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21 Jul 2008 | Comments | Wealth Management | Comments feed

Average Monthly Household Income in 2007: Is it enough?

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According to a survey done by the Statistic Department for the Economic Planning Unit, published in Personal Money Magazine June 2008 edition, a typical family in Malaysia earns only RM3686/month.

How much is RM3686/month worth?

In terms of vehicle, the cheapest range of national car Proton Saga is priced between RM31,500 to RM39,800. RM3686/month is just enough for you to pay for a new car with your entire annual household income. It means the husband and wife work for the whole year without spending any sen, that is just enough to buy a car in order to go to work.

How could you spend RM3686/month?

Ah Seng is a technician who earns RM2500/month. His wife is working in a local small company as a clerk and being paid RM1200/month. This is a typical household income.

They have a child who is one year old. They want another baby, but don’t dare to because of financial commitment.

They have a car which Ah Seng drives to work after dropping his wife at her work place. The transportation expenses involved is

  • Car installment: RM500/month
  • Car maintenance, road tax and insurance: RM100/month
  • Petrol: RM400/month
  • Toll: RM100/month

Since they are both working, Ah Seng pays his mother-in-law RM500/month to take care of his only child. Beside that, there are other child-related expenses like medical fees, milk powder, food, clothing etc, roughly RM300/month.

They realize the importance of life insurance. They pay about RM400/month for life insurance coverage, this already includes the education policy for his child.

They are renting a 2-bedroom apartment in Klang Valley that cost about RM600/month.

Let’s summarize their fixed expenses:

Transportation: RM1100/month
Child expenses: RM800/month
Insurance: RM400/month
Rental: RM600/month

What remain is meagerly RM800/month for their variable expenses. That has to pay for food, entertainment, clothing, telephone bill and other unexpected expenses. Sorry to the parents of these adults - no allowance for the grandpa and grandma :(

Are they poor?

I don’t dare to comment any more. What do you think?
I think the big problem is the large portion of the money earned being spent on transportation. Is that a want or a need? I think they are left with not many choices.

If you only earn the average household income of RM3686/month, and still want to have a healthy cash flow, the only choice is to scrap your car.  Or at least you have to learn how to get your first car free.

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Viewing 10 Comments

    • ^
    • v
    You know I am an anti-car person.
    I still think it is a luxury, not a need.

    My choice:
    I would stay somewhere near to the work place, or near LRT station.
    the benefit of driving for such a high cost is not worth it.

    I think many people are brainwashed to believe that a car is a basic need.
    Even my mother think so.
    • ^
    • v
    that might apply to those staying in Singapore. But in KL, it is really a different story.
    For those staying in KL, do you think you can scrap your car and stay just next to your work place?
    I heard that LRT are very congested. The commuter is so slow and not enough train to take the load.
    Is it true?
    • ^
    • v
    This post has been chosen to be part of the 69th Carnival of Money Stories at Almost Frugal, going live on July 22nd. Don't forget to link back to the carnival!
    • ^
    • v
    KC, sometimes I was thought that our living standard in KL actually is higher than Singapore. For instance, I was working in Singapore 6 years back. My monthly expenditure is rental- 250, you could get S$3 (include water) per meal; which is equivalent to 300 per month, I bought a used motorbike there with $S4000 (is a Honda Rebal chooper bike, man...cool). You would not get this price in Malaysia) and I was payed the season parking for $S40 per month, the mobile phone line that I got is S$30 per month, my petrol expenses + my transitlink card for LRT and bus is around 100, for entertainment and other expenses is around 200. So, the total is 920 which is equivalent to 2110 ringgit Malaysia. If we compare apple to apple, let push away other expenditure, talk only about car- monthly installment for Myvi (i.e.)- 400, petrol-400, roadtax + insurance 100- Total is 900. Other basic expenses estimation is rental-400, tol- 100, parking- 50, meal/month-500 (in KL, per meal will cost around 5-6 rinngit minimum), mobile phone- 50, entertainment- 100- Grand total now is 2100.

    In Singapore, I earned S$2500 per month as the Operation Sup. I saved S$400 (800 ringgit) per month. My variable bonus + 13rd month salary is around S$ 6K per year. In yearly basis, I could save total S$15.6K (35.8K).

    In KL, You probaly earned 2500- 3000 ringgit per month as the Operation Sup. You could only save 400 ringgit per month. Normally, many local company would not pay us variable bonus. We only could get 1 month bonus for instance 2.5K ringgit per year. The total saving is 7.3K ringgit + EPF 6.9K= 14200 ringgit. The cash on hand at the end of the year is only 6.9K.

    The weird of the Malaysia government felt majority family has increased the income. But, have they ever calculate the monthly expenditure? No doubt , we could live without the luxury things, but we could not live without insurance. If the main income in a family collapsed, there is no financial freedom for their kids and other family members. Their will live even more difficult than before.

    Thus, my thought is Government should not only save money but cut off the fuel subsidy. But, they must use the extra money for country development. As I saw today, public transportation is the top priority. Because every one of us could save extra money and use it for other useful purpose.

    The Penang bridge and the Plus higway has proven to us from the history. Why Malaysia still develop KL and other big city only.. Just look at China. The bullet train connected from Shanghai to Nanjing only take 3.5 hours to reach. (the total journey is 450km ++). Is our government scared Proton will making loss afterward? Just try to learn from India la...... look at people technology in develope a small car like Nano... I can't even imaging why Proton sold MV Agusta? It is a mistake, we should make use of the engine technology to develope a small vehicle like Nano, probably combination motorbike and car?

    Anyway, this is just my thought. The final conclusion is our government should look at the minimum expenditure (insurance covered) instead of average income. This will make more sence to peoples in Malaysia. Cheerssssssssssss
    • ^
    • v
    Hi Kenny,

    Thanks for your opinions. I can summarize that our buying power is so weak, except for the local hawkers foods and pirate software and DVD, if compared to Singapore.
    Inefficiency is the main problem to tackle.
    • ^
    • v
    Transportation is a need in malaysia but a lot of people make it a want/luxury. I have until now still not purchase a new car yet. I have been holding back for the last 4-5 months even though i have the $$$$ to buy a big new car. A lot of people will feel that i am stingy but I do not feel this way as i would definitely prefer seeing my money grow rather than spending my $$$$. A car for me is basically getting me from point A to B plus low fuel consumption due to the recent fuel price hike.

    Like what i have mentione before you determine your own fate. Spend now suffer later or save now enjoy later.
    • ^
    • v
    I worked in Singapore for 10 years, and I fully agreed with Kenny that purchasing power in Singapore is much better than here in Malaysia due to our lower currency rate.

    I can't imagine go without a car in Malaysia......but for many families, they will just survive with a motorbike for the whole family (with kids on board as well). I have seen often on the road and am feeling anxious for the little one whom goes without a helmet.....
    • ^
    • v
    Jean, I agree with what you said too. Most of my friends and classmates who works in Singapore never thought of coming back, yet.
    • ^
    • v
    Let me see....
    Food
    - breakfast for 2, Rm5 i.e. nasi lemak and teh tarik
    - lunch economy rice plus chinese tea for 2 RM10
    - dinner economy rice plus tea for 2 RM10
    That's RM25 per day and 750 per month.
    Balance RM50 for prepaid card

    ...and you said they have RM800 for variable expenses...
    which means that no movies, no astro, no trips
    • ^
    • v
    yeah .. so now it means it is quite poor if a family is earning an average income.

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