IT should come as no surprise that the number of young bankrupts under 25 is increasing. Two years ago, a study by the Consumer Research and Resource Centre revealed that 47 per cent of young Malaysians had consumer debt of at least 30 per cent of their gross monthly income. Half of all credit card bankrupts are under 30. Last year, an average of 61 Malaysians went bankrupt every day. So, is it any wonder that this dreadful trend is trickling down to the young? Young people are like old people; they want things, and they want it now. And, the world makes it easy for them to get what they want by giving them access to easy credit, high-margin car and housing loans, and hire-purchase schemes. Should such things even be given to the young? Which evil, irresponsible party is entrapping our young in this life of debt?
If society is wringing its hands at the thought of young people becoming economic lepers, it really should look at things from the proper perspective. Financial wisdom is not determined by age, and neither is financial ruin. Give easy credit access to the old and the young, and both age groups are equally capable of either running riot or being responsible with it. There are many young people who are responsible with their money and can put away substantial savings, even though they don’t earn much. There are also many old people who can’t manage to pay for health insurance, even though they make a lot. A society that is surprised at the number of young bankrupts, as opposed to that of old bankrupts, makes the assumption that bad financial habits are learned at an older age, when there is more disposable income. But, the fact is that financial habits and sense are formed at a young age. Most children have disposable income in the form of pocket money, from which they can learn about saving and spending. The ones to look out for are those who always come home with empty pockets or who always seem to borrow money from classmates. These habits are followed through into adulthood, with graver consequences. Bad habits don’t get better as you get older, they get worse. The paucity of sufficient savings in the Employees Provident Fund, even if the withdrawal age were to be increased to 60, is leading many to retirement disaster. And, if not for that compulsory saving, many would have nothing to fall back on at the end of their working lives.
If the young have not been brought up in a culture of saving and taught to appreciate the value of money, it is hard to convince them that they need to save for old age, and it becomes harder to have that conversation late in the day. We like to think that we can protect our young from the pains of life, but we are going about it the wrong way. Not talking about the birds and the bees won’t make children virtuous; it will just open them up to sexually transmitted diseases. Not talking about money when children are young won’t insulate them from adult worries; it will just put them on the sure path of experiencing those worries for themselves.