Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has commented that 40% of millennials are spending beyond what they can afford. He also stated that statistics from Bank Negara Malaysia (BNM) have shown that 47% of Malaysian youths have high credit card debts.
“So think thoroughly about what is necessary and prioritise your purchases, whether it’s a new outfit or new phone, or, like what one of my nephews wants, a PS5, and you will find that every ringgit will go a long way. Warren Buffett famously said, ‘do not save what is left after spending, but spend what is left after saving’. In other words, pay yourself first and use the power of compounding to your advantage,” said the minister.
Tengku Zafrul also elaborated with an example of a twenty-year-old who aims to have RM1 million in savings by the age of 60. He said that the individual will need to save about RM500 per month, assuming that there is an annual return of 6%.
Additionally, Tengku Zafrul cited data from the Employees Provident Fund (EPF), saying that 50% of EPF members have less than RM200,000 in their accounts. This is lower than the average of RM240,000 that members should accumulate in basic savings by the age of 55. The minister further commented that 50% of contributors would empty their savings within five years of retiring.
“However, with the emergence of the gig economy, such as Grab, Foodpanda, and Shopee, we have many opportunities and options to earn alternative sources of income to enhance our savings. In that respect, I am very pleased to see many Malaysians taking up the challenge of starting their own business,” said Tengku Zafrul.
Tengku Zafrul also urged Malaysians to improve their financial literacy skills, adding that this could be via growing and protecting their wealth through investments, insurance, or takaful. He further said that raising the level of financial literacy is a long-term commitment that requires the sustained efforts and support of many parties.
(Source: Malay Mail)
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