Oops! Generation Z and Millennials are trapped in bad debt from online loans up to Rp700 billion

Waduh! Generasi Z dan Milenial Terjerat Utang Macet Pinjol Sampai Rp700 Miliar

Oh no! Generation Z and Millennials Trapped in Stuck Debt of up to Rp700 billion through Online Loan Platforms.

Dream - Head of Strategic Communication and Brand UOB Indonesia, Maya Rizano, revealed that Generation Z and millennials, those aged between 19 and 34 years old, contribute significantly to the high non-performing loans in online loan management companies, amounting to more than Rp700 billion.

Oops! Generation Z and Millennials are trapped in bad debt from online loans up to Rp700 billion

The high value of non-performing loans in online lending services (Pinjol) indicates an increasing literacy in finance or digital among the younger generation, which remains something very important. This generation must know how to maintain their financial resilience.

"Untuk itu butuh peran dari berbagai pihak agar para generasi muda kita dapat melakukan perencanaan keuangan yang matang dan berkelanjutan," "Therefore, it requires the involvement of various parties so that our younger generation can make mature and sustainable financial planning,"

Maya's words at the UOB Media Literacy Circle event in Jakarta, Wednesday, 24 April 2024.

Many young generations are trapped in online loans (pinjol) due to several factors, namely debt services offered through personal communication, loans that are offered quickly and without conditions. It is also found that there are many illegal online loan services that use a name similar to official online loans (pinjol).

According to a triennial survey conducted by the Financial Services Authority (OJK), it was revealed that the trend of financial literacy and inclusion index of Indonesian society continues to increase. In 2022, the financial literacy index of Indonesian society has reached 49.68 percent, an increase from 38.03 percent in 2019. Meanwhile, the financial inclusion index reached 85.1 percent compared to only 76.2 percent in 2019.

Although there has been an increase every year, the percentage of financial literacy index among Indonesian society is still considered low as it is still below 50 percent. It is not only about financial literacy, but also the issues of family literacy, education ecosystem, and literacy in all aspects are still very low.

"Low financial literacy is not surprising. We see that even the literacy and numeracy skills of Indonesian children at all levels are still low. Also, the gap based on family background is still high. This is always marginalized, especially in lower socio-economic classes where literacy issues are always left behind."

"Najeela Shihab, Psychologist, Educator, and Founder of Cikal School, said."

Financial literacy is knowledge, skills, and beliefs that influence attitudes and behaviors to improve the quality of decision-making and financial management to achieve financial well-being in society.

One way that can be taken to overcome this problem is to educate the community in financial planning. The community must pay attention to the portion of their consumption by managing their income and expenses.

The ideal expenditure is around 70-85 percent used for needs such as housing, food, and even for debts that are responsible to be paid. About 5-10 percent can be used for desires, such as entertainment, sports, and buying the latest electronics. Meanwhile, 10-20 percent of total expenditure can be saved for emergency funds, investments, and insurance. Report: Aykaputri Amalia Rahmani.

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