A TOTAL of 100,610 Malaysians were declared bankrupt between 2013 and 2017. Sixty per cent were 18 to 44 years old.
According to a survey by the Credit Counselling and Debt Management Agency last year, one out of three Malaysians is not satisfied with their financial knowledge.
Being young and carefree, students always face temptations to spend lavishly while studying in university.
This is compounded by marketing tactics aimed at younger people to get them to part with money than they have not learned how to value or earn.
Therefore, it is imperative for them to learn how to control their spending habit with proper financial know-how.
To encourage youths to be early adopters of good financial management, CIMB Foundation recently launched the Be$MART app, a user-friendly digital financial planner designed specifically for them.
The app complements CIMB’s Be$MART financial literacy programme for university students, which had benefited 15,000 students since 2016.
Among them were Universiti Kebangsaan Malaysia’s (UKM) Faculty of Economics and Management students Ikmal Syaheed Abdul Aziz, 25, Kamaleswari Selvaraj, 21 and Rina Abdul Manan, 23.
A self-proclaimed foodie, Ikmal said his eating habits caused him to suffer financially each month.
“Before this, I didn't pay much attention to my cash flow. I used to eat five meals daily costing between RM40 and RM50 in total.”
For Kamaleswari, she worked part-time after completing her Sijil Tinggi Persekolahan Malaysia with the intention of financing her degree studies.
However, she ended up blowing her savings on travelling.
“Coming from a middle-class family, I dreamed of travelling the world. I used my salary to fund my trip to India. There, I bought gifts for my friends, which emptied my savings.”
For Rina, her shopping habits were the cause of her financial woes.
“Spending too much money on clothes and make-up is a major financial issue for me. I never tracked my expenses, so I’d go shopping every week, spending around RM500 a month.”
“I wouldn’t have enough money for food and education by the end of the semester.”
Ikmal said the Be$MART programme had taught him to manage his finances and debts.
“I have cut down on my meals and successfully saved RM300 a month, excluding the RM200 I allocated for my health insurance.
“The workshop taught me about the snowball method. It is a debt reduction strategy, where we pay off our debts from the smallest amount to the largest.”
Rina said she had started investing for a better future.
“At that time, I just received my student loan allowance. So, I took out RM500 to invest in Amanah Saham Bumiputera.”
She said the programme also taught students to be vigilant against scams.
“I was told that investments that promise an unusual percentage of returns could be a scam. Having learnt to invest safely, I now have a clear set of goals.”
Kamaleswari said she learnt that opening multiple bank accounts was a useful tactic.
“I have different accounts according to my priorities, namely education, travel and expenses to manage my student loans and savings better.”
She added that the Be$MART app had acted as her virtual “financial adviser”.
“It has a calendar feature where we can set the deadline for our savings. If I want to travel at a particular date, it will show me how much money I need to set aside daily to meet the target. It will notify me whenever I exceed my budget.
“Having the right attitude is important. I must discipline myself to follow the app’s advice.”
For Rina, the app had changed the way she planned a budget.
“In university, I don’t have my family members around to remind me about financial management. The app will notify me of any transaction made, so I will be more encouraged to stick to my budget.”
CIMB Foundation chief executive officer Datuk Hamidah Naziadin said the app supported the National Strategy for Financial Literacy in enabling Malaysians to make informed financial decisions.
“It is important to empower youths to take charge of their financial health. The Be$MART app was designed to provide financial information and tips.
“Through our proprietary Be$MART syllabus, CIMB Foundation aims to address and mitigate the youth bankruptcy issue.
“As a financial institution, we ride on our existing footprint and infrastructure to reach out to the young people and guide them on financial planning. Students who attended our programme have demonstrated a remarkable 150 per cent increase in their financial knowledge.”
Long-term thinking was crucial, said Hamidah.
“The cause of financial problems boils down to a lack of understanding and planning. For instance, many do not realise that buying a car incurs a lot of hidden costs.
“Hopefully, with the app, effective financial planning will set them up for life.”
She said it was never too early to start saving and investing.
“One dollar saved is more than a dollar earned. We guide youths to make their money grow with wise savings.
“The app is personalised as everyone has different commitments. The goals will depend on each individual’s aspirations, whether to pursue their studies or give back to their families. The beauty of the app is that it teaches you to save money based on your needs.
“We also want students who have taken loans to have the integrity, accountability and ownership to return the money they borrowed,” said Hamidah.
CIMB Foundation recently inked a memorandum of understanding with nine universities to equip their students with financial literacy skills through the Be$MART programme.
The collaboration aims to educate 10,000 students, particularly from the Botttom 40 group by 2021.
Present at the Be$MART mobile app launch at UKM, Bangi, was UKM deputy vice-chancellor Professor Datuk Imran Ho Abdullah.