Quietly, a growing number of young Malaysians are being forced to shoulder debts left behind by their parents, whether in the form of personal loans, vehicle hire-purchase agreements or other unpaid borrowings.
Many who have only just entered the workforce now find themselves spending a large portion of their income to settle their parents’ financial commitments. In some cases, parents are no longer able to work due to ill health; in others, they have been retrenched, retired on modest pensions, or face a combination of setbacks.
Bound by moral obligation, children often have little choice but to tighten their own belts to preserve their parents’ dignity and ensure the family’s survival.
More distressing still, some are not only expected to clear outstanding debts but also to cover their parents’ living expenses, including utility bills and basic necessities, even when they themselves are barely making ends meet.
BECAUSE OF RESPONSIBILITY
Sharing her experience, an employer who wished to be known only as Nadia said the situation is not new, but has become increasingly visible in today’s socio-economic landscape, especially among young people from low-and middle-income families.
She noted that many young adults today are burdened by financial problems not of their own making, but because they have taken on their parents’ obligations to avoid being labelled ‘unfilial’.
“As an employer, I can say that several of my staff, including SPM leavers and fresh graduates who have just started working and are only beginning to enjoy earning their own money.are forced to give half their salaries to their parents to pay off debts, including car and motorcycle loans.
“Most of these parents are already retired and no longer working… they are unable to service their vehicle loans, and in the end the children become the victims, pressured to clear the remaining balances,” she told Bernama.
Nadia added that some employees even compound their financial strain by taking out personal loans to settle their parents’ arrears.
“There was one employee, 25 years old, who had been working for less than five months on an average salary of RM3,000, who tried to apply for a personal loan. I assumed it was for himself, but it turned out his father had asked him to do it because of mounting debts.
“The father owns a house, a car and a motorcycle. A year before retiring, he bought another car even though the existing loan had not been fully paid. Unable to cope with the monthly commitments while also supporting his wife and two children who are still studying, his last resort was to ask his eldest child (my employee) to take out a personal loan to settle everything,” she said.
Beyond debt repayment, some parents place their children in debt to satisfy personal wants, as shared by Threads user @notmymainduh02 on the social platform Threads.
Seeking advice from other users, the individual said their mother had asked them to take out a personal loan to enlarge the living room.
“She (my mother) wanted me to combine my salary with hers to take a personal loan. I refused because she often buys items on credit at shops, paying only half each month, and then I’m the one who has to settle the rest.
“I want to be debt-free. My car loan is enough. When I said I didn’t want to go into debt, she immediately became upset,” the user wrote.
A SOCIAL ISSUE
Commenting on the matter, Dr Siti Nurain Muhmad, Head of the Bachelor of Finance Programme at the Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, said the phenomenon of young people having to absorb their parents’ or relatives’ debts should be viewed as a serious and growing social and economic issue.
In Malaysia’s cultural context, where filial piety is highly valued, many young adults end up carrying debt due to moral, emotional and cultural pressure — all to preserve family dignity and prevent parents from being pursued by creditors.
“However, when devotion turns into a financial burden on children, it inevitably disrupts their life stability. They risk mental stress, family conflict, delayed future planning, and may even fall into new cycles of debt.
“This phenomenon must therefore be addressed holistically through improved financial literacy within families, more open communication between parents and children, adequate social support, and more balanced, realistic assistance aligned with children’s actual capabilities,” she said.
Siti Nurain noted that intergenerational debt is becoming more pronounced in today’s economic climate, especially as living costs continue to rise.
Higher spending on essentials such as food, rent or housing instalments, education and healthcare has pushed many families to rely on borrowing just to get by.
When parents struggle to meet financial commitments, working children often become the ones who must step in, directly or indirectly.
“Some families depend on personal loans, credit cards and Buy Now Pay Later (BNPL) schemes… what starts as small debts can snowball over time due to interest and accumulated instalments.
“When this happens, the working child is forced to take over repayments,” she said, adding that low financial literacy lies at the root of the problem.
BANKRUPTCY RISKS
Siti Nurain added that young people entering the workforce already face high basic living costs, including rent, utilities, food, transport and student loans.
When family debts are added on top, their typically modest incomes become insufficient to cover everything, increasing the risk of financial failure and bankruptcy.
“According to data from the Malaysian Department of Insolvency, 5,272 youths aged 34 and below were declared bankrupt between 2020 and 2025. Of these, 5,189 were aged between 25 and 34, while 83 were under 25.
“The trend is rising, with 877 cases recorded in 2024, an increase of 150 cases compared to 727 the year before,” she said.
She stressed that the situation demands urgent attention from all parties to strengthen financial literacy, promote prudent spending, and provide integrated support so young people can build more stable financial future.
If left unaddressed, she warned, there is a real risk of prolonged intergenerational debt cycles.
“Inherited debt undermines their ability to save, own homes or start businesses, pushing them towards new borrowing just to meet living needs or other commitments.
“This persistent debt burden not only limits savings and investment opportunities but also restricts the economic mobility of young people. When they start families of their own, financial pressure may continue, creating an intergenerational debt cycle that is hard to break,” she added.
CHILDREN AS THE FINANCIAL SOLUTION
Meanwhile, Dr Noor Aslinda Abu Seman of Johor Business School, Universiti Tun Hussein Onn Malaysia, said parents without solid retirement savings, those working in informal sectors without pension contributions, and those with limited health coverage face a high risk of financial crisis.
When this happens, she said, parents may begin to treat their children as their last financial safety net.
“Non-inclusive retirement systems, unstable employment and cultural norms that expect children to be caregivers amount to an unplanned transfer of financial burdens from older generations to the young.
“Debt initially taken on for basic needs eventually becomes unmanageable as people age and incomes shrink. At that point, children are seen not merely as support, but as the only solution… this handover rarely happens by choice, but because there are no safer alternatives,” she explained.
She added that parents with limited financial literacy tend to make debt decisions based on immediate needs, without considering long-term implications, including the impact 10 or 20 years down the line.
Financially literate parents, on the other hand, are more proactive: they plan for retirement, secure adequate insurance and medical coverage, and avoid relying on their children as financial backstops.
“Some parents focus solely on today’s survival and place the consequences of debt on their children as a secondary concern… awareness usually comes only when the situation becomes severe, or when children openly share how the debt has affected their lives.
“Only financially savvy parents avoid treating their children as savings plans. They see their children’s finances as separate entities that must be protected,” she added.
“HELPING WITH BOUNDARIES”
Noor Aslinda stressed that it is unreasonable for children to bear the full financial burden of their parents, as this is not only unfair but also contrary to sound financial management principles.
Such an approach risks perpetuating intergenerational financial problems and can breed resentment and long-term family conflict.
She advocated instead for “helping with boundaries”, encouraging children to secure their own financial stability before extending support.
“This principle is like the oxygen mask rule on airplanes ; you put on your own mask first before helping others. Assistance should also focus on long-term solutions, not just cash handouts.
“Children can help parents manage commitments, renegotiate debts, or identify additional income sources to ease the burden gradually,” she said.
Clear limits on assistance are crucial to set realistic expectations and safeguard children’s finances. Open family communication is equally important, with the understanding that filial devotion should not be measured by money alone, but by sincerity within one’s means.
“The best help is help that leads to lasting solutions, such as debt restructuring or finding extra income.
“Set clear boundaries too; for example, ‘I can only help RM200 a month for six months.’ This creates realistic expectations and protects your own finances,” she added.
TIGHTENING CREDIT FOR THOSE NEAR RETIREMENT
Noor Aslinda also proposed stricter regulation of financial institutions, including tougher guidelines on credit approval for individuals approaching retirement age, and mandatory financial counselling for large loan applications.
She said more effective debt-resolution channels are needed, including strengthening agencies such as the Agensi Kaunseling dan Pengurusan Kredit (AKPK), by granting broader powers to negotiate settlements, especially for senior citizens.
At the same time, nationwide financial literacy campaigns focusing on early retirement planning are essential. Expanding access to affordable healthcare is also critical to reduce dependence on costly private treatment, which often contributes to family debt.
She further urged banks to provide comprehensive explanations of risks and legal responsibilities to young people considering becoming guarantors for their parents’ loans.
Financial institutions should also explore special restructuring schemes for seniors, including products that convert outstanding balances into lifelong micro-instalments without requiring children as guarantors.
The establishment of family debt counselling services was also suggested, including dedicated AKPK channels to help entire families design intergenerational financial plans and resolve debts more systematically.
Noor Aslinda emphasised the need for awareness campaigns on young people’s rights, stressing that they are not legally obligated to settle their parents’ personal debts unless they are guarantors.
“Young people need to shift the mindset that ‘devotion equals money’. Devotion can be expressed through time, care, management and love.
“If financial help is unavoidable, make it transparent and mutually agreed to prevent misunderstandings. Don’t feel guilty if you’re unable to help clear family debts, and if you do help, ensure it’s within realistic limits,” she added.
— BERNAMA
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