Around 30 per cent of Malaysians felt that their debts were burdensome, which seems to be a long-term problem among salaried workers in Malaysia, according to Bank Negara Malaysia (BNM) through its Financial Capability and Inclusion Side (FCI 2021 survey).
“These debts were acquired during the early working life, during their youth, often for unproductive purposes,” BNM financial inclusion department director Nor Rafidz Nazri said.
“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,” he added.
“Such risks could actually be managed affordably through insurance protection, such as Perlindungan Tenang scheme,” he said during the #NoFOMO Social Wellness Challenge (#NoFOMOChallenge) campaign launch recently.
Through the basic protection provided under Perlindungan Tenang, Malaysians could protect themselves and families with a premium/contribution as low as RM30 per year, for coverage of between RM10,000 and RM30,000.
The FCI 2021 survey also found that personal financial risk management is not a norm among Malaysians, with 47 per cent of Malaysians having difficulty raising RM1,000 in emergency funds while one-in-three were not interested in getting insurance or takaful protection, Nor Rafidz further continued.
Additionally, 27 per cent of Malaysians were worried on their ability to meet their old-age expenses, whereby 50 per cent of Malaysian youths have not thought of any retirement strategies.
“Attitude like living for today and letting tomorrow takes care of itself should be avoided,” he emphasized.
“We should actively manage our personal financial risks to provide 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.
Meanwhile, the #NoFOMOChallenge campaign, organised by the Life Insurance Association of Malaysia (LIAM) and 16 LIAM member companies, is targeting the young 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 young 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.
This is to ensure that they can make better informed decisions and become financially responsible adults, she said.
“We strive to reach out to more of them so that they are exposed to values in life.”
“The ongoing consumer education is seen as a strategy to combat the misconceptions on insurance, to educate on key issues and to guide them to become educated consumers.”
“Hence, developing healthy financial habits early can set a strong foundation, leading to a better financial decision-making, and reducing the likelihood of falling into debt or financial difficulties later on in life,” she said.
Loh said LIAM’s strategy through the #NoFOMOChallenge is to bring the youth closer to the industry, while engaging with key opinion leaders or influencers is another way to attract them.
The campaign which runs until May 2023 aims to inculcate social wellness habits and encourages them to promote the importance of financial planning through the elements of physical, emotional, or financial.
Meanwhile, LIAM chief executive officer Mark O’Dell said riding on the tagline, ‘Live Well, No Fear of Missing Out’, the campaign invites youths to create short video content ideas using humour, memes, tragedy, or drama based on the three key elements.
