I GREW UP in Sungai Petani, Kedah, son to a lumberjack and a housewife who successfully raised four children. My career path has been anything but linear. After graduating with a degree in Aeronautical Engineering from Universiti Teknologi Malaysia (UTM), I explored various interests, briefly becoming a pianist before becoming an insurance agent. However, enrolling on a financial planning course to be a Registered Financial Planner (RFP) sparked a passion for personal finance, leading me to pursue it further. I then become more intentional about financial education.

I have, since 2006, shared my knowledge, insights and experiences openly through my posts at KCLau.com, and my offerings in financial education have burgeoned to books, articles, webinars and online courses.

Today, as a financial educator, I notice:

1. Around 52% of Malaysians struggle to raise RM1,000 in emergency funds.[1]

2. Over 20% of those declared as bankrupt are youths.[2]

3. Nearly 6.7 mil people have less than RM10,000 in their EPF accounts.[3]

Even affluent parents—concerned about providing the best academic education for their children—might feel insecure about their finances afterwards, as they would be facing their own retirement.

So, what is amiss?

My take is “financial education”.

Raising “Highly-Educated, Financially-Illiterate” Children

Most parents tend to put their kids through school, tuition, music, sports, art and other extra-curricular activities. We want our children to be literate and wellrounded. It is best if they can speak multiple languages, excel in math and science, be musically inclined, possess bodily kinaesthetic intelligence, are socially competent, digitally savvy, and the list goes on.

Many children, especially in cities like KL, Penang and JB, are clocking in time in learning centres to enter universities. I have no doubt that our children will become more highly educated, but are they prepared for the real financial world?

I think not.

Our children can be academic geniuses yet clueless about:

• Income: How to earn/raise income?
• Budgeting: How to control expenses?
• Taxes: How to file taxes correctly and what strategies are there to get tax returns?
• Investments: How to pick good stocks to invest in?
• Real estate: How to find good properties to invest in?
• Insurance: How to shop for suitable insurance plans in the market?
• Estate planning: How to leave behind a financial legacy?

Can our children pick up such knowledge naturally? What we should commonly expect is that their financial skills will be restricted only to earning and spending money.

Financial Subjects

If we want to get serious about our children’s and grandchildren’s future, quality financial education needs to be included in our education system.

At the very least, financial topics should be introduced to primary and secondary school students. This would enable them to read financial statements and, as they grow up, to:

• budget better,
• have greater control over their finances,
• identify and invest in good quality stocks for the long term, and
• turnaround their own (or their client’s/ employers) finances.

Subjects that can be introduced to build their financial intelligence include:

1. Entrepreneurship, where leadership, communication and cooperation, corporate and Tax Law, and sales and marketing are taught.

2. Investing, where competencies like valuation skills, Time Value of Money (TVM), portfolio building and management skills, stocks, ETFs, REITs and other real estate-related topics can be introduced.

3. Financial protection, such as the purpose of insurance, wills and trust are explained.

More Tax Revenue?

What if we equipped our children with the skills to become entrepreneurs and investors? By making available opportunities to produce value via enterprises instead of just studying to get a job, the types of financial education listed above can empower them to build businesses and create jobs instead. They will then be able to fuel a cycle of rising income, spending, savings and investments, ultimately contributing to higher tax revenues for the government.

When more of Malaysia’s citizens are financially literate, the government can potentially reduce expenditure on welfare, subsidies and “hand-out” programmes to the less fortunate. Even an eradication of such deficits would not be impossible.

In fact, it should all start with us parents, many of whom might still be financially illiterate. It is time to journey towards financial freedom, and one can begin by scouring through free resources that are widely available online and, of course (a little self-promotion here) at my website, KCLau.com. Alternatively, shop around for good books on finance and talk to those who are financially savvy about how they spend and budget. Financial freedom starts with education.

Footnotes

[1] https://www.hsbc.com.my/financial-wellbeing/build-emergency-savings/

[2] https://www.thestar.com.my/news/education/2022/11/27/young-and-broke

[3] https://www.channelnewsasia.com/cna-insider/malaysia-afford-retirement-crisis-epf-pension-draw-downs-covid-pandemic-3877331