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:
Child expenses: RM800/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.Â Or at least you have to learn how to get your first car free.