September 15, 2017
Following our recent article: (Are Millennial Financially Screwed?), we were featured on TraXX FM and were really glad the radio station was focused on this issue as many millennials seem to be losing control of their finances.
If you missed it, listen to the full interview here by TraXX FM DJ, Sofea Fea, and CompareHero.my Senior Writer, Ooi Chia Shen. Tune in to discover:
In the simplest way, being broke means you owe more than RM30,000 and failed to repay your outstanding debts for more than 6 months. You can either apply for bankruptcy declaration or companies/banks will file a bankrupt petition from the court.
However, many millennials may be putting themselves at risk of declaring themselves bankrupt on a daily basis, considering the high level of debts and volatile or stagnant income over time.
First, millennials have spiraled out of control when it comes to spending their money. To recap, a majority of Gen Ys were relying on high-cost borrowing, with 38% reported to be taking personal loans and 47% engaged in expensive credit card borrowings, while only 28% felt confident in their financial literacy, according to a survey by the Asian Institute of Finance (AIF).
On top of that, millennials tend to correlate prices and quality of life. With that being said, they think that buying expensive items equal to better quality in life and all.
Next, their lack of financial literacy is making things worse for themselves. Most millennials tend to listen to their peers when it comes to making financial decisions. However, we believe that they can take a step further and do more research to justify their decisions.
The real issue is not the credit card, it is how we use a credit card. In other words, it goes back to our spending behaviour and capability to manage our budget.
This depends on the value you are getting for every ringgit you spend on goods or services. Most importantly, you need to ask yourselves this question before buying anything: Does it serve the purpose? (Do you really need it?)
By asking this, you will know whether you can get a cheaper alternative that is just as good or whether you need the goods or services in the first place.
Given the factors from high living costs, low financial literacy, and lack of spending discipline, increase in millennials’ bankruptcy is expected. Hence, it is even more important for CompareHero.my to continue our efforts in educating Malaysians to be financially savvy!
Setting a budget for yourselves and stick to it is a good way to start. We also encourage Malaysians to live a modest lifestyle and stay away from borrowing too much (beyond their means). Find out what is debt service ratio and check their credit score regularly. Another critical point is to avoid money game or illegal investment schemes (that promises a high return in short period of time). This is one of the major factors that got many millennials in debt problems today.
Remember to stay tuned to our blog for the latest insights and news on personal finance! If you have more information to share or question to ask, please drop them in the comment box below.