SINCE 2021, Perbadanan Insurans Deposit Malaysia (PIDM) has been actively promoting the importance of good financial management, such as inculcating a savings habit and building emergency funds to help Malaysians weather adversities in life.
As a member of the Financial Education Network (FEN), PIDM’s advocacy on financial literacy is in line with FEN’s National Financial Literacy Strategy 2019–2023 and Bank Negara Malaysia’s Financial Sector Blueprint 2022–2026.
Why is financial literacy important?
One, as the government agency mandated to protect bank depositors and takaful certificate and insurance policy owners, we want to ensure that Malaysians have adequate savings buffers and the relevant insurance to help them weather unexpected emergencies, which can be costly if it happens.
Second, the financial system can be difficult to navigate for the average financial consumer.
The sheer variety of products and services available in the market and the complexities surrounding them could pose a challenge for financial consumers.
How do you make the right financial decisions when you cannot be sure what you need right now, based on your current circumstances and for the unforeseeable future?
Furthermore, with the easy access but also the sophistication of digital financial services, one can be easily lured into making financial decisions that may not be suited, or worse, detrimental to the financial well-being of an individual.
A necessary life skill at any stage of life
It must be emphasised that financial literacy is not for a specific segment of society but for everyone, at any stage of life.
At the height of the COVID-19 pandemic, even Malaysians whom we usually associate with well-paying jobs or coming from more lucrative sectors such as aviation, oil and gas and tourism were also financially impacted. This shows the importance of being financially prepared for uncertain events.
Ensuring that you have emergency savings of at least six months’ worth of expenses and basic insurance coverage to cover against unwanted and unexpected incidents like accidents, health-related issues, floods and other disasters are the basic things for Malaysians to start thinking of as priorities in addition to achieving their dreams and ambitions.
Financial literacy is a life skill that equips individuals with the knowledge and confidence to make responsible financial decisions at key stages of their lives. For example, buying relevant insurance when you still have the financial as well as health capacity so that you will not be burdened when costly perils happen.
Savings can also start early in many forms, despite the daily living obligations, if one is able to manage their spending and lifestyle accordingly.
Where to start – building financial resilience
Rome was not built in a day and the right expectation should also be applied when you embark on your financial resilience journey, especially if you are starting from scratch. The good news is there are readily available tools and resources to help you get started.
A good place to start is by knowing how much you need to save up for your emergency fund, and PIDM has one such tool that may help.
PIDM’s SPK Calculator is an interactive tool that considers an individual’s income and expenses and informs how much they would need to save up for emergencies. The tool is free to use and doesn’t require any registration. Anyone who is keen to build an emergency fund can use the SPK Calculator to assess their own financial adequacy to cover for rainy days.
PIDM’s #SediaPayungKewangan microsite also provides free access to financial resilience content including videos, guides and bite-sized tips.
For additional resources on various financial literacy topics, the public is welcome to find out more via the FEN.
Have meaningful conversations on financial management
Good financial management and the process of becoming financially resilient is a journey that begins with conversations – open and meaningful ones with the people around us on how we can better prepare ourselves financially now and in the future.
Through some of the programmes and activities that we organise and support, PIDM hopes to get these conversations started, be sustainable and inculcated into our daily lives.
During the recent Financial Literacy Month in October, members of the public had the opportunity to participate and learn from programmes and activities carried out by FEN members throughout the month. But we hope it would not stop there.
As an active member of FEN, PIDM supports the continuous collective efforts of its members in furtherance of the national financial literacy agenda. – Nov 12, 2022
This opinion piece was authored by the Corporate Communication Department of Perbadanan Insurans Deposit Malaysia (PIDM), a government agency set up to administer the Deposit Insurance System (DIS), which is aimed at protecting depositors.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Main photo credit: MoneyWeb
