FINANCIAL LITERACY EDUCATION FOR MSME ACTORS IN LOMBOK: A COMMUNITY ENGAGEMENT APPROACH TO PREVENTING EXCESSIVE DEBT BEHAVIOR

Abstract

Micro, Small, and Medium Enterprises (MSMEs) constitute the backbone of the local economy on Lombok Island, particularly within the trade, handicraft, and tourism sectors. Despite their economic significance, many MSME actors continue to exhibit low financial literacy, which manifests in unregulated borrowing behavior and, in more severe cases, over-indebtedness. This community service (pengabdian kepada masyarakat) program aimed to strengthen the financial literacy of MSME actors in [village/sub-district, regency/city], Lombok, with particular emphasis on debt-capacity awareness, recognition of predatory informal lending, and the adoption of more structured financing strategies. The program was implemented through a preliminary needs assessment, interactive financial education sessions, hands-on debt-to-income ratio simulations, and mentoring in basic cash-flow recording. Pre- and post-test results indicated a measurable improvement in participants' understanding of debt management principles and heightened awareness of the risks associated with high-interest informal lenders and unlicensed online lending platforms (pinjol ilegal). The findings suggest that structured, participatory financial education can serve as a replicable model for similar MSME communities elsewhere in Indonesia, provided it is complemented by sustained mentoring rather than a single, isolated intervention.