Financial literacy: The key to a stress-free money mindset?

It's never too late for us to start taking steps towards becoming more educated, financially literate individuals.

By MEDINA ONN

20 Feb 2025 03:00pm

Consider setting aside some time to really think about your financial goals. Photo: Canva

BUDGETING, investing, saving — typically, neither one of the above are skills formally taught to us.

Consequently, once abruptly thrust into adult life, we’re left to navigate the world of personal finance more or less from scratch — and we, despite our best efforts, can start to spiral into unhealthy spending habits.

This is far from an isolated incident. The Credit Counselling and Debt Management Agency (AKPK) reports that over 53,000 Malaysians under 30 are burdened by an astounding RM1.9bil in cumulative debt.

Finance Minister II Datuk Seri Amir Hamzah Azizan comments that "the growing accessibility of personal loans, credit cards, and especially 'Buy Now, Pay Later' schemes is particularly worrying, especially among young adults.

"While these tools may offer convenience, a lack of understanding of their implications and a lack of discipline in managing commitments can quickly lead to unmanageable debt."

It’s clear that this debt is a direct ramification of low financial literacy amongst the broader population of Malaysia.

It is a sentiment supported by a financial literacy survey conducted by the Organisation for Economic Cooperation and Development (OECD), which states that only 36 per cent of Malaysians understand basic financial concepts, such as interest rates, inflation and risk diversification.

Let it be said that the desire to strive for a higher standard of living is both incredibly understandable, and completely normal.

However, paired with Malaysia’s ever-rising living costs and stagnating wages, it's a mindset that's compelled many to resort to credit cards and loans for both essential and luxury spending: a slippery slope that's led to many well-meaning individuals to fall into debt.

"It is my personal belief that being an excessive saver is better than being an excessive spender," says Suraya Zainuddin, founder of RinggitOhRinggit, a website about all things personal finance, specially catered towards Malaysians.

She adds: “The other side is someone who is excessively spending — then I think there's a little more mental block with facing your spending habits; facing your debt.

“There’s this term we use in the personal finance world — an ostrich. Imagine an ostrich with its head in the sand.

“An ostrich is someone who doesn’t want to open their bank account — because, perhaps, they're scared of how little they have. Or someone who refuses to open their credit card statements, because they don't want to know how much debt they're in.”

To put it simply, our fears regarding personal finance stem from a lack of knowledge. But rest assured that it's never too late for us to start taking steps towards becoming more educated, financially literate individuals.

Financial literacy consists of three main components: financial management, budgeting and saving. Financial management can be as simple as creating a single, comprehensive list of all your monthly bills.

Be sure to include the name of your service providers in the list for the sake of clarity, and set payment reminders so as to not forget to pay them on time.

Additionally, consider setting aside some time to really think about your financial goals. Whether it's as simple as paying off a credit card, or as weighty as saving up for retirement — both short- and long-term goals can aid us in refraining from making impulsive purchases in the future.

Another integral component of financial literacy is budgeting: tracking how much money you receive and spend every month. You can start by listing all sources of money you receive in a month: be it your main salary, or pocket money made from jobs on the side.

As for your expenses: review both your bank and credit card statements to make sure you’re accounting for every single expense made in the past month. Seeing all of our expenses laid out on paper can aid us in noticing our harmful spending habits: helping us be more mindful of our purchases as well as making sure our savings are on track.

Now that you have a clear picture of money coming in, money going out, and money saved, you can identify which expenses you can cut back on, if necessary.

Save the extra money according to your financial goals — and keep it safe in the case of a personal emergency. Living in the times we do now: it’s completely understandable to feel tempted by the convenience of “buy now, pay later” schemes.

However, these schemes are specially crafted to appeal to those unsure of where their financial future lies.

Thus, it is our personal responsibility to educate ourselves about financial literacy: to hold ourselves accountable for our spending, and lead a financially-conscious life that our future selves are sure to be grateful for.

We’re delighted to announce that Suraya Zainuddin will be speaking at SheLeads: a networking event that doubles as a platform to amplify the issues women face on the path to success in the workforce. We personally invite you to join us at Studio F, Karangkraf HQ on Feb 27 at 2pm!