RMFLS 2022 Reveals Financial Reality For Malaysians

The RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2022, now in its fifth year, provides a powerful and sobering look at the nation's financial health. Based on a survey of 3,144 Malaysians, the findings are a stark reminder that the financial aftershocks of the COVID-19 pandemic, coupled with the rising cost of living, are still being keenly felt. Many are still struggling to find their financial footing, and the data reveals a population at a much higher risk of financial shocks than in any previous year.

Our survey was designed to understand Malaysians' financial behaviors across various income levels and age groups. We focused on three core areas: how Malaysians manage their money, their understanding of financial products, and their preparedness for financial uncertainties.

The 2022 RMFLS concluded that the combined impact of the pandemic and global economic events has led to a significant increase in the number of Malaysians who save less than RM500 per month. This trend is visible across all income ranges, indicating that the rising cost of living affects everyone, not just those in lower-income brackets.

Key Summary Findings

Here's the honest truth about where Malaysians stand in their financial journey, at a glance:

• Savings in Decline: We found a staggering 70% of Malaysians now save less than RM500 a month. That's a huge jump from just 52% in 2021. Meanwhile, the number of people who can save more than RM1,500 has plummeted from 20% in 2020 to a worrying 5% this year.
• Vulnerable to Shocks: A majority of our respondents (63%) told us they could only survive for three months or less if they lost their job. That's a significant spike from 50% last year and a clear sign that the safety net has worn thin.
• Worrying Spending Habits: A widespread "paycheck-to-paycheck" lifestyle is now the norm, with 55% of Malaysians admitting they spend exactly or more than they earn each month.
• Investment Hesitation: More than half of Malaysian adults (52%) haven't even started investing. And for those who have, a cautious mindset prevails: 52% prefer a low-risk approach, often at odds with the kind of returns needed for long-term growth.

Financial Reality: The End of Pandemic Buffers

The survey data makes it painfully obvious that the safety net provided by financial aid in 2020 and 2021 has disappeared. A staggering 70% of respondents now save less than RM500 per month, a dramatic leap from 52% in 2021. This isn't just a small increase; it's the largest year-on-year jump we've seen since the RMFLS began. The number of people saving more than RM1,500 has also dropped by a staggering fourfold, from 20% in 2020 to just 5% in 2022. It's a fundamental shift, showing that even high-income earners are struggling to build a financial cushion.

This decline has left many people incredibly vulnerable. A huge number of our respondents, 63% to be exact, told us they could only survive for three months or less with their savings alone. This is a massive leap from just 50% in 2021. The reason for this is clear: many people's savings have been depleted by rising costs, forcing a widespread "paycheck-to-paycheck" existence.

A startling 55% of Malaysians admit they spend their entire income each month, or even more, leaving them exposed to unexpected financial shocks.

Methodology

The findings in this report are based on a nationwide online survey of 3,144 respondents aged 18 and above. The survey was conducted in English, Bahasa Malaysia, and Chinese, covering all regions to ensure a statistically accurate representation of the Malaysian population.

The Decline in Savings and Spending Habits

The survey data makes it painfully obvious that the financial aid provided in 2020 and 2021 has ended. This has led to a significant decline in financial resilience, with the number of respondents who save less being noticeably higher across all income ranges.

Here is a brief look at the percentage of respondents who managed to save more than RM1,500 per month over the years:

This financial strain isn't just felt by lower-income groups. More high-income earners (earning over RM10,000 monthly) are living paycheck to paycheck this year compared to last (48% vs 40%). To cope, Malaysians are making proactive cuts. The top three actions taken were: eating out less frequently (60%), spending less on leisure activities (57%), and starting to track expenses (55%).

Can Malaysians Retire in Comfort?

Retirement planning remains a major concern. Only 18% of respondents believe their EPF savings will be enough for retirement, a figure that, while marginally higher than in 2021, remains a clear indicator of a widespread concern.

Among those who do not, a worrying 34% have not yet started financially planning for their retirement. This is a significant paradox, especially for the 28% of respondents aged 35 and above who have yet to begin planning. This delay is particularly dangerous as age is a major factor in building retirement savings; the later you start, the harder it is to reach your goals.

Shockingly, 66% of respondents over the age of 21 would still consider applying for more EPF withdrawals if the government were to allow it, indicating a reliance on short-term relief over long-term financial security.

Malaysians are Not Investing Enough

The survey found that 52% of Malaysians above the age of 18 have not started investing. This highlights a clear gap between the importance of investing for long-term goals and actual behavior. Of those who do invest, 52% have a low-risk appetite and prefer capital preservation. This low-risk approach, combined with a preference for medium-term investments (5-10 years), signifies a mismatch between risk appetite and long-term financial goals.

The cautious mindset, while understandable in a turbulent economy, may be preventing people from achieving their financial goals. The top three investment products among Malaysian investors are unit trusts, stocks, and cryptocurrencies.

Financial Red Flags

Beyond savings and investments, other indicators point to widespread financial illiteracy and risk:

• Credit Score Awareness: An alarming 59% of respondents are either unaware of or do not understand what a credit score is. This lack of awareness can hinder their ability to secure future loans for a home or car.
• Credit Card Habits: Only 55% of credit card holders pay their bills in full every month, a significant drop from 70% in previous years. This is a clear symptom of a broader cash-flow issue, indicating that many are using credit to bridge the gap between income and expenses, which could lead to mounting debt.
• Insurance Gap: 4 out of 10 respondents do not have a medical card, and 43% of those with dependents do not have a life insurance policy. This exposes them to the risk of high medical bills and leaves their families vulnerable in the event of an unfortunate incident.

Malaysian’s Savings and Financial Priorities

The report indicates that for Malaysians who can save, building an emergency fund is the highest priority, evidenced by a high average score of 6.14 out of 9. This is a positive sign of awareness regarding the importance of a safety net. However, this is contrasted with the finding that many are struggling to save anything at all.

Here is a more detailed look at the monthly savings of respondents:

This shows a significant gap between financial intention and reality. While Malaysians understand the importance of saving, many are simply unable to put money aside.

The Rise of Digital Payments and Security Concerns

The survey shows a clear shift away from traditional payment methods. QR Payment (66%) and Contactless Cards (64%) are now the most preferred methods, surpassing cash (56%). 

The increasing reliance on digital transactions has also led to a greater awareness of online security, with 56% of respondents wanting to protect their private data from cybercriminals. This indicates that while digital adoption is high, there's a corresponding concern about digital safety.

Use of BNPL (Buy Now, Pay Later) Services

The report reveals that BNPL services are gaining traction, with 41% of Malaysians having used them.

For many, BNPL is not a tool for frivolous spending but rather a way to handle cash flow, with the primary motivation being to manage budgets (19%). This is followed by a desire for promotions or rewards (18%).

Conversely, a significant portion of those who have not used BNPL cite a preference to pay in full upfront (44%) and a fear of missing payments or late fees (40%). The report also highlights that BNPL is most commonly used for purchasing electronics and gadgets (45%).

Here is a breakdown of the BNPL usage motivations:

Download The RMFLS 2022 Report

The RMFLS 2022 reveals a story of heightened financial vulnerability among Malaysians. While the lessons from the past two years are clear, the data suggest that financial habits have not yet recovered. It is our hope that these findings serve as a wake-up call, prompting Malaysians to take the first steps toward improving their financial health and building a more secure future.

• Read the RMFLS 2021 Report
• Read the RMFLS 2020 Report
• Read the RMFLS 2019 Report

RMFLS 2022 Partners

• Amanah Saham Nasional Berhad (ASNB)
• VISA
• OCBC Bank
• Experian
• Atome