Thursday, February 19, 2009

Survey: Malaysians not saving enough

KUALA LUMPUR: Malaysians are not saving enough and they are not prepared to face a financial meltdown should they lose their job or be retrenched.

According to the latest findings from Citi’s Financial Quotient (Fin-Q) 2008 survey, only two in five (39%) Malaysians actually save and less than one-in-three (28%) make and stick to a monthly budget.

Citibank Bhd head of segment and marketing, retail bank Timothy Johnson said the results from Malaysia show an average Fin-Q score of 51 points out of a possible 100 points, with 54% of Malaysians scoring 50 points and below.

A majority of Malaysians reported in the survey saved up to 20% of their monthly income - excluding the 11% in the Employees’ Provident Fund - and 12% said they do not save anything at all.

In the event of a job loss but with continued regular expenses, one-in-five indicated their savings would last for only four weeks.

On average, Malaysians reported having 11 weeks of savings in reserve,

“Against the backdrop of the current challenging economic environment, these findings are quite worrying,” Johnson said in a briefing yesterday.

He said although the Fin-Q scores in seven of the 11 subject areas have shown improvement, it was not.

“We believe that a lot more needs to be done to ensure Malaysians are truly financially savvy as the detailed survey results revealed that there is still room for improvement,” he added.

The Citi Fin-Q survey comprised 500 online interviews of 40 questions each, rolled out to determine the level of understanding among Malaysians about their personal finances and financial practices. The survey was conducted from Oct 15 -30.

Johnson said more Malaysians were taking an interest in their finances and the recent economic crisis had made saving for emergencies an important element for them.

According to the survey, 56% are somewhat better off now than they were a year ago. Nevertheless, 37% were worried about their financial future. While 86% of Malaysians attempt to follow a budget, less than one-in-three (28) actually stick to the budget.

The Fin-Q also revealed that 30% Malaysians indicated they would “know exactly” and 60% have a “good idea” what to do if they were given six months salary to invest. There was also a 6% increase in the number of Malaysians who have a formal retirement plan and 56% are confident or somewhat confident that their savings will lead to a comfortable life in retirement.

Asked how much would be needed for retirement, Johnson said it was very subjective. He said the answer required thorough thinking and planing as the amount of money you need in retirement had a direct correlation to the style of living you wish to have.

“If you want to retire in Bahamas, you will need a bigger amount compared to living in a house in suburban area,” he said, adding that to gauge the figure, one should look at the current expenses and estimate how they might at retirement.

Johnson also pointed out a fascinating finding in the survey. He said 35% Malaysians believed that money can buy happiness.

He said the Fin-Q was a snapshot of our current level of financial literacy and what we all need to do to better control our finances. Malaysians needed to be disciplined and have good financial management to ensure enough savings, he said.

“I believe Malaysians should provide additional focus on developing and enhancing their level of financial literacy, more so given the current challenging environment.”

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