No, financial literacy is not the problem.

This is sort of an open letter to the author who penned this article that appeared in Malay Mail about financial literacy.

In it, she lambasted personal finance bloggers and the likes, saying “There are a lot of terrible things on Twitter, myself included, but one particularly irksome thing is personal finance Twitter.”

“It’s obvious to me that the advice given by these personal finance gurus are from people who’ve never actually experienced true poverty.”

Dear Ms Mahyuni, you are right – I suppose those who blog about personal finance are mainly those who have had the privilege to be educated, who have access to Internet and stable incomes.

But yet I think the anger in the article, while justified, is misguided.

Financial literacy and poverty eradication is not exclusive to each other. They go hand-in-hand. You can give everyone universal basic income and still have poor people. You can’t budget your way out of poverty, but you sure can budget your way out of frivolous expenses, no matter how poor or rich you are.

The problem is systemic. It’s not only about budgeting expenses etc – poverty is an issue that has plagued humanity since the birth of society. And in Malaysia, we all know how our wage growth is not commensurate with inflation.

Our earnings power is low. Our currency is simply not strong enough. The wealth gap just gets wider and wider. What’s needed is a comprehensive plan and strong-willed governance to plug the leaks and steer the economy. Everything is interlinked – education, social and economic policies are part of a system that should work together. And God knows it’s been dysfunctional for some time now.

To tackle this dysfunctional system, you need to have everyone play their part, personal finance bloggers included.

The author also said – “What’s rather annoying is the constant push for the poor to become entrepreneurs but entrepreneurship isn’t for everyone, requires some form of capital and often involves risks that the poor cannot afford.”

Don’t take it from me, take it from a netizen who responded by saying this:

“Just offering alternative perspectives since working with the underprivileged communities – single moms, b40s at the PPRs etc.

1) Why entrepreneurship- because they have no choice. They don’t have enough basic qualifications ie diploma or degree to even secure an admin job. They have many kids and can’t afford childcare, therefore can’t work full time. They have no desire or right attitude to work for others – challenging for them to stick to the clock in and out routine, steep learning curve – learning technology or jargons, english is intimidating for them… and many other reasons why micro entrepreneurship is their only option

2) Why financial literacy is important – many sink deeper into poverty because of blacklist and ah long. Interest from one bad decision taking rm5k from ah long when they were 25 will haunt them the rest of their lives. Most of us grew up knowing, many of them don’t or think they have no choice. Most of them also often receive some donations – from lembaga zakat, from NGOs, lately from gov etc. They need some guidance how to manage the money better and not spend it all on a hand phone, car or sofa. They need guidance on why even for a micro business they need separate books and cannot mix the money from business with family expenses, they need to learn that raw goods bought for business should not be mixed with food for family, also to learn how to price their food rightly, how to market their food to higher target segment, to learn basics of marketing and designing…etc. I could give more examples but I think it’s clear now why some courses are necessary.

3) While I agree entrepreneurship is not for everyone especially the B40 communities, they have no choice. Many resort to MLM, E-hailing and food delivery jobs etc… but it’s not enough to feed a family of 6-8 or even more. Also, there’s the scepticism mindset. I’ve seen many who didn’t think they would excel and like being an entrepreneur but once they put their hearts into it, they are actually good at it and love it.”

The only part I can agree with the article is this: “It’s 2020 and instead of a high-income nation, I would say Malaysia is more the country of high-income politicians.”

No surprises there.

So, what then?

I strongly believe education is the key. It can change one’s life by opening up paths otherwise inaccessible.

  1. Aid should be extended to those truly deserving. Targeted subsidies should be linked to outcome and certain conditions, and not be given willy-nilly. For example, guaranteed basic monthly income with the condition the children goes to school. Or basic monthly income to cover living expenses while the unemployed youth goes to a vocational college to take up blue-collar skills.
  2. Social enterprises should be continuously supported and be made part of the national agenda. Be it in the form of tax incentives or grants, social enterprises play a role by using business as a vehicle to solving social problems. You cannot keep giving out money, it has to be sustainable in the long run.
  3. A national effort on tackling poverty, for example a parliamentary committee. Not too sure how it works legally; but if we want to uplift the economic status of the whole nation, it should be given utmost priority in the highest echelons of the political corridors. We as the electorate can push for this.

These are not too far-fetched, right?

I think the financial literacy month organised by Financial Education Network is a step in the right direction. It doesn’t solve the poverty issue (nor is it intended to) – but it’s a crucial component in guiding the public towards better financial stewardship.

Everyone has a role to play. And offering constructive criticisms is the way to go.

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