Spending guidelines for Malaysians in facing high cost of living

Unmarried Malaysians, who use public transport, rent a room in the Klang Valley and do not save, need RM1,620 per month, according to report


If you are single who rents a room in the Klang Valley and depends heavily on public transport to move around, earning RM1,620 per month may not be enough for some.

However, a survey report, entitled “Belanjawanku: Expenditure Guide for Malaysian Individuals and Families”, as revealed by the government yesterday showed otherwise.

The report, which was commissioned by the Employees Provident Fund (EPF) as part of its financial literacy programme and prepared by the Social Wellbeing Research Centre of University of Malaya, noted that the amount is sufficient for single people to survive in the Klang Valley.

“Unmarried Malaysians, who use public transport, rent a room in the Klang Valley and do not save, need RM1,620 per month.

“This estimate includes basic needs (such as monthly average expenses on food and shelters), social participation and discretionary expenses,” it said.

The monthly budget for a single person who does not possess private vehicle, includes food at RM550, housing (RM300), healthcare (RM30), transportation (RM200), utilities (RM100), personal care (RM70), annual expenses such as clothes (RM90), social participation and activities (RM150) and discretionary expenses (RM130).

The report also revealed that those who wish to opt for savings can add another RM250 into the budget, bringing in a total amount of RM1,870 per month.

However, not many Malaysians prefer to commute using public transport as more than half a million new cars are sold annually.

The report suggested that using a car instead of public transport would raise the required expenditure by 38% to RM2,240 per month.

“That amount is sufficient to provide a single Malaysian living in the Klang Valley the ability to live decently, take part in society, and at the same time, have some savings for rainy days,” it said, based on a survey conducted between July 2017 and July 2018.

On the other hand, married couples would need more to maintain an acceptable standard of living.

According to the survey, the minimum expenditure required has increased to RM4,420, under the assumption that couples are more likely to either rent or own a house rather than a room.

“Having children raises the required expenditure level even more. Having just one child raises the required expenditure by nearly 30% to RM5,730, an increase of RM1,310.

“Having two children raises the required expenditure to RM6,620, an increase of RM2,200, or almost 50% higher than couples without children,” it added.

The budget includes spending for daycare, diapers, milk and baby food, tuition fees, and pocket money as part of childcare expenses.

As for elderly couples, the report noted that the estimated budget is cut by half to RM3,090 as those in this group are found to spend less than other families for most of the items in the expenditure basket.

Speaking at the launch of Belanjawanku in Bangi, Finance Minister Lim Guan Eng said it is essential for the people to be clear about their expenses and avoid the debt trap.

“Either we are working, married, being parents or going into retirement, we need to have the relevant knowledge to allow us to make decisions in financial planning.

“The S&P Global Literacy Financial 2014 reported that financial literacy in Malaysia is low at 36% compared to 59% in the developed countries. That contributes to high levels of debts, as well as the increasing number of bankruptcy among the youth,” he said.

It was reported that about 100,610 Malaysians, of which 60% of those aged between 18 and 44, were declared bankrupt from 2013 to 2017.

Lim added that as of June 2018, the household debt stood at RM1.17 billion or 83.3% of the country GDP.

Belanjawanku provides the minimum monthly expenditure estimate on various baskets of goods and services for different households in the Klang Valley, which will allow Malaysians to attain a reasonable and acceptable standard of living or wellbeing.

It also provides comprehensive guidelines encompassing allocations for basic necessities, social participation, recommended savings, loan repayment and emergencies.

The research involved a survey and focus group discussions comprising of researchers from local universities, representatives from the EPF, Credit Counselling and Debt Management Agency, Economic Planning Unit, National Wage Council, non-governmental organisations and Bank Negara Malaysia.

It will be routinely updated to reflect the change in prices, with versions exclusive to other regions to follow in the near future.

Meanwhile, EPF CEO Tunku Alizakri Raja Muhammad Alias said the guide will also be adopted by its Retirement Advisory Service officers in providing its members financial guidance and advice, complementing what is essentially a flagship EPF service.

“We expect Belanjawanku to form the bedrock of society’s strong financial wellbeing, leading to a better quality of life in the long term,” he said.