What do the millennials of Malaysia do with spare moolah?
Well, a recent study published by Vase.ai showed that most are diligently saving towards three main financial goals: buying a house, starting a family, and going on holidays.
These were the top three reasons for saving money – apart from creating an emergency fund – given by respondents in a survey of 1,525 Malaysians aged 24 to 35.
This was followed by saving for retirement and saving to buy a car or a motorbike.
The respondents comprised 60 per cent Malays, 24 per cent Chinese, and 8 per cent Indians or respondents from other races, Vase.ai said.
The survey found that millennials’ reasons for saving also differed slightly by race. Malay respondents saved mainly to start a family, fund a pilgrimage to Mecca or spend on Hari Raya Haji, and for emergency use.
Chinese and Indian respondents saved mainly to fund their travels, buy a house, and for emergencies.
Most millennials have less than a year’s salary in savings
The vast majority of respondents earned between RM3,000 and RM6,000 (US$313 to $1,434) a month, with most being diploma or degree-holders employed in full-time jobs.
About 80 per cent of those polled saved part of their income, while about 20 per cent did not.
When asked about their financial goals within the next 10 years, respondents’ top two goals were to clear their debts and buy a house.
This was followed by starting their own businesses, creating a savings plan, and travelling the world.
However, these goals might still be out of reach for many.
Three-quarters of respondents who did save regularly had less than half a year’s worth of salary saved up in banks and other sources.
Only six per cent of respondents had total savings worth over a year’s salary.
About half the respondents who had a savings habit said they took on side jobs to reach their financial goals.
The other half said they had downgraded their lifestyle, including spending less on their hobbies, going to the gym, eating out, and socialising.
One third of respondents who did save, said they saved less than 20 per cent of their income every month, while one-quarter said they saved exactly 20 per cent of their income each month.
Bank accounts were the most common savings method, with three-quarters of respondents using bank accounts to save.
The second most popular method was unit trusts, followed by Employees’ Provident Fund contributions, and insurance plans.
The least popular methods were peer-to-peer lending, cooperative banks, and investing in stocks and cryptocurrencies.
As for the those who did not save, about half said their income was just enough to cover their expenses, while one-third said they did not know how to save.
They also cited the rising cost of living and existing loan payments as barriers to saving.