While the video above may be funny and entertaining, it highlights a worrying state of financial awareness among Malaysians. Last month, we ran the 2018 Malaysian Financial Literacy Survey and found that as many as 59% of Malaysians do not have enough savings to last them for more than 3 months, and that 34% admitted to spending equal to or more than their monthly salary.
We found these to be some very disturbing numbers, and set out to dissect the results of the survey further. As it turns out, Malaysians’ attitude towards money is shocking, and needs to be addressed immediately. Here’s what we found.
1. Malaysians have no choice but to own a car.
This was one of the strongest patterns we found in the entire survey, with a total of 84% of respondents aged 25-44 currently servicing a car loan. This issue isn’t merely a financial one, as the public transportation network in the country is still limited (and unreliable at times), and alternatives such as Grab have been increasing its fares progressively. Young Malaysians today have no choice but to buy a car, even if the cost of living in urban areas is constantly increasing.
The government is trying to address this issue with the unlimited public transportation pass to be introduced in 2019, which will significantly reduce the cost of commute for many Malaysians. However, will it be enough to convince Malaysians to ditch their cars? Time will tell.
2. The more you earn, the more you save? WRONG.
Our survey results found that the “middle income trap” is very apparent among Malaysians: increased salaries do not equate to proportionally increased savings. We found that:
– 88% of Malaysians earning between RM2,000 to RM5,000 a month save less than RM1,000 monthly.
– 67% of Malaysians earning between RM5,000 to RM10,000 a month save less than RM1,000 monthly.
– 31% of Malaysians earning above RM10,000 a month save less than RM1,000 monthly.
What’s crystal clear is extremely worrying. Nearly a third of Malaysians who earn more than RM10,000 a month – widely considered a high-income group – do not even save 10% of their salaries. On the other hand, two-thirds of Malaysians who earn RM5,000 to RM10,000 a month also save less than RM1,000 a month.
Finally, one of the easiest correlations we found in the survey results was also a painful one to note. Nearly half of Malaysians (47%) who earn less than RM2,000 a month do not – or most likely, cannot – save money in a month.
Based on these trends, can Malaysians retire by the appropriate age? The next observations shed more light.
3. More than 30% of ALL Malaysians currently live paycheck to paycheck.
A big part of retirement planning comes from starting early. However, that doesn’t seem to be the case for many Malaysians. Delving further into the survey answers we found another shocking statistic: 30% or more respondents across all age groups have admitted to spending equal or more of what they earn each month! Here’s the breakdown:
Spending equal or more than what you earn each more means these Malaysians are living from paycheck to paycheck, rendering them unable to save any meaningful amount of money – let alone invest. Of course, these aren’t just the carefree souls who spendtheir money to sustain their lifestyles; others may be burdened by the costs of raising children as well as servicing home and car loans that leave them with nothing to save at the end of the month. Regardless, our survey indicates that there is a disturbing number of Malaysians living this way.
4. Women DO spend more than men!
We also decided to study if the stereotypes about gender and money are true. We found that female Malaysians tend to save less than males (30% vs 20%), and there is a huge difference in the number of men and women who save more than RM1,500 a month: just 8% of females compared to 19% of males.
At the same time, more Malaysian men own credit cards compared to women (67% vs 46%). There is a common preconception that the credit cards you own, the more you end up spending. Clearly, this isn’t the case for the men and women in Malaysia.
5. Retirement planning? What’s that?
All of the observations lead us to a distressing statement: at this rate, it is virtually impossible for Malaysians to even think about retiring with any money in the bank. And you know what? We could very well end up like that.
From our survey, we found that a staggering 47% of Malaysians aged 35 and above have not started saving for retirement. Of this amount, 13% of them are aged above 45. Given the standard retirement age of 55 or 60, can these Malaysians even retire by then?
Spending Our Way Into Financial Suicide
The results from the Malaysian Financial Literacy Survey 2018 is extremely worrying. Forget retirement planning, many Malaysians today are not even saving a meaningful amount of money each month, and instead are spending more than what they earn in some cases.
Whether it’s a lifestyle they choose to live or one they have no choice but to live, it is not sustainable and will only lead to financial complications later in life.
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- Consumer Behaviour
- Financial Literacy
- Malaysian Financial Literacy Survey
- Retirement Planning
- Savings
- Survey
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We found that: – 88% of Malaysians earning between RM2,000 to RM5,000 a month save less than RM1,000 monthly. – 67% of Malaysians earning between RM5,000 to RM10,000 a month save less than RM1,000 monthly. – 31% of Malaysians earning above RM10,000 a month save less than RM1,000 monthly.
What are the shocking statistics about financial literacy? ›
With this is mind, here are five scary financial facts as well as ways to avoid becoming a part.
- 54% of Americans Live Paycheck to Paycheck.
- Paying for an Emergency is Something 61% of Americans Cannot Do.
- Only 24% Of Millennials Have Basic Financial Literacy.
- 21% Of Americans Don't Save Anything from their Income.
The mean score of household financial vulnerability is 6.990 with a standard deviation of 1.851, indicates that, on average, households in Malaysia are financially vulnerable.
How much money does average Malaysian have? ›
According to a survey conducted by the Department of Statistics Malaysia in 2019, the average Malaysian household had a monthly income of RM7,901 (approximately $1,900 USD) in hand. However, this amount may vary depending on various factors such as location, occupation, and household size.
What percentage of Malaysia is financially literate? ›
As of 2020, Malaysia's financial literacy standing was improved significantly! We scored 59.7% [2]. This increment is equivalent to 1.65 fold from previous state. The compound annual growth rate, CAGR stands at 8.8%.
What is the 50 30 20 rule? ›
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
Are only 57% of Americans financially literate? ›
Fifty-seven percent of American adults are considered financially literate, according to a survey from credit rating agency Standard & Poor's (S&P). And our research found varying degrees of familiarity with key savings vehicles like 401(k)s and CDs.
How is Malaysia doing financially? ›
Overall, the Malaysian economy expanded by 3.9% in the first three quarters of 2023. Headline inflation continued to moderate to 2% (2Q 2023: 2.8%) during the quarter. The moderation was recorded in both non-core inflation and core inflation. For non-core inflation, fresh food and fuel contributed to the decline.
What is the financial crisis in Malaysia? ›
Malaysia's economic vulnerabilities stepped up significantly from early 1997 through the period following the onset of the crisis in mid-1997, as market confidence increasingly diminished along with the rest of the region. Large portfolio outflows took place, and equity and property values declined substantially.
What is the economic problem in Malaysia? ›
Concern over large government debts, rising operating expenditure, inadequate tax revenue and the continued burden of subsidies persist. The federal government's total debt and liabilities at the end of 2022 was about RM1. 45 trillion, or 80.9 per cent of GDP, an amount that is not desirable.
Countries by number and percentage of millionaires
| Country or subnational area | Number of millionaires | Share of global millionaires (%) |
|---|
| Vietnam | 49,000 | 0.1 |
| Colombia * | 39,000 | 0.1 |
| Romania * | 37,000 | 0.1 |
| Malaysia * | 36,000 | 0.1 |
44 more rowsThe cost of living in Malaysia is 71.6% less expensive for an individual than in the United States.
What is the 1% wealth in Malaysia? ›
Just US$485,000 (or over RM2. 2 million using today's currency rates) in net wealth in Malaysia is all it takes for you to be categorised as the richest one per cent here, or to be richer than 99 per cent of the Malaysian population, according to property consultancy Knight Frank's latest report.
What percentage of Malaysians are in poverty? ›
DOSM: Poverty rate trends down. The poverty rate has reached 6.2 percent of the population in 2022, down from 8.2 percent the year before. This was according to the Department of Statistics Malaysia (DOSM) Household Income and Expenditure Survey 2022 released today.
What is the income statistic in Malaysia? ›
He said the average monthly disposable household income increased by 1.7% to RM7,111 in 2022 compared with RM6,764 in 2019, while the median monthly disposable household income also increased by 1.9% to RM5,413 in 2022 compared with RM5,116 in 2019.
What is the wealth of Malaysia by race? ›
Among the ethnic groups, the Bumiputera had the lowest wealth, with an average wealth of RM 72,872. The Indians had 20% higher than the Bumiputera, at RM 87,229 while the Chinese had the highest average wealth, at RM 128,325, which were 76% and 47% higher than the Bumiputera and the Indians respectively.
What are the problems with financial literacy? ›
Being financially illiterate can lead to many pitfalls, such as being more likely to accumulate unsustainable debt burdens, either through poor spending decisions or a lack of long-term preparation. This, in turn, can lead to poor credit, bankruptcy, housing foreclosure, and other negative consequences.
What percentage of the US is financially illiterate? ›
First, only 57% of adults are financially literate. Second, over 40% of Americans aren't familiar with Roth IRAs, money market accounts and high-yield savings accounts. On the other hand, nearly 70% of people know about 401(k)s but don't know how to use them.
What percent of Gen Z is financially literate? ›
Financial literacy is the ability to understand and use financial concepts, including topics like budgeting, saving, investing, and credit. According to a Financial Industry Regulatory Authority (FINRA) survey, only 24% of Gen Z respondents could correctly answer four out of five financial literacy questions.
Why is financial literacy declining? ›
In fact, much of the downward trend in financial literacy can be traced back to respondents increasingly selecting “don't know” as their response option to the underlying questions. The rise in “don't know” responses accounts for 75 percent of the drop in financial knowledge from 2009 to 2021.
