Survey: Poor financial health among Malaysian millennials

Millennials blame high cost of living in a survey conducted by iMoney

‘Spending today trumps saving for tomorrow’ seems to be the theme adopted by Malaysian millennials.

In a survey conducted by iMoney this month, over 1,200 millennial respondents between 21-36 years old shared insights on their financial behaviour, concerns and sentiments on Malaysia’s current economic environment.

With the 2017 National Budget announcement around the corner, there is no doubt all eyes will focus on initiatives to alleviate the high cost of living which ranked as a top financial concern for this segment of the population.

In the survey, 51% of respondents are attempting to save for retirement but a large majority in this category will still not have sufficient funds for the golden years as the amounts currently set aside are minimal and insignificant. The other 49% have placed retirement savings on low priority, sharing that they have not even given it any thought.

While 87% of Malaysian millennials cite the high cost of living as their major financial concern, findings also show that there is a lack of money management skills that put more burdens on their financial situations.

“We conducted this survey because we felt that there is a need to better understand how Malaysian millennials spend their money and their financial concerns, especially ahead of the upcoming Budget announcement.

Through the results of the survey, we found how much of a struggle it really is for them but also have identified gaps in financial literacy amongst millennials and the steps that can be taken by the government and respective organizations to address the concerns of this generation,” says Lee Ching Wei, chief executive officer of iMoney.

High Cost of Living + Lack of Money Management Skills = Financially-burdened Millennials

iMoney Millennial Survey Infographic -Debt Breakdown

The cost of living poses a big challenge especially for the lower income group (individual income of RM3,000 and below) as they spend close to half of their income on just food. This makes it increasingly difficult for the millennials in this income bracket to save as the cost of food has been increasing due to inflation.

A recent announcement by the Ministry of Finance (MoF) at the 2017 Budget Focus Group Meeting: “Cost of Living” showed that Malaysians spend 31.2% of their income on food; 23.9 % on petrol, housing and utilities; and 14.6 % on transport. Corresponding to this data, the iMoney findings also show that lower income respondents spend an alarming 21-27% of their income on entertainment as opposed to saving.

These results not only show the generation’s inability to save but also their lack of money management skills where they prioritize their lifestyle over future financial stability.

Retirement is the least of their concerns

iMoney Millennial Survey Infographic - Saving for Retirement

One of the more positive highlights of the survey was that despite the harsh financial situation millennials find themselves in, 51% of the respondents have already started to put away money for their golden years.

Unfortunately, 73% of these respondents are not saving at least 10% of their income on top of the compulsory retirement contribution with the Employees Provident Fund (EPF), which is necessary in order to achieve the minimum target savings requirement.

A shocking 49% of total respondents admitted that they place retirement on low priority and have not started saving for it at all.

Shackled in debt

iMoney Millennial Survey Infographic - Debt to Income Ratio

The survey also found that millennials of the lower income groups have a very high debt-to-income ratio exceeding 100%. This means their debt repayment exceeds their income. While both credit card debt and mortgage inches up in tandem with income for most respondents, it is alarming that the younger group in the lowest income bracket (below RM1,500) has an average credit card debt monthly repayment rate at 120%/RM1,850.00.

Generally, the debt-to-income ratio for most of the respondents sits at above 50% for just their loans. This is worrying as once we bundle in their credit card payments, essentially all of our respondents earning below RM4,500 commit 90% of their monthly income to just servicing these debts.

This is by far one of the most alarming finds in our survey as it shows Malaysians living in urban centres treading the boundaries of bankruptcy.

Negative sentiments all-around

iMoney Millennial Survey Infographic - Millennials Can't Catch A Financial Break

The common sentiment amongst the millennials is that Malaysia is already in (49%) or heading to into a recession (41%). However, the hard truth is that Malaysia is far from a recession. Although growth has slowed, Malaysia’s economy has grown in line with market expectations at 4% for the second quarter of 2016, and 4.2% in the first quarter.

However, this perception isn’t hard to argue with as the financial hardship that millennials find themselves in is likely to skew their perception that Malaysia is in a recession. In fact, 70% of millennials feel like times are now tougher than their parents’ era.

As finances are stretched thin, all of them have chosen to sacrifice major financial decisions due to the economic climate. 69% of the respondents said they have postponed or cancelled plans for vacations overseas, and 65% delayed buying a home. Other decisions that were put on the back burner are buying a car (41%), furthering studies (37%), and getting married (30%).

For more details on the survey results, check out:

iMoney Millennial Survey Infographic -Trapped in Plastic

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