Instilling a greater need for financial literacy

According to the Securities Commission (SC) of Malaysia, 1 in 10 Malaysians believe that they are not disciplined in managing their finances revealing low confidence on their own financial knowledge and, 1 in 3 Malaysians rate themselves to be of low financial knowledge or financial literacy.

Financial literacy is a combinationof awareness, knowledge, skill, attitude, and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being. 

And financial well-being refers to a person’s ability to meet current and ongoing financial obligations, feel secure in their financial future, and make choices that allow them to enjoy life.

Thus, being financially illiterate tends to lead to poor financial decisions such as over-utilisation of credit cards and overspending, which end up in low financial well-being as what has been happening to Malaysians in recent years.

As reported by the Insolvency Department, 84,805 Malaysians were declared bankrupt between 2015 and 2019.

Additionally, findings by the Credit Counselling and Debt Management Agency (AKPK) survey also reveals that 52 percent of Malaysians have difficulty raising RM1,000 as emergency funds.

Jeffrey Lam, Head of Corporate Responsibility, Prudential Assurance Malaysia Berhad (PAMB) explains how Malaysians should be prepared financially, especially during the ongoing crisis.

Jeffrey Lam, Head of Corporate Responsibility, Prudential Assurance Malaysia Berhad

“The Covid-19 outbreak has only emphasised the greater need to be financially secure. While the size of the fund varies according to one’s lifestyle, dependents and monthly bills among others, a general rule of thumb is to set aside at least 6 months’ worth of expenses,” Jeffrey emphasises.

He also stresses on the importance of financial knowledge, skills, and values being taught in schools. “This will allow students to make savvy and effective financial decisions in their daily life and as they move into adulthood.”

“National financial education strategies are increasingly involving the introduction of financial education into the school curriculum, design and the implementation of dedicated learning frameworks. Yet the integration of financial education in school curriculum can be challenging as this is a new and specialised endeavour,” he explains.

He goes on to say that teaching financial literacy in school can only go so far – what cannot be taught in a classroom should be supplemented at home by parents.

“With the right financial education, parents can use real-life examples to impart lessons to children. For example, grocery shopping with their children. This chore relies on financial knowledge, where the parent could let the child know the difference between needing vs wanting an item or the importance of sticking to a budget.”

Sowing saving habits from young

Knowing this, Prudential has initiated several financial education programmes that are catered to different age groups to promote financial literacy. The initiative includes the Cha-Ching and Duit Right programmes.

Notably, Prudential has been able to reach 155,000 students through the twofinancial education programmes since 2014.

Cha-Ching was created by Prudence Foundation, the community investment arm of Prudential in Asia and Africa, in partnership with Cartoon Network Asia and Children’s Educational Specialist, Dr. Alice Wilder.

It is an award-winning financial literacy programme designed for children aged 7 to 12. It aims to instil the knowledge, behaviours, and attitudes needed to help children become more financially responsible.

In Malaysia, Cha-Ching’s money management framework was adapted into a classroom-style programme where Prudential introduced Cha-Ching Live inMalaysia – an edutainment approach and hands-on commitment to help Malaysian children understand the simple concepts of Earn, Save, Spend & Donate.

The Cha-Ching Curriculum was then developed in partnership with Junior Achievement Asia Pacific, to provide structured lessons and training for teachers to teach key concepts in the classroom in an interactive and engaging way.

The Curriculum was piloted to 10 schools in 2016 in Malaysia and to date it has been officially implemented in 458 (unique) schools across 7 states in Malaysia and reached out to approximately 102,186 students (as of November 11).

On the other hand, Duit Right was developed in 2014 as a practical and engaging experiential learning program targeting secondary school students aged between 13-16.

Conducted as a workshop with the help of a trainer and 10 volunteer facilitators, students will be empowered to make better informed financial decisions through this 2-hour program.

In 2018, Duit Right Plus was introduced so that it can be conducted by teachers as a co-curricular club-based program to effectively reach more students and introduce 7 fundamental money management concepts that are aligned with Bank Negara’s 6 Financial Literacy pillars.

It aims to instil fundamental financial skills by helping students understand and apply good money management habits.

Duit Right Plus also features Kawenga, a one-of-a-kind board game created to help students learn and apply the 7 money-management concepts in a fun and experiential way.

Government’s role in increasing financial literacy

As stated by Jeffrey, public and private sector collaboration is a key driver to improve financial literacy among the people.

“We have provided financial education programmes for PRUKasih communities as we want to empower them to make responsible financial decisions.

PRUKasih is a financial protection plan to support the Government’s agenda in improving the lives of the urban low-income households, in partnership between PAMB and Yayasan Generasi Gemilang.

We have also collaborated with Agensi Kredit Dan Pengurusan Kewangan (AKPK) and Malaysian Financial Planning Council (MFPC) to provide 500 individual and 43 congregated financial education sessions to 1620 participants to educate them on personal financial assessment (digital version), simplified content, data collection (automation) and entrepreneurship programme (exploring collaboration opportunities),” Jeffrey shares.

Furthermore, as the Ministry of Entrepreneur Development targets to produce a million small and medium enterprise (SME) entrepreneurs, including those from the B40 group, in the next five years, Prudential has introduced an entrepreneurship programme – PRUKasih Entrepreneurship Programme.

The programme is specifically designed to assist the community in acquiring entrepreneurial skills and competencies to enable them to venture into businesses.

Additionally, Prudential has also been involved with public sector financial literacy partnerships such as FINCO (Financial Industry Collective Outreach) and Financial Education Network (FEN).

FINCO is the largest collective impact initiative in Malaysia that works to provide underprivileged children with the tools to achieve their life goals while FEN is an inter-agency grouping co-chaired by Bank Negara Malaysia and Securities Commission Malaysia.

Protecting your family’s financial future

Jeffrey says financial planning is important, and it includes financial protection such as life and medical insurance. He highlights that protection gap or underinsurance is very significant in Malaysia as the penetration rate of life insurance and takaful schemes has remained stagnant at 54 percent over the last five years.

“Prudential’s purpose is to help people get the most out of life, and we do this by making healthcare affordable and accessible, protecting people’s wealth, and growing their assets, and empowering our customers to save for their goals.

We advise our customers to regularly review their coverage as their financial needs change over time and as they go through life stages or experiences. For example, when you start a family, you may want to consider a child protection plan and legacy planning; as you get older, retirement planning will be a focus,” he elaborates.

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