Man at His Best

Millennials Struggle With Their Financial Positions

Most 21-26 year old Malaysians say that high costs of living now stands as a major financial concern to them.

BY Sim Wie Boon | Oct 31, 2016 | Money & Career

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High costs of living stand as a major financial concern for most Malaysian millennials after a survey conducted by iMoney concluded that 87 percent of Malaysians aged 21-26 year old cited that the cost of living in Malaysia is high.

While 51 percent of respondents are attempting to save for retirement, a large majority of this category still have insufficient funds for their golden years as the amounts set aside are minimal. The remaining 49 percent have placed retirement funds on a low priority with some not even given any thought on it at all.

Financially-burdened Millennials

One of the most notable findings within the survey is that the lower income group (individual income of RM3,000 and below) spend close to half of their income on just food. Along with the increasing costs of food due to inflation, the burden is set only to get heavier for the group.

They also found that these lower income respondents willingly spend 21-27 percent of their income on entertainment as oppose to saving it which reflects an inability to save as well as a lack of money management skills where lifestyle fulfillments are priotised over financial stability.

On Retirement

Interestingly enough, despite the harsh financial situation, 51 percent of the respondents are looking to save up for their golden years. Unfortunately 73 percent of them are not saving at least 10 percent of their income on top of the compulsory retirement contribution that comes with the Employee Provident Fund (EPF), which is an important step to achieving minimum target savings requirement. What’s even more shocking  is that a 49 percent of the respondents admitted to having retirement savings on a very low priority and have not even started to save for it.

Debt Crazy

Perhaps the most alarming finding of iMoney’s survey is that millennials of the lower income group have a disturbingly high debt-to-income ratio that exceeds 100 percent meaning their debt repayment exceeds their income. The average credit card debt monthly repayment rate of the lower income bracket (below RM1,500) stands at 120 percent or RM1,850.

Generally speaking, the debt-to-income ratio for most of the respondents sits at above 50 percent for just their loans. This makes for a worrying revelation as when one bundles the respondents credit card payments, respondents earning below RM4,500 commit 90 percent of their monthly income to just servicing their debts.

 

Negative Sentiments

With such a disturbing revelation of millennial financial situation, the negative sentiments that hang heavily over the shoulders of milennials on Malaysia’s financial situation does not help. 49 percent of the respondents believe that Malaysia is already in a recession while the remaining 41 percent believes it is heading there.

iMoney however disputes these sentiments saying that Malaysia is far from a recession. While growth has slowed, the Malaysian economy has grown in line with market expectations at 4 percent for the second quarter of 2016 and 4.2 percent in the first.

In fact, 70 percent of millennials believe that times are now far tougher than their parents era with finances stretching thin and them having to sacrifice major financial decisions due to the economic climate. 69 percent of the respondents said that they have postponed or cancelled plans for vacations overseas while 65 percent has delayed the decision to purchase a house. Other decisions that have taken a backseat include buying a car (41 percent), furthering studies (37 percent) and getting married  (30 percent).

 

iMoney provides a free service that enables consumers to make the best choice on day-to-day financial decisions and gives consumers the knowledge to help them save, manage and grow their money. For more, head on to their website


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