The number of young Malaysians who were declared bankrupt between 2018 and September of this year was an amazing 10,378.
According to figures from the Insolvency Department website, almost 20% of the 47,929 people who were declared bankrupt during the time were under the age of 34; 10,138 were between the ages of 25 and 34; and those under 25 make up 240 bankruptcy cases.
Youths, said Universiti Malaya Faculty of Business and Economics Assoc Prof Dr Aida Idris, need to manage their finances efficiently to avoid bankruptcy.
“Many youths today are chasing an extravagant lifestyle. Avoiding wastage and unnecessary expenditure is important,” she said.
Aida warned that pursuing the lavish lifestyles often portrayed on social media is not sustainable for most people.
“Regardless of whether you can afford it, leading a hedonistic lifestyle is destructive,” she warned.
The bankruptcy threshold was increased from RM50,000 to RM100,000 by revising the Insolvency Act of 1967 in 2020. After being raised from RM30,000 to RM50,000 in 2017, this was the second time the bankruptcy threshold has been raised in a short period of time.
A person can only be declared bankrupt by a court order, according to the Insolvency Department. If a debtor owes more than $100,000, a creditor has the right to file for bankruptcy against them.
It’s crucial that young people surround themselves with uplifting individuals who can give them the confidence they need to make wise financial decisions and stay out of debt.
The people you hang out with greatly affect how you feel about spending, saving, and investing. As a result, make an effort to maintain friendships with people who are aware of these personal finance issues.
Always prioritise how much money you can save before making a spending plan. Avoid investing or making decisions based solely on your emotions.
It is never too late to make the proper decision and start anew, no matter how dire your financial condition is.
Some options include asking loved ones for emotional support, earning several salaries to pay off the debt early, and keeping an eye on your credit record.
The key to preventing teenage bankruptcy is financial knowledge.
Although there is no single manual or textbook on financial literacy, it is crucial to master the fundamentals from a young age in order to manage debt and make plans for the future.
To be better able to manage our finances, financial literacy teaches us the worth of money, the significance of budgeting and saving, and how to avoid making unnecessary purchases.
A decent education can equip young people with responsible financial habits and behaviours, keeping them from going bankrupt.