Sunday, February 28, 2010

Money Sense .....

Open up the back pages of the local newspapers, we can see almost daily rows and rows of bankruptcy orders. Credit card debts, loan defaults, failed business are some of the reasons. Over the last year or so, more and more details surfaced about how many people in this blessed country of ours are deeply in debt. Just look at the long list applying and receiving the wang zakat. Any rumours of “gifts” and any sniff of “easy money”, we can see thousands congregating. We hear a number of people declaring themselves poor (‘fakir’ and ‘miskin’) to get their hands on the wang zakat. Gone are the days where people were eager to show off their pay to gain more loans. Now people are more eager to show off their debt (‘hutangs’) Based on these alone, debt is a very serious issue. Up there with other social and economic issues. Debt can lead to other social ills and crimes.

The authorities, I am sure, realised this. From the curb on personal loans, new regulations on credit cards and also the introduction of the Supplemental Contributory Pension (SCP), the authorities are trying to address the debt and personal finance issues. But what else can be done?

There is only so much the authorities can do. As in many things, financial discipline involves personal will and personal control. How best can we do this? Obviously education and awareness plays a big role, if not the biggest. But, are we taught about this in our schools? Not during my school days. I believed it’s the same for many others. Lack of personal finance education can lead to costly mistakes. A good example is buying a car. I believe to many people owning a good car is a symbol of status and among the most important things in live. It’s the same with me. Imagine my shock when reading the book “Rich Dad Poor Dad” by Robert Kiyosaki. According to him, which I believed is true, a car is a LIABILITY not an asset. Come to think of it, it should have been commonsense. Apart from a few vintage cars, all cars depreciate in value as soon as you get it out of the showroom.

So, education is very important. Hopefully the Education authorities can look into this and do something similar to what they did for “Corruption” issues. Give our kids, our young, a head start in personal financial management.

How about us who missed the boat? What can be done to help us? Our neighbours, Malaysia, had setup ‘Agensi Kaunseling dan Pengurusan Kredit’ (AKPK) or ‘Credit Counselling and Credit Management Agency’. Its mission is to promote financial wellness among Malaysians by empowering them to be financially savvy through comprehensive consumer educational programmes and providing professional credit counselling and debt management programmes to enable them to regain control of their finances. AKPK is a wholly owned subsidiary of Bank Negara Malaysia, set up to provide financial counselling and debt management to individuals as well as financial education to help individuals take control of their financial situation and gain peace of mind that comes from the wise use of credit. All their services are provided “FOC” (Free of Charge). You can read more about AKPK and learn some tips and even download their Money Sense / Celik Wang e-book here.

May be setting up a similar agency here will help not only in debt management but more importantly increase ‘financial literacy’ and hopefully shorter list of wang zakat applicants.

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