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Financial Literacy Webinar

Recorded Session #1 webinar can be viewed below or by clicking on this link:
https://vimeo.com/571171306

Summary
  1. The webinar entitled #BePrudent: Take Control of Your Finances was held on 26 October 2020. It was the first out of the three webinars organised by BNM as the co-Chair of the Financial Education Network (FEN), in conjunction with the Financial Literacy Month that was held in October 2020. The webinar series aimed to inform, educate and support Malaysians in practicing sound financial management. This session was moderated by Encik Hann Liew, the co-founder of RinggitPlus with esteemed panellists, namely Encik  Azaddin Ngah Tasir, CEO of AKPK, Dato’ Dr. Paul Selvaraj, CEO of FOMCA and opening remarks by YB Tuan Mohd Shahar Abdullah, Deputy MOF II.1. The webinar entitled #BePrudent: Take Control of Your Finances was held on 26 October 2020. It was the first out of the three webinars organised by BNM as the co-Chair of the Financial Education Network (FEN), in conjunction with the Financial Literacy Month that was held in October 2020. The webinar series aimed to inform, educate and support Malaysians in practicing sound financial management. This session was moderated by Encik Hann Liew, the co-founder of RinggitPlus with esteemed panellists, namely Encik  Azaddin Ngah Tasir, CEO of AKPK, Dato’ Dr. Paul Selvaraj, CEO of FOMCA and opening remarks by YB Tuan Mohd Shahar Abdullah, Deputy MOF II.
  2. The panellists shared some statistics on household finances amid the Covid-19 pandemic that has greatly affected financial situation of households and individuals. The pandemic has also highlighted household savings behaviour in Malaysia. It made us realise the importance of preparing for emergencies. Dato’ Paul discussed areas of concerns by FOMCA, such as increasing number of people going into bankruptcy and approaching AKPK for assistance, lack of savings or emergency funds, lack of financial plans for retirement, as well as low literacy rates which lead to poor decision making.
  3. The situation has worsened with the pandemic. FOMCA’s survey revealed that 31% of consumers do not take control of their finances. Meanwhile, 47% of the survey respondents have excessive debts i.e. the majority of their salary is utilised to service and repay debts. Azaddin added that AKPK is utilising this critical time to ramp-up on financial education (FE) efforts, as people are generally more aware on the importance of having emergency funds and realising that they can actually live with less in the new normal.
  4. The discussion highlighted that it is important to instil awareness on the availability of FE from various resources to help consumers to be truly informed, particularly when dealing with financial products. Hann suggested RinggitPlus as one of the sources for FE. Azaddin added that FE intervention can also nudge consumers towards empowerment and the behavioural changes needed. For example, the Ministry of Education requires teachers to undertake online FE modules. AKPK also makes it compulsory for its employees to go through the annual financial assessment to ensure good financial management.
  5. AKPK promotes the adoption of 4As concepts in prudent financial management, namely Acknowledge, Analyse, Action and AKPK. In doing so, we have to acknowledge that personal finances are our own responsibility. Therefore, we should analyse our budget and spending, and to take corrective actions, if required. Finally, it is important to seek assistance, including from AKPK – to discuss, get advice and possibly enrol in its Debt Management Programmes, if necessary. Affected customers should approach their banks or AKPK if they face problems to resume payments after the end of moratorium period on 30 September 2020. In general, consumers are afraid to seek assistance from AKPK thinking that it will hinder them from taking up new loans. However, such assistance from AKPK is important to improve borrowers’ credit situations and ultimately help them to be in a stronger financial footing.
  6. While acknowledging that spending is important to stimulate the economy, the panel cautioned Malaysians to spend within their means. Consumers should maintain enough savings of between three (3) to six (6) months of expenses for emergency. Big ticket purchases should be weighed carefully depending on affordability and lifestyle, without sacrificing savings. Consumers should also take into account yearly committed expenses such as car insurance and maintenance costs.

Read more: Additional Q&As for Financial Literacy Webinar Session 1

Key Tips:

  • Important to be prepared for unexpected events such as rainy day savings, financial plans for retirement and be financially savvy.
  • Adopt 4A concept to build stronger financial situation – Acknowledge, Analyse, Action and AKPK.
  • Assistance from banks and AKPK are always available even after the moratorium ends.

Recorded Session #2 webinar can be viewed below or by clicking on this link:
https://vimeo.com/571171297

Summary
  1. The webinar titled #Hann&Suraya: Personal Finance ChitChat which was held on 28 October 2020, was the second session of three webinars organised by Bank Negara Malaysia (BNM) as an initiative of the Financial Education Network (FEN), in conjunction with the Financial Literacy Month held in October 2020. The webinar aimed to inform, educate and support Malaysians in practicing sound financial management. The speakers were two personal financial influencers – Encik Hann Liew, co-founder of RinggitPlus and Cik Suraya Zainudin, founder of RinggitOhRinggit.com.The webinar titled #Hann&Suraya: Personal Finance ChitChat which was held on 28 October 2020, was the second session of three webinars organised by Bank Negara Malaysia (BNM) as an initiative of the Financial Education Network (FEN), in conjunction with the Financial Literacy Month held in October 2020. The webinar aimed to inform, educate and support Malaysians in practicing sound financial management. The speakers were two personal financial influencers – Encik Hann Liew, co-founder of RinggitPlus and Cik Suraya Zainudin, founder of RinggitOhRinggit.com.
  2. The speakers discussed several myths surrounding personal finances among Malaysian consumers, namely financial management practices are only for the rich and dependent on one’s environment. The speakers debunked these myths and stressed that financial management is inclusive for everyone regardless of socioeconomic status. Prudent financial management can also be practised by anyone, with help from others if necessary. Personal mindset and self-determination are key to prudent financial management.
  3. The speakers elucidated the prevailing economic crises due to Covid-19, and its implications on the financial situation of many Malaysians. The situation underscored the importance of adopting sound financial management regardless of income and environment. Hann and Suraya highlighted the importance of saving and investing, which enables people to be more resilient moving forward. Several tips of managing finances were also shared, including prioritising savings before incurring any expenses on payday. Hann reiterated the importance of taking into account the yearly expenses such as car insurance when doing monthly budgeting. In addition, they also mentioned the importance of having insurance for younger generation as it provides safety net during unforeseen circumstances. In terms of spending, Hann and Suraya highlighted their observations that people are starting to realise that they can live with less in the current pandemic situation, whilst setting more money aside. One of the tips shared to manage spending is to avoid temptations by unsubscribing to newsletters or notifications from online shopping websites. They also advised the practice of delayed gratification i.e. taking the time to think before actually spending in order to differentiate between needs and wants.
  4. The speakers also discussed debt management strategy, including the snowball method recommended by Dave Ramsey to manage debt repayment i.e. prioritising settlement for the smallest amount of debt. Hann suggested debt consolidation to lower cost of borrowing, especially with multiple credit card debts. The decision to get into debt, particularly mortgage, should be made based on personal objective and not based on peer pressure as it is a long-term commitment. For more serious debt problems e.g. due to gambling addiction, it is very important that the person gets proper help to overcome the addiction through support groups and speaking to a professional.
  5. In conclusion, personal finance and money management issues, such as budgeting, saving, investing and tracking of expenditure, should be discussed and planned with spouse and family to avoid problems in the future.

Read more: Additional Q&As for Financial Literacy Webinar Session 2

Additional Q&As for Financial Literacy Webinar Session 2 (by RinggitPlus)

Key Tips:

  • Everyone can practise prudent financial management, for instance by prioritising savings and practising delayed gratification.
  • Strategies to manage debt and lower cost of borrowing include snowball and debt consolidation method.
  • Discuss and plan personal finance and money management issues with spouse and family.

Recorded Session #3 webinar can be viewed below or by clicking on this link:
https://vimeo.com/571171298

Summary
  1. The webinar titled #YOLO But Your Cover is Low – Insurance & Takaful for Youth was the third and final webinar organised by Bank Negara Malaysia (BNM) as an initiative of the Financial Education Network (FEN), in conjunction with the Financial Literacy Month held in October 2020. The webinar aimed to inform, educate and support Malaysians in practicing sound financial management. The panellists were Encik Rangam Bir, Vice President, Life Insurance Association of Malaysia (LIAM), Encik Elmie Aman Najas, Deputy Chairman, Malaysian Takaful Association (MTA) and Puan Alina Amir, co-founder of Arus Academy. The session was moderated by Encik Hann Liew, co-founder of RinggitPlus, and mainly focused on the importance of having insurance and takaful protection among youths in Malaysia.The webinar titled #YOLO But Your Cover is Low – Insurance & Takaful for Youth was the third and final webinar organised by Bank Negara Malaysia (BNM) as an initiative of the Financial Education Network (FEN), in conjunction with the Financial Literacy Month held in October 2020. The webinar aimed to inform, educate and support Malaysians in practicing sound financial management. The panellists were Encik Rangam Bir, Vice President, Life Insurance Association of Malaysia (LIAM), Encik Elmie Aman Najas, Deputy Chairman, Malaysian Takaful Association (MTA) and Puan Alina Amir, co-founder of Arus Academy. The session was moderated by Encik Hann Liew, co-founder of RinggitPlus, and mainly focused on the importance of having insurance and takaful protection among youths in Malaysia.
  2. The Malaysian Statistics Department data revealed that there are about 14.8 million youth in Malaysia, representing 47% of the population. The average wage of fresh graduates is about RM2,300, and is lower than the living wage in Kuala Lumpur (RM2,700). These figures, coupled with factors such as inflation and protection gap, signified the importance of retirement saving and strong financial planning with income protection element, particularly among youth which forms almost half of the population. However, awareness among youths on the importance of having insurance or takaful is still poor.
  3. Taking out insurance/takaful at young age has several benefits, in addition to the obvious protection against insured perils. Firstly, insurance premiums will always be cheaper for the youths due to age factor at the point of purchase. Secondly, at young age, good health will also translate into lower insurance costs due to lower chances of having an illness like diabetes or heart disease. Therefore, insurance/takaful should be a fundamental component in financial planning for youths. 
  4. Unfortunately, most youths do not realise the importance of insurance/takaful protection. This is especially so among those who are already managing their finances well, as well as the B40. The panellists noted that lack of exposure and understanding is the major barrier for youth from taking out insurance/takaful. This trend is really concerning, as insurance/takaful coverage is a form of risk management and in some cases, as income replacement for youth in building their wealth. Insurance/takaful could provide protection against falling into a personal financial crisis due to any unfortunate incidence, and its absence may derail long-term wealth accumulation and/or cause people to fall into poverty.
  5. Elmie highlighted the myth that insurance/takaful is a waste of money if no claim is made. The panellists stressed that premium/contribution paid is for protection.  Rangam added that 90% of claims made are paid to the policy holders. Alina shared that financial education on insurance/takaful is needed to allow for better understanding of its concept and value. It should be started from young and can be effectively executed through experiential learning. In addition, youths themselves should also play their part to build advocacy around insurance/takaful with their peers.
  6. Decision to choose the type of insurance/takaful should be based on the individual’s personal situation, including objectives, dependents, level of risks and protection required. There are many resources to assist decision making on insurance/takaful, including online resources, financial planners, agents, insurance companies or takaful operators. Rangam advised youths to take up insurance/takaful early, prioritising on protection such as death, critical illnesses and personal accident. As one progresses to different life stages, one can expand the coverage into other aspects such as savings, retirement or education for children. As the general rule of thumb, financial planners recommend coverage of between 6-10 times of annual income, depending on risk profiles and existing coverage such as employee benefits. Insurance/takaful are also available to differently abled member of the society, subject to the underwriting process.
  7. Budget allocation is also an important factor in deciding on insurance/takaful coverage. The panellists agreed that youths should not overspend on insurance/takaful to avoid policy lapsing due to affordability issues and failure to meet premium payments. As a rule of thumb, the premium/contribution should be between 10 to 15 percent, and up to a maximum of 30 percent of income. However, as a starter, the industry together with BNM have introduced Perlindungan Tenang, as an affordable insurance and takaful option. The premiums can be as low as RM5 monthly . There are also many providers offering Perlindungan Tenang, making it very accessible and easy to purchase. Youths can approach any of the insurance companies or takaful operators for further information.
  8. Finally, insurance companies and takaful operators are open to discuss available options such as reduction in coverage, should a policy holder or takaful certificate holder faces difficulties in meeting the commitment, especially during the pandemic period. This is important so that the protection plan is not terminated or lapsed.

Key Tips:

  • Insurance/takaful protection is an integral part of personal financial risk management.
  • Purchase insurance/takaful at young age, prioritise on getting protection plan first and expand the coverage based on personal situation.
  • Perlindungan Tenang is an affordable insurance/takaful option.
  • Discuss with your insurance companies/takaful operators should you face difficulties to meet premium/contribution commitment.