Young, broke and in debt: The price of keeping up
City-dwelling Gen Zs have now found themselves at a financial crossroads
L.R TURNER08 Jan 2025 09:00am
Photo for illustrative purposes only. - Canva
The perpetual rise in the cost of living, stagnant wages and the captivating yet risky Buy Now, Pay Later (BNPL) schemes are creating a perfect storm.
Add the relentless influence of social media into the mix, and it's no wonder young Malaysians are feeling the financial squeeze.
According to the Credit Counselling and Debt Management Agency (AKPK), as of October 2024, 53,000 individuals under 30 are grappling with a staggering RM1.9 billion in debt.
To put this in perspective, that's enough to purchase 36,190 Perodua Myvis or 20,540 Honda City cars—a favorite among Gen Z—or even 3,800 two-bedroom apartments on the outskirts of Klang Valley.
Imagine this: when Tunku Abdul Rahman proclaimed “Merdeka!” in 1957, the crowd at Stadium Merdeka was about 20,000.
Double that number, add another 13,000, and you've got the tally of Gen Zs in debt today.
Unlike the jubilant cries of independence, these individuals are trapped in financial shackles.
Despite Malaysia's vision for equitable wealth distribution, wage stagnation continues to be a thorny issue.
A study by the Singapore-based ISEAS – Yusof Ishak Institute revealed that while productivity has increased, wage growth has not kept pace.
Echoing this sentiment, Picodi Malaysia’s “Minimum Wage 2024” study ranked Malaysia 59th out of 67 nations, with minimum wage earners stuck at a monthly income of RM1,323—unchanged since January 2023.
The World Bank further highlighted that Malaysia has one of the lowest household savings rates globally.
Nearly 70 per cent of lower-income households reported inadequate resources to meet basic needs, and over 60 per cent have no savings, made worse by rising food and energy prices.
Faced with stagnant wages and social media pressures, many Gen Zs turn to BNPL as a quick fix.
While this option allows them to snag desired items now, it often leads to deeper debt due to its ease and lack of stringent credit checks.
A multi-pronged approach is important to empower Gen Z and break this cycle.
Employers must ensure wage growth aligns with productivity to offer fair compensation.
Policymakers should craft policies that promote equitable wage distribution and expand economic opportunities.
Crucially, financial literacy must be prioritised.
Educational institutions and community programs should equip Gen Z with the knowledge to manage finances wisely, understand financial products, and make informed decisions.
By enhancing financial literacy, young Malaysians can sidestep high-interest debt and impulsive spending, laying the foundation for a secure financial future.
Only then can our young truly experience “Merdeka” in more ways than one.
