Thursday 28 Mar 2024
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KUALA LUMPUR: How many of us make it a habit to allocate at least 10% of our monthly income to tide over emergencies? It is not too late to take the right actions now if we have not already taken the precautions.

According to the Credit Counselling and Debt Management Agency (AKPK) since its establishment in 2006, and until Sept 30 this year, a total of 292,775 people have applied for counselling services provided by the agency and 115,706 for credit management.

This year, until Sept 30, 106,391 individuals have sought help to manage their debts, most of them being men. Of this, some 46,453 or 43.7% were men of 40 years and above who sought counselling services for debt management with the agency. This compared with men of 30 to 40 years of age, where only 42,219 or 39.7% have done the same. Another 17,719 or 16.6% of men who sought help in order to manage their finances were from the 20-to 30-year-old age group.

“AKPK welcomes the public to come forward and seek advice before they commit to taking on a debt so that they are fully aware of their financial situation. This service is free,” said Mohamad Khalil Jamaldin, AKPK corporate communications’ head of department.

According to the same statistics, some 22.8% of Malaysians failed to plan their finances; 16.2% are saddled with debts due to hefty medical bills while 16.1% fell into the debt trap due to their failure in business.

Mohamad Khalil suggested that if one could afford it, an emergency buffer fund should be established where the allocated amount equals to his or her expenses for three to six months. “For example, if your salary is RM2,000 and your monthly expenses are RM1,000, the minimal amount that should be in the emergency buffer fund is RM3,000 to RM6,000,” he told Bernama recently.

According to Mohamad Khalil, to avoid being too deep in debt, one should make sure that his/her total debts do not exceed 40% of one’s net salary. Therefore, a debt exceeding that amount meant that the individual was prone to having problems managing his debts.

Mohamad Khalil said the early signs that a person was having trouble managing his or her finances include borrowing money from friends, making cash withdrawals from credit cards to pay for expenses or to pay for other credit card instalments or when he is only able to pay a minimal amount of 5% of the total amount of his credit card debts.

People have to know that if they did not have any savings or insurance for any emergencies, they might end up with heavy debts, he said.

He said  credit and financial education was the answers to most financial problems that people face nowadays.

“At AKPK, we provide counselling and debt management services as well as financial education. AKPK aims at providing various educational services tailor-made to assist individuals to control their financial situation so that they will have peace of mind by practising smart credit usage,” he said.

AKPK collaborates with education institutions in organising personal financial management programmes to instil awareness among youth and encourage them to practise prudent financial management.

Trainees undergoing the National Service Training Programme are also exposed to the same financial education, a collaboration between AKPK and the Ministry of Defence. “This is in line with our objective of starting them young. This financial education should be instilled as early as possible so that more people know how to manage their finances,” he said.

In addition to that, Bank Negara Malaysia (BNM) via AKPK has established the Power! Programme (Your Money Management Programme) to encourage financial literacy among Malaysian consumers. The programme’s target group is young adults between 18 and 30 years old, first-time debtors and future debtors. It outlines effective ways to manage debts and make sound financial decisions.

Mohamad Khalil emphasised that AKPK does not provide loans or funding but it helps members of the public via its credit management programme.

This programme caters to anyone who needs help in managing debts that they have with financial institutions regulated by BNM.

Mohamad Khalil said the public could go to any of the agency’s 11 branches or 12 counselling offices around Malaysia bringing with them several important documents namely salary slip or revenue slip, loan statement, credit report information and the latest Employment Provident Fund’s statement (if needed).

For more information, call AKPK through toll-free number 1800-88-2575 or go to its website www.akpk.org.my. — Bernama

This article first appeared in The Edge Financial Daily, on December 17, 2014.

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