Round up

The Finance Of Different Income Groups In Malaysia

It’s the time of the year again where newspapers talk about the year’s income and economic growth. Not wanting to miss the train, I like to share two graphs about the finance of Malaysia’s different income groups. I am so kiasu sometimes.

This is how the typical Malaysia fare when it comes to income, expenditure, and spending. 

The good news is, on average, every income group has got surplus saving each month. It is quite unbelievable that the average pay for the Top 20 is about RM14,000, less than USD4,000. And our ministers are wondering why people choose to work overseas.

If you can’t find a job, go Uber full-time, and you should be around 40-60% percentile (M40). Percentage-wise, it’s not too bad for something that everyone can do. But you probably won’t feel the “privilege” of being above 50% because the gap is so near to B40.

The graph is based on official records, and I think there is much dishonest or unrecorded money, especially among urban dwellers. Just look at how people spend on branded bags in shopping malls; unless they are all single T20 income earners. Also, the graph is not linear; it’s exponential. Breaking into the top 20 is not easy.

How do we spend it? 

As always, the lower you are, the more % of your income goes to basic needs like food and housing. I wish we have food stamps here. I have volunteered in lower-income group communities to know that giving cash handouts to financially illiterate parents doesn’t always help feed the kids. 

Property prices are still near the historical high. I believe that it will normalize soon as all the high-density development completes. Nearly all my friends who could afford to buy a house have already bought one and are just waiting for their unit to meet the latest by the end of 2017 before moving out of their rented place. 

It’s normal for people to spend 25% or even 30% of their housing income. But this can’t be our budget; we aren’t typical because we want to make a difference in our finance. Set the limit for housing at 15% of your income, and you’ll have 10% extra each month. If you have a housemate that runs the clothes dryer the whole day, kick him out. 

This also shows that RM5000/month is the current minimum financial freedom mark. It is only at above RM5000 that you can have the real freedom to choose the % of spending for every category.

Do these figures reflect your financial situation?

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