Dhivakar Vijayachandran is only 16 but he has already invested in his first stock, made money from it and is on the lookout for more investments.
The teenager reads financial and business publications regularly so he can make informed decisions about investing.
But the principles of saving and growing his money, he says, were ingrained in him by his parents.
“My father has always told me to take the middle path … that I should never buy anything that is too expensive, or too cheap, because those deals may be too good to be true. He always reminds my sister and I that we have to live within our means,” says the savvy teen who hopes to study actuarial science and become an investment banker.
Meera Marimuthu and her husband Dr Vijayachandran Viswalingam started discussing money matters with Dhivakar and his sister Dakshayani, 13, from the time they were four or five.
They want their children to grow up understanding the value of money and possess the ability to manage their money.
“What is important is that they develop the habit of saving and that they don’t spend on impulse. Money spent must always be thought through. We teach them to always account for their expenditure and to always save a portion of their pocket money. We also teach them to compare prices before making purchases and do a breakdown of pricing to see if they are getting their money’s worth.
“What we hope is that these lessons will teach them how to manage their salaries later on,” says orthopaedic specialist Dr Vijayachandran, 47.
Dhivakar and Dakshayani manage their monthly pocket money. Unless warranted, they don’t get top-ups from their parents. If they run out of money, they have to deal with the consequences, a harsh but necessary lesson in living within their means, says Meera who is a lawyer.
“The actual handling of money began when they started school and had pocket money to manage. It started small, of course. Now, Dhivakar gets RM150 a month and Dakshayani gets RM50. We tell them that we will provide them their food, transport, clothes and stationery. Anything else that they want comes out of their pocket money. They have to make accounts of their expenses too just so they can see where their money is going.
“As they grow older, we also talk about they ways to make their money grow. With Dhivakar, these conversations seem to have stuck,” says Meera, 46.
Financial education is crucial in cultivating positive financial habits. Studies have shown that Malaysians have low financial literacy levels, says head of the Credit Counselling and Debt Management Agency’s (AKPK) Financial Education Department Nor Akmah Yaakob.
“According to the OECD (Organisation for Economic Co-operation and Development)/INFE (International Gateway for Financial Education) report in 2016, Malaysia ranked 26 out of 31 countries in adult financial literacy competency scores. What this means is that Malaysia has low financial literacy levels,” reveals Nor Akmah.
The Bank Negara Financial Capability and Inclusion (FCI) Survey (2015) further revealed that Malaysians had low financial resilience and were vulnerable to financial shocks: more than 75% of Malaysians would find it difficult to raise even RM1,000 of immediate cash for emergencies and 32% can only cover a week’s worth of expenses, at most, should they lose their source of income.
A significant number of Malaysians, according to the central bank’s report, were short-sighted, preferring to “live for the moment” and to keep pace with the latest digital lifestyle.
This was particularly true of the millennial generation which tends to live on high borrowing costs such as personal loans or credit card debts, it said.
This, says Bank Negara’s deputy director Shaik Abdul Rasheed Ghaffour, clearly indicates a need for continuous financial education. Malaysians need to develop the skills and confidence to make informed financial decisions.
Since its inception close to a decade ago, AKPK has conducted financial counselling for more than 806,000 individuals, a quarter of which were under the agency’s debt management programme.
“Of the 240,100 who sought help for debt management, more than half (57.1%) were for credit card debts, 30.9% were for personal loans.
“Based on the response to our debt management programme, 40.6% (of the cases) were due to poor planning. Financial education was definitely crucial in helping them make informed decisions,” says Nor Akmah.
Though AKPK’s mandate is to educate adults aged 18 and above, the agency, as part of Bank Negara’s Financial Education Network, is coming up with a National Strategy for Financial Literacy 2018 to 2022 blueprint aimed Malaysians of all ages and from all walks of life.
“Financial education should start (when children are) in primary school. This is to cultivate positive financial habits like saving. But that’s not enough. Financial education is a continuing process that also encompasses skills, knowledge and the confidence in making informed decisions about all financial resources,” says Nor Akmah.
For Vijayachandran’s family, the consistent discussions about money management are beginning to pay off. Although Dakshayani is still learning to manage her funds, her brother has become adept at handling his finances, says Meera.
“We are very proud of Dhivakar. He’s very responsible with his spending. Apart from thinking about investing his savings, he has learnt how to make the most of his money. He has even been elected as the treasurer for some societies in school and is very careful about managing the funds.
“Don’t get me wrong, though. We don’t stinge … we spend on family holidays every year, we go out for nice meals and we are house proud.
“But we don’t spend beyond our means. I think that’s one of the most important take-home messages we want our children to retain. That, and saving,” says Meera.
The Credit Counselling and Debt Management Agency (AKPK) is organising a Financial literacy Symposium – Financial Behaviour for Quality Lifetime on Nov 15 at the Sheraton Hotel in Petaling Jaya. For more information, go to www.akpk.org.my or call 03-2616 7766,