Malaysians have the most debt? Well, proportionately YES.

According to the latest Manulife Investor Sentiment Index (MISI) which was published in many medias across the region, Malaysian investors rank the highest in Asia in terms of indebtedness. 68 percent of Malaysians currently have debts. This is the HIGHEST PROPORTION of all the eight markets surveyed in Asia. Please note that highest proportion and the highest debt amount are two different things. This indebtedness excludes mortgages. The same survey showed that Malaysians do have some financial awareness because they rank savings for retirement a top financial priority. As for actually doing it, most lack sufficient financial planning.

When I look around me, I think this 68 percent should be even higher. Latest smart-phone, dinner at nice places and posting the photos in their Facebook and the worst case is purchasing a brand new Segment B Japanese car despite struggling with the repayment every month or pushing the repayment period to the maximum. When asked why, some would answer that the particular model saves fuel. Sigh….. Some would spend so much on renovation that they would spend the next few years paying for it. Is it truly necessary? Well, it is, when we have way too much money.

Oh yeah, as per the survey, the average debt per investor is RM56,000 which is nearly 10 times average monthly personal income. The most major reason is due to daily living expenses (60 percent), with rental payments (44 percent) and children’s education (37 percent) the other main causes. Even more alarming, 44 percent of investors spend 70 percent or more of their income every month. This meant these people would have nothing to fall back on if they suddenly lose their job. There are just no savings for rainy days. Need to read more? Here: malaysians-most-indebted-asia

Dear fellow Malaysians, this survey does not reveal anything unique about our typical spending habits. However, it should serve as a notice to all of us that financial awareness is of little use if we are just not discipline enough to take appropriate actions. Last but not least, Manulife Holdings Bhd group CEO Mark O’ Dell said: “Without effective debt management, Malaysians are less likely to achieve their long term savings goals, which could jeopardize their future financial security.” Oh yeah, rental should only be an option for a while. Save quickly, buy something and after a few years, upgrade. The first purchase need not be the best, it’s not going to be anyway. Happy saving and investing.

written on 3 Mar 2016

Next suggested article: Making savings a forced habit

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