LAST_UPDATESat, 23 Jun 2018 10am

Below 25 And Bankrupt: An Alarming Issue Among Malaysian Youth

An alarming issue in Malaysia, 579 youth below the age of 25 were declared bankrupt in the first half of this year. Pic: imclawgroup.comAn alarming issue in Malaysia, 579 youth below the age of 25 were declared bankrupt in the first half of this year. Pic:“I wanna be a billionaire, so freaking bad. Buy all of the things I never had. I wanna be on the cover of Forbes magazine, smiling next to Oprah and the Queen.” – Bruno Mars, “Billionaire”

The truth is, everyone dreams of becoming a billionaire and have all the money in the world to spend it like nobody’s business, but once you get a reality check, can you really afford it?

Back in February 2014, Malaysian Digest did a write-up on the rise of bankruptcy among young Malaysians, which took a closer look at the reasons such as failure to repay loans and credit cards debts due to poor financial planning and spending habits.

Recently a News Straits Times report stated that a total of 1,940 youth below 25 years old had been declared bankrupt since 2007 until June this year, but what was more shocking was that 579 out of that total were declared bankrupt in the first six months of 2014, according to a Bernama report.

This represents an increase of 208 individuals from the previous year, with another 2,491 individuals between the ages of 25 to 34 were also declared bankrupt, said Minister in the Prime Minister’s Department Nancy Shukri.

Looking at the numbers, it’s safe to say that young Malaysians are not prepared to deal with the consequences of having financial debts. Being reckless about finances once they are legally considered an adult at age 18 can have serious repercussions by the time they reach their mid-twenties.

Bankruptcy at a young age can be damaging to youth beyond affecting their credit rating.  Stress, family pressure and social expectations can all take its toll psychologically on the affected youth facing bankruptcy.  Besides the usual views from financial planners and credit agencies, perhaps we should also understand this issue from the psychological perspective as the root causes of increasing youth bankruptcy could be found there.

The over-emphasis on materialism also contributes to bankruptcy among youth. Pic: justjemia.blogspot.comThe over-emphasis on materialism also contributes to bankruptcy among youth. Pic: justjemia.blogspot.comWhat’s in the youth’s mindset towards money and materialism?

Associate Professor Dr. Zahari Ishak from University of Malaya (UM) said that bankruptcy among youth can be viewed more from the internal causes, which are the family background and the way the child is being brought up.

“Being a parent nowadays is not easy as parents today will try to accommodate whatever the child needs from the beginning. As the child is growing up, they get used to the comfort zone as all their necessity and needs have been provided for them all along,” said Zahari.

Some youth were given credit cards as a back-up for emergency matters but is often misused by them for other spending.

“Due to reckless spending habits, these youth look at credit cards as an easy way to obtain their desired needs that lead them toward a lavish lifestyle. Some cases are also due to the abuse of alcohol and drugs, while a small number of youth would spend their money towards online gambling,”  

Zahari stated that most youth who had financial problems came from lower to middle income families, who were under pressure living in an urban area. External factors would be due to medical or hospital bills as medical expenses can be quite costly but these factors are considered less of an influence compared to others. 

The over-emphasis on materialism also contributes to bankruptcy among youth as society sees things more on the surface rather than trying to understand the real values. For instance, the pressure to accommodate today’s standard of living.

The culture of savings also seems not to be emphasized during the early years of education in which should have been cultivated more in terms of Mathematical education.

The culture of savings should have been cultivated more during the early chilhood. Pic: savings-earncent.comThe culture of savings should have been cultivated more during the early chilhood. Pic: savings-earncent.comI work for it, so I deserve to spend it, what! 

Growing up in an increasingly materialistic society, it is without doubt that youth today have the mindset of spending their money like kings and queens, because they feel that they deserve to spend it after working hard to earn it. 

“It all goes back to the way they are being brought up, they don’t look at the negativity of overspending at all, which later could lead to difficulties in life and can progress to  borrowing money from unauthorized moneylenders,”  

“Suicide will definitely be the last stage for them to solve their bankruptcy problem when they are under pressure of debts. They are most likely to become ashamed with themselves and have a very low self-esteem and will isolate themselves and will lose motivation to overcome their problems,”

“Proper guidance and counseling are much needed to reach these youth as it is not easy for them to reach out for the help that they need,” explained Zahari.

What do Malaysian youth have to say about this?

Yasmin Lee Abdullah, a Marketing Executive strongly feels that youth nowadays have misplaced priorities.

“Most tend to spend on stuff that they think they can’t live without like branded goods and save not for rainy days or emergency purposes, but more towards travelling,” 

“I see that most of my friends depend on their credit cards to get them out of trouble, but they do not realize the consequences of their actions for the future. In future, they might not be able to take up loans for housing or car and might end up being blacklisted,” said the 24-year-old.

On how she makes sure that she will not fall into bankruptcy, Yasmin said that she plans her finances monthly.

“A book to write down and trace my spending is important in case I go astray. 20 percent of my income will be put in my savings with 33% percent going to my study and car loans,”

“The other 12 percent goes to my medical card and insurance while the remaining 35 percent of my income will be used for my daily spending such as food, petrol etc.” shared Yasmin. 

Online businesswoman Aisha Wong advice youth not take up loans if they can't commit to do repayment. Pic: mDOnline businesswoman Aisha Wong advice youth not take up loans if they can't commit to do repayment. Pic: mD“Honestly, I think most youth does not aware the consequences of having debts, as they are so ‘brave’ enough to keep on loaning money until they went broke!” said Hashim Ahmad, Retail Assistant.

“At a young age, I do feel that we need to stabilize ourselves first before starting to have commitment towards personal, car or housing loans. Take one step at a time when we first started to have our first work upon graduating,” said the 25-year-old.

Online Entrepreneur, Aisha Wong, 28, feels that most youth choose to pursue a luxurious life rather than plan for stability due to peer pressure and the influence of today’s latest trends.

“As a young businesswoman, I’ve always make sure to control my company’s capital and expenses. Having your own company does not mean you can use the money any time that you want,”

“The risk of bankruptcy is also due to poor business planning, so before you want to start your own business, an in-depth research is needed as there are a lot things that need to be done. Don’t take up loans if you don’t have the discipline and commitment to do repayment,” said Aisha. 

Government measures to tackle youth bankruptcy 

Nancy Shukri told Bernama that the government continues to create awareness of the dangers of bankruptcy through the Credit Counseling and Debt Management Agency (AKPK) and Insolvency Department, which has organized many awareness programs to help individuals in managing their finances but found that the majority of youths are not aware of the services provided. 

She urged youths who are reluctant to seek help to brace themselves and seek the help and services that they need in order to curb bankruptcy among youth.

The Minister in the Prime Minister’s Department has taken a serious view of this issue and has been highlighting the problem urgently in the last few months as well as outlining government measures to help curb the problem.

But are the government initiatives enough to check the rising tide of youth bankruptcy? If we look at this problem on the global scale, the increase in young adults facing financial problems corresponds to growing affluence in many societies and countries around the world.

It's always best to save it for rainy days. Pic:'s always best to save it for rainy days. Pic: problem started affecting youth in developed countries almost a decade ago. According to Mintel, a UK based global market research firm, a June 2007 survey found that as many as 3 million UK youths aged between 18 to 34 would consider bankruptcy if their situation forces them to it, noting back then that "many young adults have clearly adopted an easy-debt lifestyle, fuelled by cheap borrowing costs and willing lenders”.

Sounds familiar? This is what Malaysian youth are increasingly facing now.

For those who are still young and have a long way to go, being declared bankrupt below the age of 25 is such a serious matter and it is something that could affect all their hopes and aspirations as they look forward in their still long and undecided future.

As much as we deserve to spend our money on our needs and wants, it is best to save it for a rainy day.

- mD