3,500 Malaysian Gen Ys have sought AKPK’s assistance, compared to about 4,500 people for the whole of 2016.
“On one hand, we welcome these millennials seeking our advice to restructure their personal debt, but the yearly increase in the number of young people who are getting into debt is worrying,” says the agency’s Corporate Communications Head, Mohamad Khalil Jamaldin.
Khalil said that while his agency does provide free financial education classes, he believes that it is important that the young should be taught financial prudence from an early age and especially when they are in university.
Although AKPK is doing an excellent job in assisting our millennials, the solution lies in parents needing to play a greater role in educating their children especially those middle-class parents who seem to be bent on giving their kids everything while not preparing them for tough situations.