KUALA LUMPUR (June 17): A growing number of Malaysian youths are falling into financial distress, as consumerism, digital spending habits and "buy now, pay later" (BNPL) schemes outpace financial literacy levels — a trend that Youth and Sports Minister Hannah Yeoh said must be urgently addressed.

Yeoh said 877 bankruptcy cases involving individuals aged 18 to 40 were recorded in 2024, up from 727 in 2023 — a rise she attributed to the ease of online shopping, social media influence and the growing popularity of BNPL platforms.

“If you look at the youth population — about nine million — this may seem like a small number, but the trend is worrying,” Yeoh said during a panel session at the Sasana Symposium 2025, organised by Bank Negara Malaysia (BNM).

“It’s so easy now to buy things online and defer payments through instalments. But when you accumulate credit card debt, you also accumulate interest. That’s how it starts.”

Yeoh warned that without intervention, early financial missteps could lead to long-term consequences, suggesting that financial ill-discipline in youth might result in a lifetime dependence on social assistance schemes.

“If they become bankrupt by age 40, they’re going to end up on the social welfare beneficiary list for the rest of their lives,” she said. “It’s better to rehabilitate and make them productive contributors to the economy, rather than having them become a long-term burden on taxpayers.”

In 2023, Malaysia amended its Bankruptcy Act to allow automatic discharge for individuals under 40 who meet certain low-debt criteria to give young defaulters a second chance. However, the government has acknowledged that prevention through education is more sustainable than amendments to the law.

Deputy BNM governor and co-chair of the Financial Education Network (FEN) Adnan Zaylani said survey data continues to show that Malaysians aged 19 to 30 consistently score below the national average in the Malaysia Financial Literacy and Capability Index — indicating a persistent knowledge gap.  The index is a key metric BNM uses to assess financial literacy and capability among Malaysians, such as financial knowledge, attitude and behaviour.

“Youth are especially vulnerable to poor financial decisions, particularly with the rise of online spending,” Adnan said, noting that this demographic is also more likely to rely on flexible but high-risk payment options such as BNPL.

A recent survey by Shopee’s BNPL arm, SPayLater, involving over 40,000 users, showed that 81% of respondents use BNPL services to manage financial shocks, not for discretionary or luxury spending.

And 57% said they used BNPL to manage monthly cash flow, while 46% used it to bridge finances until payday. Notably, 32% turned to BNPL during emergencies — citing costs such as baby formula, medical bills, home repairs and insurance.

While this points to a practical use of BNPL as a financial buffer, both Yeoh and Adnan warned that users — particularly the young — risk falling into long-term financial hardship if they do not have a clear understanding of compounding debt and repayment obligations.