RMFLS 2021 Uncovers Financial Habits in a Pandemic Economy

The fourth annual RinggitPlus Malaysian Financial Literacy Survey (RMFLS) captured a pivotal moment in the nation's financial history. The survey, conducted during a year of intense economic strain from the COVID-19 pandemic, provides a candid look at how Malaysians were truly faring with their money. The findings reveal a country grappling with financial hardship but also undergoing a profound and necessary shift in financial awareness and resilience.

Despite a worrying decline in savings, the report highlights a critical silver lining: a newfound appreciation for financial resilience. More Malaysians are now actively building emergency funds, with 63% citing this as the top reason for saving. This marks a significant shift in mindset as Malaysians have been forced to confront financial realities brought on by the pandemic, with only 15% believing that EPF savings alone are enough for retirement (a significant drop from 30% in 2020).

Key Summary Findings

Here are the most important takeaways from the RMFLS 2021 at a glance:

• A Financial Wake-Up Call: The economic impact of the pandemic was clear, with 21% of respondents unable to save any money each month, living paycheck to paycheck.
• The Rise of Digital Finance: The use of e-wallets continued its healthy growth, with 89% of Malaysians using at least one e-wallet and more people using multiple apps compared to the previous year.
• Retirement Planning Gaps: Despite a heightened awareness that EPF savings are not enough for retirement, a significant 45% of those who feel this way have not yet started planning.
• Youth Financial Habits: While digitally savvy and more open to investing in alternative assets like cryptocurrencies, millennials show worse personal finance habits than the national average, with 57% unable to survive for more than three months on savings alone.
• Building a Safety Net: The pandemic was a strong catalyst for change. Building an emergency fund became the top reason for saving money, cited by 63% of respondents.
• A Cautious Approach to Credit: There was a considerable decline in credit card ownership, with 45% of Malaysians not owning a credit card.
• Investments and Property: Among those who are investing, Unit Trusts (42%) are the most popular product. In a post-COVID world, 45% of consumers would still consider buying a property, with investment being the key motivation for 33% of respondents.

Methodology

The findings of the RMFLS 2021 were based on a stratified sampling of 1,518 respondents from a total of 3,033 who participated in the nationwide online survey. The survey was conducted in English, Bahasa Malaysia, and Chinese, covering all regions to ensure a statistically accurate representation.

2021 Impact on Savings and Spending

The economic fallout from the pandemic made saving an uphill battle for many. The survey revealed a clear impact on financial habits, with 21% of respondents not saving at all, a slight increase from 19% in 2020. This indicates a growing segment of the population living paycheck to paycheck. 

Similarly, the number of people who could save RM1,500 or more each month dropped to 15%, a notable reduction from 20% in the previous year. This financial strain is further evidenced by the fact that 21% of Malaysians either took or were planning to apply for a loan moratorium.

A telling 44% of Malaysians spend exactly what they earn or more each month. This figure is virtually unchanged from 2020, but it's a significant increase from the 43% reported in 2019, before the pandemic hit. This suggests that while habits didn't worsen drastically in 2021, they were still far from ideal. Despite these challenges, a majority of respondents (76%) reported that they feel in control of their money, suggesting a disconnect between perceived and actual financial health.

Payments, Investments, and Knowledge Gaps

The survey confirms Malaysia's full embrace of digital finance. E-wallet adoption remained strong, with 89% of consumers using at least one e-wallet. The number of users with multiple e-wallets also increased, suggesting a growing comfort with contactless payments. A striking 36% of respondents reported using three or more e-wallet apps, up from 27% in 2020, demonstrating a clear trend toward multi-platform usage.

Among the various e-wallets available, the survey found that Touch ‘n Go e-wallet is the most used, with 35% of respondents saying it's the one they use most often. This data shows a clear preference for established players in the digital payments space.

Digital savviness extends to investments, with a noticeable openness towards alternative assets. Almost half (49%) of respondents who are not currently invested in cryptocurrencies are willing or open to doing so. Among those who have already invested, Bitcoin (72%) remains the most popular cryptocurrency, followed by Ether (55%) and Ripple (50%).

Despite this sophistication, we found a surprising knowledge gap. A staggering 52% of Malaysians are either unaware of what a credit score is or know the term but do not understand its purpose. This is a concerning finding given the increasing use of credit and loans, and it could lead to poor financial decisions.

The lack of knowledge is particularly striking given that a majority of Malaysians already understand the tangible benefits of a good credit score. For example, 74% know it can lead to a higher chance of approval for credit cards and loans, and 60% believe it can result in faster approvals. This indicates a disconnect between understanding the benefits and a fundamental knowledge of how to achieve them.

Navigating Retirement

The RMFLS 2021 highlights a critical gap between awareness and action when it comes to long-term financial planning. While 59% of respondents believe their EPF savings are insufficient for retirement, almost half of them (45%) have not yet taken any steps to plan for it. This is a concerning finding, as it is unchanged from the previous year, suggesting a persistent lack of proactivity despite the heightened awareness.

When it comes to insurance, a significant portion of Malaysians remain financially vulnerable. The survey found that while 65% of consumers read the Product Disclosure Sheet, only 31% fully understand its content. This points to a need for more accessible and clear information about financial products, as simply providing the documents is not enough. This disconnect between being handed a document and truly understanding its implications is a major hurdle in ensuring Malaysians are adequately protected.

Malaysian’s Property Aspirations

In a post-COVID environment, the property market showed a mix of caution and enduring interest. A significant 45% of consumers would still consider buying a property, with a primary motivation of investment (33%) for those planning a purchase within the next five years. The cautious enthusiasm is also reflected in the fact that the second most common motivation is to be a first-time homebuyer to enjoy rebates (32%).

This enthusiasm, however, is driven by very specific criteria. The most influential factors are Location, Connectivity, and Environment (80%), followed closely by Selling Price (69%) and Unit Size, Layout, and Design (61%). These findings suggest that while property remains a key financial aspiration, buyers are highly selective and prioritize long-term value and livability.

The Takeaways for EPF and Loan Moratorium

The survey provides a stark look at how Malaysians were using emergency financial relief measures. Of those who have applied or were planning to apply for a loan moratorium, 29% intended to use the cash to pay off other debts, 28% for investment, and 27% to cover lost income and household spending.

This demonstrates that for many, these measures were not for discretionary spending but were critical for managing existing financial commitments and making ends meet. Our data also showed that a significant portion of those who withdrew their EPF savings during the pandemic (51%) did so for emergency funds, with 44% using it for investment and 41% to pay bills and other commitments. The fact that the top three reasons are related to managing financial commitments and investments highlights that these withdrawals were used for essential, rather than frivolous, purposes.

Insights into Malaysian Youth and Millennials

The survey revealed a mixed bag of financial habits for youths and millennials (aged 35 and below). On one hand, they are highly digitally savvy, with 92% owning at least one e-wallet and 38% using three or more. This group is also more open to alternative investments, with 63% willing to invest in cryptocurrencies, a figure far above the national average of 51%.

Despite being digitally comfortable, the youth demographic's savings habits are more concerning than the general population. The reasons for saving, as shown in the table below, still align with traditional goals like home ownership and retirement, but their financial discipline appears to be lagging.

A significant finding is that this group's financial situation is more precarious than the national average. Worryingly, 57% of young Malaysians cannot survive for more than three months on savings alone, and 45% spend exactly what they earn or more. This highlights a critical need for targeted financial education to bridge the gap between their digital comfort and their foundational financial management skills.

Silver Linings: A Glimmer of Hope

The RMFLS 2021 report, while highlighting widespread financial difficulties, also uncovered significant bright spots that point toward a more financially resilient future for Malaysians. The pandemic served as a powerful wake-up call, fundamentally changing how people view financial security.

A major shift in mindset is the renewed focus on creating a safety net. Building an emergency fund became the top reason for saving, with a remarkable 63% of respondents prioritizing this goal. This figure is a huge leap from the 27% in the 2020 survey who had only just realized the importance of such a fund, showing that awareness is now translating into action.

Looking ahead, Malaysians remain cautiously optimistic about their financial futures. Saving for retirement (49%) and travel (40%) were also among the top reasons for saving money, indicating a gradual return to pre-pandemic aspirations. The survey also found that almost half of the respondents (49%) who aren't currently invested in cryptocurrencies are open to it, reflecting an evolving and more modern view on building wealth through alternative assets.

Download The RMFLS 2021 Report

Dive deeper into the data. For a comprehensive look at the findings, detailed methodology, and expert analysis, download the Full RMFLS 2021 Report (PDF).

Final Thoughts and Past Reports

The RMFLS 2024 reveals an encouraging story of resilience and recovery among Malaysians. While challenges in digital security and retirement preparedness remain, the positive shifts in financial habits are a promising sign for the future.

Curious to see how things have changed? Explore our previous reports to see the trends over the years.

• Read the RMFLS 2020 Report
• Read the RMFLS 2019 Report

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