Are You Saving Enough?

Malaysians not saving enough, survey reveals
by Hemananthani Sivanandam, The Sun

KUALA LUMPUR: Only two in five Malaysians actually save, fewer than one in three plan and stick to a monthly budget, and 12% do not save anything in an average month.

These were some of the findings in Citi’s Financial Quotient (Fin-Q) 2008 survey, conducted from Oct 15 to 30 and involving 500 online interviews. Each of the respondents was asked 40 questions to determine the level of understanding among Malaysians about their personal finance and financial practices.

“We believe a lot more needs to be done to ensure Malaysians are truly fi nancially savvy as the detailed survey results revealed there is room for improvement. There needs to be more discipline and prioritisation,” Timothy Johnson, Citibank Berhad’s head of segment and marketing, retail bank, told a media briefing yesterday.

The survey also found thathe majority of the respondents (62%) reported that they save up to 20% of their monthly income (not including the 11% contribution to the EPF). Asked where their monthly income went, 38% reported that less than 10% of their monthly income was spent
on non-essentials.

In terms of investing habits, about 90% of the respondents indicated they “know exactly” or “had a good idea” of what they would do if given six months salary to invest. However, only 28% reported they had a formal retirement plan developed in consultation with a financial professional. A startling 72% did not have a formal plan.

“Malaysians need to practise what their mind is telling them. They need to realise the need to start saving for their retirement regardless of their age,” said Johnson.

The survey showed that those aged 18 to 29 were the majority who paid off their full outstanding credit card balance on a monthly basis. “It’s a myth that the younger generation are spendthrift. Financial literacy among the younger generation is more apparent these days,” he said.

Johnson said financial literacy was a lifelong process. He believed Malaysians should talk to financial planners to help them become financially savvy. “The perception that financial planners are only for the rich is wrong. They are accessible to everyone,” he said.

Four “personalities” were revealed in the survey – the 30-something strugglers; the single and secure; the settled and successful; and the “blur budgeter”.

Among the 30-something strugglers (aged 30-39), 62% were not satisfied with their current quality of life. The single and secure group showed that 77% were satisfied with their quality of life. The settled and successful showed that about 80% were satisfied with their quality of life. And the “blur budgeter” group revealed that 49% were not satisfied with their quality of life.

Interestingly, the respondents for the second and third group had a higher percentage of females compared to males, while the fourth had the highest percentage of self-employed respondents (24%).