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3KLANG VALLEY • 2019
BELANJAWANKU?WHAT ISAn expenditure guide, providing estimated minimum monthly expenses on various types of goods and services for different households in Malaysia.
Belanjawanku can help Malaysians plan their personal and family budgeting to achieve a reasonable standard of living.
It is developed based on actual spending patterns on common goods and services by urban households in the Klang Valley.
A Reasonable STANDARD of Living is...
Having enough money to meet basic needs
Living a purposeful and meaningful life
Being involved in community activities and gatherings of families and friends
4 KLANG VALLEY • 2019
How To UseBELANJAWANKU?
Having adequate financial resources to afford not just the minimum basics but also the ability to participate in
society for a reasonable and dignified livingSource: Social Wellbeing Research Centre, 2018
“ “
Choose your household category.
Check the budget estimates for your household category.
Use the budget estimate as a guide for your monthly expenses and personal budgeting.
Refer to the budget estimates for other households for future financial planning.
5KLANG VALLEY • 2019
ELDERLY COUPLE SINGLE(CAR OWNER)
SINGLE(PUBLIC TRANSPORT USER)
MARRIED COUPLE(WITH TWO CHILDREN)
MARRIED COUPLE(WITHOUT CHILDREN)
MARRIED COUPLE (WITH ONE CHILD)
THISIS WHOI AM...
6 KLANG VALLEY • 2019
ELDERLY COUPLE SINGLE(CAR OWNER)
SINGLE(PUBLIC TRANSPORT USER)
MARRIED COUPLE(WITH TWO CHILDREN)
MARRIED COUPLE(WITHOUT CHILDREN)
MARRIED COUPLE (WITH ONE CHILD)
THIS IS HOW MUCH
I NEED A MONTH...
RM4,420
RM5,730
RM6,620
RM3,090
RM1,870
RM2,490
7KLANG VALLEY • 2019
BASKET TRANSPORT
PERSONAL CARE
HEALTHCARE
CHILDCARE
HOUSING
UTILITIES
SOCIALPARTICIPATION
FOOD
ANNUALEXPENSES
DISCRETIONARY EXPENSES
THINGS I USUALLY SPEND ON...
9KLANG VALLEY • 2019
SINGLE(PUBLIC TRANSPORT USER)
Food Housing Transport
RM550 RM300 RM30 RM200 RM100
PersonalCareSavings
Utilities
RM250 RM70 RM90 RM150 RM130
Healthcare
Budget Estimate/month RM1,870
SocialParticipation
AnnualExpenses
Discretionary Expenses
10 KLANG VALLEY • 2019
SINGLE(CAR OWNER)Budget Estimate/month RM2,490
Food Housing
RM550 RM300 RM30 RM770 RM100
RM250 RM70 RM140 RM150 RM130
PersonalCareSavings
UtilitiesHealthcare Transport
SocialParticipation
AnnualExpenses
Discretionary Expenses
11KLANG VALLEY • 2019
Food Housing Transport
AnnualExpenses
SocialParticipation
Discretionary ExpensesSavings
RM870 RM870 RM70 RM1,020 RM290
RM400 RM100 RM300 RM200 RM300
PersonalCare
Healthcare Utilities
MARRIED COUPLE(WITHOUT CHILDREN)Budget Estimate/month RM4,420
12 KLANG VALLEY • 2019
Food Housing Transport
SocialParticipation
Discretionary Expenses
RM1,300 RM870 RM100 RM1,030 RM300 RM650
RM400 RM120 RM340 RM240 RM380
PersonalCareSavings
ChildcareHealthcare
AnnualExpenses
Utilities
MARRIED COUPLE(WITH ONE CHILD)Budget Estimate/month RM5,730
13KLANG VALLEY • 2019
ChildcareFood Housing UtilitiesTransport
AnnualExpenses
SocialParticipation
Discretionary ExpensesSavings
RM1,550 RM870 RM120 RM1,040 RM310 RM1,150
RM400 RM140 RM400 RM250 RM390
PersonalCare
Healthcare
MARRIED COUPLE(WITH TWO CHILDREN)
Budget Estimate/month RM6,620
14 KLANG VALLEY • 2019
Food Housing Transport
AnnualExpenses
SocialParticipation
Discretionary Expenses
PersonalCare
Healthcare
RM850 RM700 RM130 RM500 RM290
RM90 RM230 RM170 RM130
Utilities
ELDERLY COUPLEBudget Estimate/month RM3,090
15KLANG VALLEY • 2019
My financial needs
My general spending behaviour
How much I can afford to spend
My spending budget
Money to put aside for savings and emergencies
My short-term and long-term financial goals
Manage my spending prudently
Make better decisions for the right purpose
Strengthen my financial position
BAS-
UNDERSTAND
SO THAT I CAN...
PLAN
How Can I Use Belanjawanku?
17KLANG VALLEY • 2019
IntroductionA reference budget is a basket, or collection of goods and services that are considered necessary to achieve an acceptable standard of living. Reference budgets are usually estimated for many different individual and family situations. Unlike poverty line income calculations, a reference budget is not used to label whether an individual or a family is “poor”. Aside from spending on just basic necessities, a reference budget also includes items that allow individuals or families to lead dignified lives with active involvement in society. It is the minimum expenditure required to not just survive, but to thrive in society.
Since a reference budget is a useful tool on many levels, the Social Wellbeing Research Centre (SWRC), University of Malaya has started a research programme aimed at compiling a “Reference Budget for Malaysians”, or Belanjawanku, the first results of which are laid out in this publication. Belanjawanku is a compilation of detailed minimum monthly expenses for different baskets of goods and services consumed by different households, to achieve an acceptable standard of living. It is based on actual spending patterns of individuals and families from urban households in the Klang Valley and can serve as a guide for monthly expenses and personal budgeting.
What Goes Into BelanjawankuTo come up with Belanjawanku, the SWRC has put together common expenditures on food, housing, utilities, transport, childcare, personal care, and health for different categories of household. The budget estimates also include monthly average expenses for social participation, involving festival celebrations or attending weddings & funerals; annual expenses for vehicle maintenance, clothing, or instalment payments on furniture &
BELANJAWANKUA Reference Budget For Malaysians
18 KLANG VALLEY • 2019
appliances; discretionary expenses such as insurance, vacations, or contributions to parents; and some savings.
To estimate how much each type of household needs to spend on these items, the SWRC conducted a survey of household expenditures, and survey of prices of goods and services through catalogues, the internet, and at actual business premises, between July 2017 and July 2018. Prices from different sources were averaged, and where there was a wide range of prices, a cut-off point at 25 per cent from the lowest price was used instead.
The SWRC also conducted focus group discussions with academicians, representatives from the EPF, AKPK, the EPU, the National Wage Council, BNM, as well as NGOs, industry specialists, experts from financial institutions, and reference persons from different households. These discussions were added to data from the Department of Statistics’ Household Income and Expenditure Surveys and BNM. Given this wide range of sources, and the addition of expenditures that households commonly spend on, Belanjawanku provides an alternative reference to the official Poverty Line Income (PLI), and is more in tune with the standard of living that Malaysians aspire to.
A Summary of the ResultsUnmarried Malaysians who use public transport, rent a room in the Klang Valley, and do not save, need RM1,620 per month. This estimate includes the basic, social participation, and discretionary expenses. Using a car instead of public transport, raises the required expenditure by 38 per cent to RM2,240 per month. Assuming this individual also wants to save, it raises the total by RM250 to RM2,490, which should provide some financial security for the future. 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.
Not surprisingly, married couples need more to maintain an acceptable standard of living, with the minimum expenditure required increasing 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 per cent to RM5,730, an increase of RM1,310. Having two children
19KLANG VALLEY • 2019
raises the required expenditure to RM6,620, an increase of RM2,200, or almost 50 per cent higher than for couples without children. Belanjawanku includes spending for day care, diapers, milk and baby food, tuition fees, and pocket money, as part of childcare expenses. On top of these expenditures directly related to childcare, other existing expenditures especially on food, increase noticeably when couples have children.
Belanjawanku also estimates the monthly expenditure for senior couples at RM3,090. Senior couples were found to spend less than other families for most of the items in the expenditure basket, with the exception of healthcare, and are also less likely to save.
Comparing Belanjawanku with Actual IncomeSince Belanjawanku indicates the minimum level of consumption required for people to live comfortably, it also helps reveal the minimum level of income needed for different households. At RM1,620, the minimum income required by a single Malaysian living in the Klang Valley is higher than the current minimum wage of RM1,100. However, it is lower than the median wage of RM2,580 in Selangor or RM2,650 in Kuala Lumpur. Similarly, Belanjawanku’s expenditure estimates for families with children also remain below the median household income reported in 2016, where Selangor’s urban household median income was reported to be RM7,443 and Kuala Lumpur’s household median income was RM7,620. Since Belanjawanku serves as a guide for minimum expenses required, any surplus in income is crucial for people to attain better living conditions such as having more comfortable housing as families grow or invest in their children’s education.
However, the minimum required expenses of RM3,090 for senior couples, which translates to an average of RM1,545 per person, is far higher than the RM1,000 a month assumption the EPF uses to calculate its basic savings requirement for every retiree. This suggests that greater attention and focus needs to be given to whether households are saving enough for retirement. This is especially true since even under the RM1,000 a month assumption, more than half of EPF members near withdrawal age are not even meeting this minimum level.
One key insight arising from a detailed examination of Belanjawanku is that aside from spending on food, an over-sized share of Malaysian household spending actually goes to
20 KLANG VALLEY • 2019
transportation when using their own vehicles. For singles and couples without children, the cost of owning a car or motorcycle actually exceeds spending on food. This suggests that increasing the use and availability of public transport would go a long way towards tackling the cost of living burden, and give households a better chance to meet their aspirations.
The Future of BelanjawankuBelanjawanku can be many things to many people. For policymakers and researchers, Belanjawanku can be used as a reference to measure the effectiveness of policy changes (such as the minimum wage and social benefits), and assess the impact of outside events on living standards. For the general public, Belanjawanku can be used as a guide for financial planning and budgeting, and for companies, it can be used as a salary benchmark. Given the variety of uses, Belanjawanku is a valuable addition to the tools available to inform policymakers, NGOs, companies, and Malaysians at large, in making their financial and policy decisions.
With this in mind, under the Belanjawanku programme, the SWRC will periodically publish revised estimates to take into account changes in prices and household expenditure choices. As Malaysia continues on its journey of development, we hope that Belanjawanku will form a common reference point for the dreams and aspirations of Malaysians in achieving a better future.
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21KLANG VALLEY • 2019
Duration of study : July 2017 – July 2018Location of study: Klang Valley
QuestionnaireSURVEY
Focus GroupDISCUSSION
PriceSURVEY
In catalogues, internet, and at actual business premises
Structured questionnaires
Reference persons from different households
Agency representatives - EPF, AKPK, EPU, National Wage Council, BNM, NGOs
Industry specialists and experts from financial institutions
Academicians
SURVEY METHOD & DATA COLLECTION
PRIMARY DATA
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Basic Assumptions ForBELANJAWANKU
PUBLIC primary & secondary
EDUCATION
Average travel distance to work is
30KM
Housing for couples is based on monthly MORTGAGE REPAYMENT or RENTAL
VALUE (whichever is lower)
People are able to make INFORMED
DECISIONS
PUBLICHEALTHCARE
services
Couples own a CAR and a MOTORCYCLE
Housing for singles is based on
ROOM RENTAL People are generally
HEALTHY
23KLANG VALLEY • 2019
SECONDARY DATA
PricingCRITERIA
PublishedDOCUMENTS
Data from DOSM and BNM
Household Expenditure and Income Survey (HES and HIS)
Data on prices from KPDNHEP, LKIM, FAMA, and relevant agencies
PUBLISHED
CONSTRUCTING THE BELANJAWANKU
Average price
Cut-off point at 25% from the lowest price, where applicable
Special offers/discounts not considered
Prices applicable during the survey period
24 KLANG VALLEY • 2019
Message from
Financial literacy is a key determinant of people’s overall wellbeing, which eventually contributes to the nation’s financial stability and an increased upward economic mobility. In active collaboration with the EPF, University of Malaya will continue to promote financial education to enhance people’s ability to handle financial matters.
Belanjawanku is useful as an indication of the cost of living as well as a guide for Malaysians to improve their personal financial management in order to lead a happy and meaningful life. Datuk Ir. (Dr.) Abdul Rahim Hj. HashimVice Chancellor, University of Malaya
Vice Chancellor of UM
Even though money is and should not be everything (it definitely cannot buy lasting happiness and health), it is nonetheless a vital component
in addressing a person’s quality of life. Money must be used in the right way and for the right purposes and this can certainly be
achieved with proper understanding and being knowledgeable in financial matters.
Belanjawanku is the result of many detailed studies
and surveys conducted by both the EPF and the SWRC, and is a powerful tool in helping you to make the right choices in your spending.
Belanjawanku provides a comprehensive guideline on the allocation of your income towards different expenditures such as basic necessities (housing, transportation, food and utilities) and entertainment as well as uniquely Malaysian expenses such as balik kampung and ang pow. In addition, Belanjawanku also gives recommendations on how much you should provide for savings and loan repayments as well as putting aside some cash for emergency spending. We hope the information provided in Belanjawanku is practicable and realistic in helping you manage your expenses as we believe a well planned and executed budget will empower you and your family towards financial independence. Keep a look out as the EPF will be introducing more tools and services to assist you in achieving a life that is filled with meaning and purpose.
Tunku Alizakri AliasCEO, the Employees Provident Fund
25KLANG VALLEY • 2019
Message from
Chief Executive Officer of EPF
27KLANG VALLEY • 2019
AKPK
Annual expenses
Basic needs
Belanjawanku
BNM
Budget Estimate
Childcare
Discretionary expenses
DOSM
Elderly couple
EPF
Agensi Kaunseling dan Pengurusan Kredit
Includes clothing & footwear, furniture & household appliances, school/kindergarten registration fees, and vehicle maintenance, road tax & insurance. These items are allocated on a monthly average
Includes food, housing, transport, utilities, healthcare, personal care, childcare, and annual expenses
A standard monthly estimated spending guide on basic necessities, social activities, and optional items in order for an individual or a family to live a reasonable and meaningful life
Bank Negara Malaysia
Amount estimated based on focus group discussions and price surveys
Includes clothing, footwear, babysitting, diapers, milk & baby food, pocket money, and tuition fees (extra classes or religious classes)
Includes life, health, accident, & property insurance, sports & games, vacations, membership fees, and donations to religious or charitable institutions
Department of Statistics Malaysia
Couples with at least one spouse aged 60 years or older
Employees Provident Fund
28 KLANG VALLEY • 2019
EPU
FAMA
Food
Healthcare
Housing
KPDNHEP
LKIM
NGOs
Personal care
Private Transport
PRS
Economic Planning Unit
Federal Agricultural Marketing Authority
Expenditure on food is based on the recommended nutrient intake from the Malaysian Dietary Guideline (2010) set by the Ministry of Health, Malaysia
Includes care for common illnesses & small injuries, contraception, oral/dental care, and basic family medical chest (first aid kit)
Rental rates for singles are obtained for several districts and based on prices in www.mudah.my, www.ibilik.com, and the Research Structure Plan for Selangor 2035 Report (2010).Owned property prices for couples and families refer to low - medium cost PR1MA and RUMAW1P properties that are below RM200,000
Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna
Lembaga Kemajuan Ikan Malaysia
Non-Governmental Organisations
Includes hand, oral, & body hygiene, sanitary pads, shaving items, hair & skin care, and basic bathroom equipment
Ownership of a 1000cc engine car and a 110cc motorcycle as well as petrol, toll, and parking fees
Private Retirement Scheme
29KLANG VALLEY • 2019
Includes bus, LRT, MRT, and Komuter fares
Average amount as reported by Focus Group Discussion participants in addition to EPF/PRS contributions
Includes festive celebrations (Hari Raya, Chinese New Year, Deepavali, and Christmas), attending weddings, doa selamat, funerals, or other religious ceremonies/rituals, celebrating newborns, wedding anniversaries, and birthdays
Social Wellbeing Research Centre
Includes mobile phone, cable TV, internet, water, and electricity
Public Transport
Savings
Social participation
SWRC
Utilities