Financial Wellness in Malaysia: How It Affects Health and Steps to Improve It

Stella Kwan
Nov 29, 2024
4 min read

Updated: Nov 30, 2024

In Malaysia and across Asia, financial wellness is about more than just balancing income and expenses. It involves the relationship one has with money, the ability to manage financial stress, and how effectively these challenges are communicated and handled.

Here, we explore financial wellness in a Malaysian context, the impact it has on health, and practical strategies to cultivate it.

What Is Financial Wellness?

Financial wellness integrates both the practical and emotional aspects of managing money. Saundra Davis, a financial behavior expert, defines it through three pillars:

Clear Goals and Priorities: Having clarity about short- and long-term financial objectives.
Understanding Your Numbers: Knowing key financial figures such as income, expenses, debt, savings, and retirement plans.
Emotional Regulation: Adjusting behaviors and emotions to align with financial priorities and realities.

While financial security is a component of financial wellness, it’s not solely about wealth. For example, a person earning RM10,000 per month might feel financially unstable due to poor spending habits, while someone earning far less may experience peace of mind because they live within their means.

Financial Stress and Its Impact

Financial stress is a universal issue. In Malaysia, where the cost of living is rising, financial challenges are common. Stress levels can escalate when individuals must make constant decisions about money, whether it's small daily purchases or larger commitments like financing education or healthcare.

Moreover, financial stress is often intertwined with shared responsibilities. Many Malaysians manage household finances collectively with family members, blending differing priorities and financial philosophies.

Persistent financial stress is harmful. Studies show that constant worry over money can lead to mental health issues like anxiety and depression, regardless of one’s income level. Addressing this stress starts with taking control — knowing your income, expenses, and debt, even if the numbers are less than ideal.

The Link Between Financial Wellness and Health

The relationship between financial well-being and health is significant. Here’s how it plays out:

Physical Health: Financial insecurity limits access to essentials like nutritious food, quality healthcare, and safe housing. A study on socioeconomic status revealed that financial struggles can accelerate aging and increase the risk of chronic illnesses.
Mental Health: Financial stress contributes to depression and anxiety. Research has found that Malaysians with high financial strain, such as inability to meet monthly expenses, are more likely to experience mental health challenges.
Materialism: A study found that being overly focused on acquiring wealth or possessions negatively affects well-being, regardless of income level. The takeaway? A healthy relationship with money is more important than the amount of money one has.

The Pandemic’s Impact on Financial Wellness in Malaysia

COVID-19 disrupted the financial stability of many Malaysians, with industries like tourism, retail, and hospitality taking the hardest hit. Job losses and income reductions forced families to reassess their priorities.

Interestingly, the pandemic also encouraged some to redefine financial wellness. Many Malaysians began shifting from striving for material wealth to appreciating financial stability and life’s simpler joys.

How to Improve Financial Wellness

Improving financial wellness doesn’t require drastic changes. Here are some practical steps to take:

Assess Your Current Financial Situation

Start by understanding your financial health. Tools like budgeting apps or expense trackers can help you evaluate spending patterns and identify areas for improvement.

Seek Professional Advice

Financial planners and counselors in Malaysia can provide guidance on budgeting, saving, and achieving goals like homeownership or retirement. Initiatives like the AKPK Debt Management Programme help Malaysians manage debt effectively.

Talk About Money

Discussing financial matters openly with family members is essential, especially in households with shared finances. Address differing financial expectations respectfully and find common ground.

Build Financial Intimacy With Your Partner

For couples, communication about finances is key. Setting shared goals, reviewing spending habits, and planning for major expenses together can strengthen financial well-being and relationships.

Focus on

Improve knowledge of personal finance topics, such as investments, insurance, and estate planning. Resources like webinars and workshops by organizations like Bank Negara Malaysia or local financial institutions can help.