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MALAYSIANS are too busy earning a living, doing their work very well, spending most of their time researching and improving on their work that they have no conscious management of their finances, says Credit Counselling and Debt Management Agency (AKPK) CEO Koid Swee Lian.
These days, after people graduate and start working, they want to buy a car straight away, and banks are also quick to offer them a credit card.
Koid says students should bear in mind that the minute they graduate, most of them would have a student loan to pay off.
“So ask yourself Do you really need that car' and Can you afford it?' We are not saying don't buy a car but maybe don't buy it until you are financially more stable. It shouldn't be your priority. Try taking public transport for a while.
“Or if you buy a car, buy a small one or a second-hand one and be mindful of usage because petrol costs money. Don't spin it around the city like there is no tomorrow,” she advises.
She has also noticed that when young couples get married these days, they want their house to be fully furnished, and so they buy all their household furniture and utensils on credit.
And if they can't pay in full at the end of the month, that would incur interest payment and finance charges, which Koid says are “unnecessary additional expenses.”
“Youngsters buy on credit. Maybe it's peer pressure but they will buy something like six pairs of shoes in one go with their credit card which will take up their salary for a month. What they should be doing is spend within or below their means and be comforted (by the fact) that they are financially stable.”
Koid also believes parents have a role to play in educating their children to appreciate the value of money.
“Youngsters tend to be self-centred. Parents have a role to play to manage their children's expectations. Parents are so used to financing the children that they don't know when to stop and the children are so used to taking money from their parents that they too don't know when to stop,” she says.
Parents have to look after the welfare of all their children and not just one, and they also have to save up for their own retirement, she adds.
AKPK, which Koid heads, is a Bank Negara subsidiary that offers service and advice for free to people on how to manage their finances and debts. It also has a debt management programme to assist financially distressed consumers.