THE level of financial literacy is alarmingly low among Malaysians with people who lack financial literacy often developing bad financial habits that can lead to financial constraints which negatively impact their mental and physical health.
While the government has recognised the importance of financial literacy and has taken steps to address the issue, more needs to be done as new trends and convenient ways to pressure the general public to spend more continue to emerge in the market.
There are several government initiatives to incorporate financial education into the school curriculum, notably by providing financial counselling services to help individuals manage their finances effectively.
Securities Commission Malaysia (SC), Bank Negara Malaysia (BNM), the Education Ministry and other bodies in Malaysia are working to raise awareness to the general public by creating the Financial Education Network (FEN). The government has launched several initiatives to increase financial awareness but they have not been impactful enough.
Lack of financial literacy can also make people vulnerable to scams which are constantly evolving and adapting. Scammers are targeting people from all ages and backgrounds.
They normally will try to build trust over time and pressuring the victims to make the transaction or share personal bank details. Scammers often prey upon greed and fear. The new revised budget has made it mandatory to have a kill switch to help with online fraud.
Even the government is taking steps to reduce scams. If you have fallen as a scam victim, best to contact the bank and lodge a police report.
Shame and taboo
There are some indicators that will help us identify a scam. We must remind ourselves that if the investment is too good to be true, it’s most likely a scam.
It is essential to know where to find correct and reliable information and to check the credentials of companies or individuals before making financial decisions. We can always check the company’s or person’s credentials on the Malaysian financial regulators’ database.
Scammers often pretend to be and misuse other local authorities. To be safe, go to the official websites and contact the hotline to confirm any issue. Another way to check whether a financial product is legit is to find out whether the company is licensed by the SC or BNM. These two regulators often update an alert list to inform the public companies to avoid.
Cultural beliefs and societal pressure also contribute to the low level of financial literacy in Malaysia. Some Malaysians are hesitant and do not want to discuss financial matters with their own family members and friends, let alone seek professional advice because personal finance appears to be a taboo topic.
Some may feel embarrassed to discuss any financial problems as they are afraid to ‘lose face’. In some cases, people also seek financial help and advice from non-professionals who can make them worse off financially.
This can lead to bad experiences when managing personal finances and distrust in the financial institutions. Thus, it is extremely important to seek professional help from the right financial experts.
Society pressure plays a part as well. Some Malaysians prioritise spending on family obligations and social events rather than saving for their future. Some people may be pressured by society to buy cars or a house by a certain age, have a big wedding ceremony or even start a family even though they are not financially ready.
In extreme cases, they end up taking loans as they are financially incapable to support these things in life. This unhealthy cultural norm has caused people to make unhealthy financial decisions and practise bad financial habits.
To overcome this, we need to remind ourselves that we need to take care of ourselves and our future so that we can provide our family a future as well. If we do not take care of ourselves financially, our family may end up being forced to take care of us.
In conclusion, improving financial literacy is crucial for making informed financial decisions and ensuring a secure future for ourselves and our families. It is important to seek professional help from the right financial experts, break free from social norms, and take care of ourselves financially to support ourselves and our loved ones adequately. – April 16, 2023
Kimberly Law, CFP, IFP is the co-founder of Uno Advisers Sdn Bhd. She is also a licensed financial planner and a certified member of the Financial Planning Association of Malaysia.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
