A study in Sarawak, Malaysia, sheds light on the factors that shape effective financial management among young people on low-income. Details are reported in the International Journal of Managerial and Financial Accounting.
Young Malaysians, particularly those from low-income backgrounds, are increasingly struggling financially. While the pandemic intensified the economic pressures, the underlying problems for this demographic are longstanding, rooted in unstable employment patterns and broader societal pressures. Many young people have part-time, temporary, or informal jobs and often lack the usual protections such as unemployment benefits or healthcare, leaving them vulnerable.
Beyond employment instability, shifts in consumer culture driven by globalization and digitalization have encouraged overspending, compulsive purchasing, and mounting personal debt. For many young people, these pressures have contributed to financial problems. Those that lack practical financial skills and habits can even end up in bankruptcy.
The current work discusses financial literacy, defined as the knowledge, skills, and confidence necessary to manage personal finances successfully. It shows how psychological and behavioural factors, including one’s attitude to money, financial prudence, self-efficacy, and financial avoidance, influence financial behaviour. The team analysed survey results to tease out the complex relationships among these variables.
They found that financial prudence, financial avoidance, and financial literacy each have a direct and measurable impact on how young people manage their finances. Interestingly, financial literacy did not alter the effect of other factors, but was a good indicator of positive financial behaviour. These findings underscore the importance of equipping young people with solid financial knowledge and practical management skills, which might improve outcomes regardless of their individual psychological tendencies.
The researchers suggest that policymakers might draw on these findings to design targeted financial literacy programs to help young people budget effectively, manage debt, and plan for the future. Such interventions have the potential to reduce financial vulnerability, prevent harmful debt patterns, and support a smoother transition to financial independence.
Sim, C-Y., Chin, C-H., Ngian, E-T. and Wong, J.J-W. (2025) ‘Financial management behaviour among youth: is financial literacy a panacea?’, Int. J. Managerial and Financial Accounting, Vol. 17, No. 2, pp.175–204.
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