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Kuala Lumpur, Dec 8: As the world braces itself for a recession and continued inflation in 2023, Malaysians are in their worst-ever financial position to prepare for it. Data from the RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2022 revealed various painful truths on the current financial state of the rakyat, including depleted savings, cash flow issues, and other worrying trends.
Malaysians are still struggling from the financial impacts of the pandemic
Malaysians from all walks of life are now facing severe financial challenges that leave them vulnerable to financial shocks, as various financial aids reduced the impact in 2020 and 2021. 70 percent of respondents indicated that they save less than RM500 per month or do not manage to save at all.
This is the worst-ever result tracked by the RMFLS in five years.
At the other end of the spectrum, the amount of Malaysians who manage to save more than RM1,500 per month has also dropped significantly.
From 20 per cent in 2020, the figure has dropped four times lower to just five per cent in 2022.
The RMFLS 2022 results also indicate that more Malaysians are struggling with less savings in hand, as 63 per cent of respondents stated that they can survive for three months or less with only their savings (52 per cent last year). A similar pattern is also seen where 55 percent of Malaysians spent exactly or more than what they earned each month (44 per cent last year), essentially living paycheck-to-paycheck.
With depleted savings and higher cost of goods, the survey also highlighted a worrying trend where more credit cardholders are not paying off their bills in full – just 55 per cent in 2022 compared to 70 per cent last year.
Forgoing long-term security and wealth generation for short-term relief
With the challenges in cash flow and savings, the survey results show that Malaysians are choosing short-term monetary relief over long-term financial stability. A staggering 66 per cent of respondents above 21 stated that they will consider applying for more Employees’ Provident Fund (EPF) withdrawals if the government allows it.
In addition, the survey also found that 52 percent of Malaysians above the age of 18 have not started investing.
Meanwhile, a majority of those who are investing have low-risk appetites but medium-term investment horizons which is not optimal – though these may be influenced by current financial challenges and global economic outlooks.
Current trends a wake-up call to all parties to take action
“The financial effects of the pandemic have been devastating and our survey findings this year reaffirm that Malaysians have real financial challenges to address. It is a harsh reality not only for the rakyat, but also for policymakers and industry players – this is a generational issue that requires long-term solutions with sustained and concerted support from all parties. We cannot leave anyone behind,” said Hann Liew, Co-Founder and Director of RinggitPlus.
In line with this, RinggitPlus recently introduced a new section to its Savings vertical on RinggitPlus.com that highlights the various cash management solutions in the market as it aims to encourage Malaysians to save and earn best-in-class returns. More products will be listed throughout 2023, and the section already includes an easy registration process through the RinggitPlus WhatsApp chatbot.
Finally, as part of its commitment towards enabling better access to financial literacy initiatives and education to more Malaysians, RinggitPlus will begin offering its content in Bahasa Malaysia in 2023.
“The new section on the Savings vertical at RinggitPlus.com is timely as it highlights a relatively new product line in the industry, and will help those looking to research and compare for the best savings products in the market. Meanwhile, offering our content in Bahasa Malaysia is part of our mission to extend our range of services to other languages and thus reach out to more Malaysians,” Hann said.
Financial literacy continues to be a major step towards helping Malaysians overcome financial challenges and take control of their financial health.
As RMFLS celebrated its 5th anniversary, the annual survey continues to highlight the importance of financial literacy among Malaysians and provides data points that have been used by various organisations, education bodies, and governmental sectors towards guiding Malaysians to take control of their financial health.
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