IT’S the weekend. Look for any young, urban Malaysian and you would probably find them hanging out in a mall, watching the latest movie, trying a new fitness craze or catching up with friends at yet another hipster café.

But can they afford it? The cost of fun does add up. Here’s a typical Saturday out and about in the Klang Valley for a millennial: about RM13 for a movie ticket and another RM11 for popcorn and drinks. A nice meal and coffee at a café would set you back about RM40. Add an average of RM10 for parking and petrol and your total bill can come up to almost RM80.

Considering the plethora of consumer choices available to millennials today, it might not come as much of a surprise that young Malaysians spend up to 30% of their monthly income on entertainment.

That is exactly what a survey by iMoney Group and The Edge found. Young Malaysians are dealing with a high cost of living and debt obligations but still fork out a substantial amount on “fun spending” every month. For example, those in their 20s earning under RM1,500 spend an average of RM410 on fun activities a month, which is over a quarter of their pay cheque.

The average spend on fun trends upwards as incomes increase.

With a cost-of-living floor of about RM1,500 to live on in urban Malaysia, can anyone afford to spend on fun and save money as well?

Living beyond their means

Ryan Lau, a 24-year-old living in Petaling Jaya, barely makes enough as a chef to meet his monthly commitments. But despite not being able to keep any savings, he can count himself luckier than his friends, who are up to their eyeballs in credit card debt.

Out of 10 friends who own credit cards, Lau says, seven depend on their parents to pay off their bills.

iMoney Group has noticed a notable spike in demand for personal loans after Hari Raya Aidilfitri this year, with a significant 50% jump in month-on-month traffic on their site looking at these credit products.

Based on applications via the financial products comparison site, demand for personal loans has jumped a shocking 3.7 times year on year (from September 2015 to September 2016). However, bank loan approval rates declined 53% across the board, largely due to the high debt service ratio (DSR) of applicants.

“More people want loans but not many get them. Banks are tightening,” iMoney Group CEO and co-founder Lee Ching Wei says. “If you look at how people are managing their money, it’s very hard for them to get approvals.”

High DSRs are now the leading reason banks reject loan applications.

“In recent times, DSR has been the biggest bucket. In the past, they would have rejected you because you are a delinquent or you haven’t been a good paymaster and DSR was usually second,” Lee says.

The survey indicated that for the lower-income groups especially, DSRs soar above 100% of income.

“They include PTPTN loans (in assessing creditworthiness) earlier this year, so that caused a bit of a shake-up in approval rates,” he says.

Beyond the possibility that banks are being more risk averse, he notes that it is possible people just are not earning enough to secure loans.

“Everybody is living beyond their means. I don’t think it’s their fault. It’s very hard to get by if your basic cost of living is more than RM1,000 a month,” Lee says.

Even so, the easy access to credit cards and personal loans makes spending what they do not have much easier.

Pointing fingers?

Can this generation be blamed for their spending habits? Responses are mixed.

“You can’t blame them. There are avenues for them to spend,” says Daryl Wong, a corporate trainer who specialises in Gen Y employees.

Both Wong and Lau emphasise how strong temptation and peer pressure are in influencing spending decisions.

In Hong Kong and Singapore, Wong relates how millennials generally view the long term as being hopeless.

“They have given up on purchasing property and cars because they are so expensive — so why save money now?” Wong says. “I think that culture is slowly spreading here.”

Many millennials appear to be governed by the “treat yo’self” concept, believing they deserve to pamper themselves with what they see as their hard-earned money.

Despite what seems to be an alarming upward trend of discretionary spending, Wong finds that many millennials are much more savvy about how much they are paying for their lifestyles.

“They are more prudent in looking for discounts on new apps such as Offpeak (which offers discounts at selected restaurants in off-peak hours),” Wong says.

The proliferation of discount apps records Gen Y as the majority of their customers, Wong says, adding that among the young consumers he speaks to, many conduct research and do price comparisons before making purchases, and are often willing to pay online if they are able to find better deals on the internet.

“Gen Ys know they are struggling. A lot of people are looking for supplementary income,” Wong says, citing direct selling, internet shops and content writing as secondary income sources necessary to maintain their lifestyles.

GroupM Malaysia’s 3D Malaysia consumer survey also found that more and more youth feel that they do not have enough money to spare and may need a second source of income.

The proportion of young survey respondents agreeing with the statement, “I never seem to have any money to spare these days, in fact, I seem to be going backwards”, has grown 27% from 2014’s survey.

The survey also found that those opting for a second source of income grew 36% from 2014 to 2016.

“They are aware of the rising cost of living and are showing initiative to cope with their current lifestyle,” says GroupM.

On the other hand, iMoney’s Lee is of the view that poor money management drives debt — like credit cards and personal loans.

“I think people are going to have to look at how much they are really spending and start sacrificing something. Anyone who is a parent of a millennial child will tell them [they] need to sacrifice something,” he says.

“The downside of having a satisfactory life is that you continually roll your debt,” Lee says. “Six months later, you are going to be in a much worse position than if you just suffered and cleared up most of your other debt. You would be able to move forward a bit better.”

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