A study on debt burden among Gen Z Malaysians: Key factors influencing personal debt accumulation

Ang, Zi Xin and Cheah, Ruo Yan and Hor, Chia Chi and Yong, Di Liang (2025) A study on debt burden among Gen Z Malaysians: Key factors influencing personal debt accumulation. Final Year Project, UTAR.

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Abstract

In recent years, the issue of personal debt accumulation has become increasingly prevalent in Malaysia. This study seeks to examine the influence of peer influence, financial literacy, spending behaviour, social media, and psychological factors on personal debt accumulation among Generation Z aged 21 to 28 in the Federal Territory, Penang, Selangor, and Johor. The proposed framework draws on the theory of planned behaviour, life-cycle hypothesis, impulse buying theory and social learning theory to explain the relationship between these factors and personal debt accumulation. The problem statement addresses the growing concern over high debt levels, driven by rising living costs, stagnant wages, easy access to credit, and weak financial literacy. Surveys show that a large share of Gen Z spend all or more than their income and lack adequate emergency savings, placing them at higher risk of unsustainable debt. A quantitative research approach was adopted, with primary data collected through a structured questionnaire. 400 valid responses were obtained and analysed using SPSS 31.0. The findings revealed that each independent variable significantly impacts personal debt accumulation, with varying levels of influence across the factors examined. The study’s results provide valuable insights for policymakers, financial educators, and institutions to develop targeted strategies aimed at improving financial literacy, promoting responsible spending habits, and reducing debt vulnerability among Gen Z. Moreover, the research serves as a reference for future studies related to personal finance and debt management in similar demographic contexts. Keywords: Personal Debt Accumulation; Peer Influence; Financial Literacy; Spending Behaviour; Social Media; Psychological Factors

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