This article first appeared in Forum, The Edge Malaysia Weekly on June 26, 2023 - July 2, 2023

A survey has revealed that a single person who depends on public transport and lives within 30km of the centre of the Klang Valley needs at least RM1,930 a month. If he has a car, the budget is RM2,600. A family with one child needs RM5,980 while one with two children would require about RM6,890.

The survey, which was conducted by the Employee’s Provident Fund in collaboration with the Social Wellbeing Research Centre, Universiti Malaya, for the Belanjawanku Guide 2022/2023, also covered senior citizens.

The survey covered 12 other cities in Malaysia including Kota Kinabalu and Kuching. But the focus was on the Klang Valley, which is the most expensive place to live in in Malaysia.

The initial reaction is, are the budgets realistic?

A simple answer is yes. A single person can go on with his or her life with less than RM2,000 per month. As for families, the estimated budgets revealed by the survey are realistic amounts for them to handle their affairs on a month-to-month basis.

However, they have to be frugal in their spending and modest in their style of living. The amounts are enough for people to live on, have a roof over their heads and not starve.

But the more pertinent question is whether this frugal lifestyle can be sustained for the long term.

Be it an individual or families, there surely would be some who want more than to just live within their constrained means. For instance, the survey assumes that the individual lives in a rented room. In reality, most individuals rent rooms as a temporary measure. Over the longer term, they tend to look for a studio apartment or a small flat, which would cost at least RM1,000 per month in rental.

The person also cannot afford to splurge on extras such as entertainment or have a nightlife. The budget for food is only for non-alcoholic beverages. It does not take into account the few hundred ringgit a month most individuals tend to spend on entertainment. A vacation abroad would be quite difficult when one has a monthly budget of less than RM2,000.

As for families, the budget assumes that the cost of housing is RM1,000 a month and the cost of childcare is RM1,150 per month.

A couple with two children will find it almost impossible to afford a house within the city centre. The cheapest single-storey houses are easily more than RM1,200 per month and those are difficult to come by.

It is possible to get houses or flats at RM1,000 per month on the fringes of the Klang Valley, but the location and neighbourhood may not be ideal.

Childcare is another expensive item for families. The cost of having a full-time maid is certainly more than RM1,150 per month, if one takes into account the upfront cost one incurs to hire the domestic helper.

Which is why most families with constraints on their monthly budget tend to live near their parents. But as a long-term arrangement, how many couples have the luxury of counting on immediate family members to assist them with childcare?

Hence, it comes back to the question of how many families would be able to lead a frugal life on a sustained basis. The answer is obvious — it would be difficult.

The study serves as a useful guide for individuals, small families or senior citizens to manage their finances. It is also useful to the government agencies when they channel resources to help people on the ground.

Led by Prof Emeritus Datuk Dr Norma Mansor, who is director of the Social Wellbeing Research Centre, Belanjawanku is the third in a series of surveys conducted to determine the pattern of spending of individuals and households. In many ways, it determines the cost of living in different towns and cities in the country.

The outcome was arrived at after data was harvested from focus group discussions, questionnaires and price surveys in shops. The data had been collected since 2017. In the latest survey, 1,200 questions were posed to people living in the Klang Valley and 12 cities and towns.

The survey covers not just basic spending on food, housing and transport, but also drills down to expenditure incurred for discretionary items, social participation and ad-hoc spending.

Discretionary spending includes contribution to parents, vacations and medical care while ad-hoc expenses are one-off items such as children’s school fees or car repairs. Social participation covers expenses for weddings and gatherings.

In a nutshell, the outcome of the survey is a fair reflection of the reality on the ground in terms of cost of living. It is not surprising that the cost of living is the highest in the Klang Valley, followed by Georgetown and Johor Baru, while the cheapest places to live in are Alor Star and Kota Baru.

The biggest expenditures are food, housing and transport. Those staying in the Klang Valley pay the most for almost all segments of expenditure, from housing to ad-hoc spending. The only exception is public transport. An individual using public transport in the Klang Valley forks out RM140 per month while his counterpart in Kuala Terengganu pays RM150 per month.

The cost of public transport is high in almost all of the 13 places surveyed, ranging from RM110 to RM140 per month. The only exceptions are Seremban and Kuching, where the cost is RM90.

The survey also touched on other areas that impact the cost of living. For instance, it suggests that the term “affordable housing at RM300,000” needs to be reviewed as houses in that price range already exist and are not being taken up.

Financial literacy was also severely lacking among the respondents. However, only one in three admitted to not having any skills in financial literacy.

Another area is lack of emphasis on savings. The “live for today” attitude is prevalent. What it means is that most respondents place savings at the bottom of their priority list, which supports the outcome of another piece of research that says 52% of the population cannot survive for more than three months without a job.

M Shanmugam is a contributing editor at The Edge

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