The Concerning Rise of Youth Debt in Malaysia

In a concerning trend, a recent report from AKPK Malaysia has revealed that over 53,000 youths under the age of 30 in the country are currently drowning in debt. This staggering statistic represents a collective debt worth nearly RM1.9 billion among this young demographic. 

According to the report, the average debt per youth in Malaysia is around RM36,000. This figure is particularly alarming when compared to the median monthly income of RM2,062 for those aged 20-29 years old, as reported by the Department of Statistics Malaysia. 

The high levels of debt among Malaysian youth are a worrying sign, as young people are often just starting out in their careers and financial journeys. Accumulating such significant debt at an early age can have long-lasting consequences, hampering their ability to save, invest, and achieve financial stability and independence. 

Several factors are likely contributing to this troubling situation. The rising cost of living, including expenses like housing, education, and healthcare, may be outpacing the earning power of many young Malaysians. Overreliance on credit cards and personal loans, often used to finance lifestyle expenses or emergencies, can also quickly spiral out of control. 

Data from Bank Negara Malaysia shows that the outstanding balance for credit cards among individuals aged 25-34 years old reached RM20.7 billion as of 2022, a significant increase from RM15.5 billion in 2019. In contrast, earned wage access, which allows employees to access a portion of their earned but unpaid wages, can be a more affordable and sustainable option for young people to manage cash flow needs. 

Earned wage access provides young workers with the ability to withdraw a portion of their earned but unpaid wages, typically for a small fee, without incurring the high-interest rates and fees associated with credit cards. This can help them avoid relying on costly credit options to bridge gaps in their cash flow, thereby preventing the accumulation of debt. 

Additionally, a lack of financial literacy and planning among youth may leave them unprepared to manage their finances effectively. Without a solid understanding of budgeting, debt management, and long-term financial goals, young people can easily find themselves in a debt trap. Improving financial education initiatives can empower Malaysian youth to make informed decisions and develop healthy financial habits. 

The implications of this youth debt crisis extend beyond the individual. High levels of debt can hinder economic growth, as indebted individuals have less disposable income to contribute to consumer spending and investment. It can also perpetuate cycles of financial insecurity, making it increasingly difficult for young Malaysians to achieve their personal and professional aspirations. 

To address this pressing issue, a multifaceted approach is needed. Increased financial education initiatives, targeted debt counseling services, and policies that support young people's economic stability and access to affordable credit options, such as earned wage access, could all play a role in empowering Malaysian youth to take control of their financial futures. 

By addressing the root causes of youth debt and implementing effective strategies to promote financial well-being, Malaysia can help its young people achieve financial security and pave the way for a more prosperous and equitable future.