A rising number of young Malaysians are facing financial difficulties due to personal loan-related bankruptcies.
The 2024 Financial Capability and Utilisation of Financial Advisory Services in Malaysia Report (CMDF Report 2024) reveals that 67 per cent of respondents save little to nothing, and 56 per cent struggle to meet basic financial needs, relying on highinterest loans.
Furthermore, 31 per cent of respondents have more debt than assets, with education loans as the most common form of debt at 47 per cent.
The role of financial planning
The Malaysian Financial Planning Council (MFPC) stressed that structured financial planning is essential for young individuals to manage liabilities.
“Structured financial planning is key to helping young individuals manage liabilities effectively,” the MFPC told Sarawak Tribune.
The Council advocates for the Six Steps in Financial Planning to help establish goals, track expenses, and develop debt management strategies.
However, the CMDF report highlights that many young Malaysians are not prioritising savings or planning, heightening their financial vulnerability.
Financial planning begins by defining the client-planner relationship, where planners clarify their role in overall financial wellbeing.
Clients must actively participate in discussions about their financial habits and priorities.
“Clients play a crucial role by actively participating in discussions about their spending habits, financial priorities, and more, ensuring a personalised approach to financial planning,” said the council.
By gathering data, setting goals, and evaluating financial status, individuals can identify risks and create realistic plans. Financial planners recommend strategies such as debt repayment, credit management, and maintaining a financial cushion to ensure long-term stability.
“Avoiding impulsive credit card spending and maintaining a financial cushion are crucial for long-term stability,” it said.
Financial literacy initiatives
To address financial distress, MFPC promotes initiatives like the ‘My Money & Me’ Workshop, which helps individuals with budgeting, savings, and debt management.
“The ‘My Money & Me’ Workshop educates individuals on budgeting, savings, and debt management, helping them make informed financial decisions,” said the MFPC.
Programmes such as Retirement Webinars aim to raise awareness about long-term financial security, while the Malaysian Financial Planning Day introduces financial planning careers to students.
MFPC also runs university clubs to instill good money habits and empower students with practical financial skills.
“Through structured programmes, guidance, and implementation, we equip students with practical financial management skills,” said the council.
Guidance from financial planners
The MFPC encourages young people to seek help from Licensed Financial Planners (LFPs), who provide unbiased, client-focused advice on managing debt, investment, and retirement.
“LFPs offer unbiased, clientfocused solutions tailored to individual needs,” said the MFPC.
Despite 87 per cent of respondents acknowledging having a financial planner, only one-third recognise that these planners offer independent advice, highlighting the need for greater awareness.
“We need greater awareness of professional financial advisory services, especially about the independent and unbiased nature of LFPs’ advice,” it added.
Financial tools and support systems
MFPC pointed out several tools and agencies, like AKPK and BNM,that help individuals manage borrowing and credit.
“Agencies like AKPK and BNM offer Debt Management Programmes, financial counseling, and credit information to promote responsible borrowing,” said the MFPC. Credit monitoring services and budgeting apps assist in tracking expenses and loan affordability.
“Online budgeting apps and financial calculators can assist in tracking expenses, assessing loan affordability, and managing savings,” it explained.
Alternative debt solutions, such as AKPK’s Debt Restructuring Programme, offer financial relief. MFPC urges young Malaysians to use these resources to reduce financial stress and achieve longterm stability.
“By utilising these resources, young Malaysians can enhance financial literacy, make informed borrowing decisions, and reduce financial stress,” it added.
Collaborative efforts to strengthen financial literacy
MFPC collaborates with government agencies, financial planning firms, and educational institutions to improve financial literacy.
“Our signature ‘My Money & Me’ program is made possible through strategic partnerships with agencies like Perkeso, LHDN, PIDM, and AKPK,” said the council.
These collaborations aim to educate individuals on wealth management, credit awareness, and long-term financial planning. MFPC is also a partner in the Financial Education Network (FEN), which drives nationwide financial literacy initiatives.
“We actively participate in FEN’s annual Financial Literacy Month (FLM), organising youthcentric initiatives to educate young Malaysians on essential financial topics,” it added.
Looking ahead, MFPC plans to expand partnerships with universities, industry stakeholders, and government agencies to make financial literacy more accessible.
“We are broadening our partnerships to make financial literacy more accessible and impactful for young Malaysians,” said the MFPC.
By incorporating financial literacy into student development, MFPC aims to equip young Malaysians with essential money management skills. They also advocate for HR departments to implement financial literacy policies to support employee wellbeing.
“We urge HR directors to implement financial literacy policies for employee financial well-being,” it said. Through interactive activities and nationwide collaborations, MFPC hopes to enhance financial literacy across Malaysia.
“Through collaborations and interactive activities like gamification, we aim to engage young Malaysians and foster longterm financial literacy,” it added.
