A financial coach has identified Malaysian lack motivation as the biggest challenge for Malaysians in adopting a habit of saving.

Carol Yip said such a habit needed to be cultivated from a young age.

“To get a person to spend less than what he or she is earning is tough. They really need to push themselves to do that,” she said.

Yip was responding to Bank Negara Malaysia (BNM) governor Muhammad Ibrahim, who said on Friday that 75% of Malaysians were unable to fork out even RM1,000 for emergencies.

Ibrahim said many lacked the skills to manage their money and could not make wise spending decisions.

Yip said if people did not have the discipline to save their money for use during critical times, they should “force” themselves to deduct a specific amount from their salaries every month to put in an “emergency” bank account.

Yip, who is also CEO of Aged Care Group and specialises in personal financial education and sustainable retirement, said this would be “forced savings” for a rainy day.

She also attributed the tendency to splurge to credit card spending and lifestyle influences.

“It is no surprise that credit card spending can exceed the person’s financial capability to settle the dues every month.”

Last year, the government said there were 3.6 million main credit card holders, with the outstanding balance on credit cards at RM36.9 billion as of June 2017.

It was also reported that 294,000 people were involved in bankruptcy cases because they could not settle their car, house, personal or credit card loans. Some of them were guarantors for those who had defaulted on payments.

Financial planner Wilfred Lim said the lack of a savings habit could also be seen in other countries.

“They do not really know the purpose of an ’emergency fund’.

“Besides that, low income and high cost of living make people spend more.”

Lim said ideally, people should set aside at least six months’ worth of expenses in an emergency fund account.-FMT

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