Career breaks, traumatic accidents and retirement are some of the most financially damaging events Malaysians have experienced, according to a recent HSBC report.

According to its Life Changers report, which is part of the bank’s The Power of Protection series, personal life events such as having a traumatic accident or injury had a negative financial impact for 69% of the respondents, while 66% said having a life-changing illness had an adverse effect on their finances.

“A divorce or separation from a partner was financially challenging for about 62% while bereavement over a parent was financially negative for 54%,” says the report.

Getting married (63%) and moving in with a partner (59%) were considered financially beneficial life events while the loss of a close friend or relative (50%) and buying a home (49%) were perceived as having a negative financial impact.

As for work-related events, 71% felt that taking a career break or an extended holiday had a negative financial impact while 65% said retirement had a negative impact on their finances.

Other work-related events stand out as having a positive financial impact. “Starting a first job is almost universally perceived as a financially positive event (92%) as is starting a new job (88%) and changing careers (79%). Two-thirds of those who started a business said it had a positive impact on their finances.”

The report states that work-related events appear to be “less life-changing” than personal events as more than a third of the respondents who started their own business describe it as their most life-changing event, as did 33% of those who changed careers.

“Twenty-eight percent of those who retired found it had a big impact on their life, as did 26% of those who started their first job and 22% who started a new job. About one in five described being made redundant or taking a career break as life changing,” says the report.

The survey found that most people rely on their own financial strategies in the event of a setback to help them cope with major life changes. “While most receive strong emotional support during life-changing events, only a small proportion receive financial support, meaning many people rely on their own financial plans and resources to protect their quality of life. For example, while 56% received emotional support when experiencing a life-changing critical illness/injury, only 23% received any financial support,” says the report.

“Similarly, people had relatively low levels of financial support for work-related life events. Only 8% received financial support when made redundant (while 20% received emotional support) and similarly, 14% received financial support when starting their first job (compared with 41% who received emotional support). Financial support was the greatest for those who retired (22%), although emotional support was more common (36%).”

The support mostly came from immediate family members — partners and parents — while many received help from friends and siblings.

Having first-hand life-changing experience prompts people to put more thought into the management of their finances. The report says even planned events such as having a baby or getting married have financial implications that cause people to rethink their financial behaviours.

The survey found that through these challenges, Malaysians have learnt to cope. “For example, two-thirds of the respondents cut back on or reprioritised their spending as a result of a life-changing event. Over half (56%) started saving more and 44% set up a new savings account. Just over a third (36%) made an investment,” says the report.

Meanwhile, more than half (55%) withdrew money from their savings, followed by 38% who sought a loan or financing and 28% sought financial help from relatives. The report adds that almost two out of five respondents took out a new insurance policy (39%) while 26% raised the level of their existing policy.

In hindsight, many the 1,005 Malaysians polled wished that they had taken a different approach to cope with life-changing events that had a negative financial impact on their lives. Much of this has to do with having better saving tactics.

“Three-quarters wished they started to save more, 45% wished they had made an investment and 43% wished they had set up a new savings account,” says the report.

Another aspect the respondents most wished they had paid attention to was their spending. “Almost three in five (57%) who did not cut back on or reprioritise their spending (56%) wish they had done so.”

One regret is related to having a well-defined protection plan in the event of a mishap. “Half of the respondents wished they had taken out a new insurance policy while 43% wished they had increased the level of their existing policy.”

Despite the regrets, most of the respondents said their lives were overall better than their parents’ generation. “Nearly two-thirds (63%) thought they had more choices in life while 46% thought their lives were more fulfilling. Forty-five per cent felt they were financially better off than the previous generation,” says the report.

But there were also people who believed that some aspects of their lives were worse than those of their parents’ generation. According to the report, 53% thought they had to take more risks with their finances, followed by 50% who felt they were under more financial pressure and 48% who thought their parents’ generation had a better quality of life than them.

“The respondents believed the next generation will continue to have more choices in life but also face increasing financial pressure. Almost two-thirds (64%) thought that the next generation will have more choices in life while 53% thought the lives of the next generation will be more fulfilling. Forty-eight per cent thought the next generation will have a better quality of life than them.

“However, the majority of the respondents believed that the next generation will come under more financial pressure (66%), take more risks with their finances (64%) and face a more uncertain future (62%) than them.”

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