Smart Investor Malaysia


Financial Literacy & Financial Accountability Are Life Changing


For us to pursue our multiple life goals, we will need to have financial resources, which is like our ‘financial muscle’. We will need to have muscles to do the weight-lifting, which is to turn our life goals into reality. Therefore, we need to have the know how.

This, essentially, is financial literacy.

The Organization of Economic Co-operation and Development has defined financial literacy as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.

Why Is Financial Literacy Important?

financial literacy

Obviously, the decision we make today has a long-term impact on our financial wellness in the future. Hence, a poorly made decision may have a very detrimental impact on our future.

If a person is not financially literate, then this person may face multiple challenges in respect to managing his or her own wealth. Potential consequences can be:

  • Not protecting savings and assets adequately;
  • Not prudent in borrowings and ending up with too much debt;
  • Not investing to inflation-proof your purchasing power;
  • Not having a will; and
  • Not having financial safety net like an emergency fund and health insurance.

The list can go on and on.

When a person is in a situation as above, it’ll be rather difficult person to attain financial independence as well as pursue his or her life goals.

How Financially Literate Are We?

The following statistics from the National Strategy for Financial Literacy 2019-2023 Report gives us a picture of where we stand as a nation in terms of financial literacy.

  • 43% of Malaysians understand that growth of money is compounded over time, while 22% believe money grows on linear basis;
  • 75% of Malaysians understand that inflation means cost of living is rising, only 38% can relate the effect of inflation on their own purchasing power;
  • 84% of Malaysians who claim to save regularly typically withdraw it at month-end to cover daily subsistence expenses;
  • Three in 10 of working adults need to borrow money to buy essential goods;
  • 52% have difficulty raising RM1,000 as an emergency fund;
  • Only 24% are able to sustain their living expenses for at least three months if they lose their main source of income, and only 10% can sustain for more than six months;
  • Six in 10 adults are self-employed and hence not covered by a social security system or any formal retirement fund; and
  • About 60% of investors were found to have unrealistic expectations on potential annual return from investment in capital market products.

A Financially Responsible Person

financial literacy & financial accountability

When a person is financially literate, he or she will be more capable in understanding how his or her decision can impact their financial future, hence becoming a responsible person financially.

When we are financially responsible, we will be careful about adding financial responsibility to our finances. We will ensure that we do not spend all we make but make provision for our future, and for emergencies.

In fact, most people are aware of this but somehow, fail to take action.

What Is Missing?

Since most of us who are working adults have not been taught about financial literacy in school, we need to learn it from somewhere.

Learning is a passive thing – you can continue to read, learn, listen to podcasts or attend workshops for years. However, it is not the learning that matters but the doing that makes a difference.

To ensure that we do what is in our best interests, not only do we need financial education, we also need financial accountability. I truly think this is the key missing piece of the puzzle.

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That is why we are unable to behave rationally and stick to our plans, fail to save what we plan to save every month, all because of a lack of accountability.

I will define accountability as having a sense of ownership over your work and accepting consequences for your actions and behaviours.

Many times, we are aware that if we don’t save, it will leave us in a worse shape compared to when we save. But we spend anyway.

So to increase your financial accountability, it’s best if you work with someone interested to help you stay true to your own words, and be accountable for your own actions.

Financial Accountability Partner

An accountability partner is someone who coaches another person to keep a commitment. Getting a right accountability partner is known to be a highly effective strategy for goal-setting and achievement.

The good news is that If we want to stick with our action plan, we just need an accountability partner. The bad news is that we cannot be our own accountability partner.

And if you have selected a candidate who is not so suitable, your accountability partner may well turn into your partner in crime.

What To Look For In Your Accountability Partner?

Ideally, this person should be able to complement you in terms of knowledge, skills, expertise. Since this is a financial accountability need, your candidate should possess extensive knowledge on this subject matter. Otherwise, coaching you to do the wrong thing will eventually send you down a path that is cursed as well.

However, you should look beyond things that are measurable such as knowledge. Will this person be willing to challenge you to out-grow your limit?

Your main objective of getting an accountability partner is to outperform your own set objectives. Therefore, you need someone who has the courage and discipline to tell you what you need to hear, not what you want to hear.

Your accountability partner should also be able to make sure you follow through on your commitments, monitor and review your action plans with you so that you can find ways to improve on it.

When you are in doubt, he should also be able to provide you with independent feedback and show you the next step so that you will not be stuck at status quo.

Who Can Be Your Ideal Financial Accountability Partner?

financial literacy

Most of us have friends, and family members who we care a lot for. Are we their financial accountability partner?

Did any of our friends or family members volunteer to talk to us about our financial successes and planning? Has anyone have taken the time or initiative to tell us the importance of save-first, spend later, or the importance of having an emergency fund?

I guess the common answer to these questions will be a string of “no’s”.

That is also why I volunteer myself to be your financial accountability partner by devoting my lifework to be a licensed financial planner. I have a strong sense of fulfilment whenever people feedback to me that they are seeing progress and happy because they are sticking to their own plans and are seeing results.

That sense of fulfilment is even stronger when I get credit for the success my client is having.

Personally, I believe that it is important for us to work at something we love to do and are passionate about. I’m just glad I’m under this category.

I think someone who is doing what they are doing when not motivated by monetary reward alone, will be the right person to do the best work.

So, get an accountability partner to make sure you are accountable for your financial independence.

About the author 

kevin neohKevin Neoh is a NextGen Money Coach who works with people to help them transform their relationship with money to improve their lives with the money they have. Kevin can be contacted at and

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