Most Malaysians, according to the Department of Statistics Malaysia (DOSM), can be defined by their household incomes. Eighty per cent of the income-earning population are in the M40 and B40 categories.
In its 2022 Household Income & Basic Amenities Survey Report, M40s had an average household income of RM7,971 while the B40s had only RM3,401 for an average household size of 3.8 persons.
Recent data reveal that B40s and M40s are having it tough financially on several fronts.
Many claimed in surveys that prices of everyday essentials such as food, rice and services have increased significantly. Rising housing, education and healthcare expenses also burden their monthly budgets, some to the point that their incomes are no longer able to meet their living needs.
For B40s facing living cost-to-income disparity circle, they rely on cheaper food options. But rising prices of goods and services is an ever tightening noose.
While there are various government assistance programmes aimed at the B40, such as the Rahmah Cash Aid programme (STR) and housing subsidies, they are temporary band aids and do not address the root of the B40 socio-economic problem.
Meanwhile, M40s who are not beneficiaries of government cash aid, find their monthly finances strangled by service tax hikes on power and water, and rising prices of water, electricity, imported goods and even raw chicken.
With claims that groceries have already increased by 50 per cent in the recent 3 months, many M40s will find themselves on the road to financial insecurity as savings diminish.
We can also look at affordability from my Kedai Nasi Kandar and Teh Tarik (KNKTT) experience. If we applied my KNKTT test to the B40, the total monthly meal cost of RM3,600 would have plunged our B40s with only RM3,401 into debt.
And our M40s with RM7,971 would lose half their monthly income to nasi kandar and teh tarik. (Simple formula of three persons per household having only two meals of nasi kandar and teh tarik per day over 30 days).
It comes as no surprise that 40 per cent Malaysians have already taken up a second job or are contemplating to do so because they can't afford the rising cost of living on one paycheck according to Randstad Malaysia's 2024 Workmonitor Research.
Housing affordability is another toughie. Statistics derived from DOSM median household income from 2012-2022, and average house prices from the National Property Information Centre for the same period, show that house prices outgrew salaries of most Malaysians.
Annual salaries only grew 5.75 per cent year-on-year to RM76,506 while the median house price increased by 7.5 per cent to RM350,000 by 2022. The median house price to salary means Malaysia has a median multiple of 4.6 (RM350,000/RM76,506), which is way above the affordable price-to-income ratio of 3.0 stated by the Central Bank of Malaysia.
This "seriously unaffordable" housing assertion is backed by Khazanah Research Institute's 2019 report.
The numbers don't lie. Numbeo's Malaysia Cost of Living Index in June 2024 estimates a family of four monthly costs at RM8,036.10 without rent.
In all fairness, the federal government and Prime Minister Datuk Seri Anwar Ibrahim are putting in effort to help most Malaysians survive the tough financial times.
It includes a plan to build 500,000 affordable homes at between RM100,000 to RM400,000 by 2025 through PR1MA, PPR, Residensi Wilayah, Rumah Ikram Keluarga Malaysia, and SPNB.
Savings from fuel and utilities subsidy cuts are being channelled in the form of cash aid to the B40s. The Madani Framework should increase domestic job opportunities by increasing foreign direct investment and growing domestic industries.
The question on everyone's minds will be, "Are the efforts enough?"
I'm confident the personal financial challenges of Malaysians weigh heavily on Datuk Seri Answer's mind, as evident from reforms undertaken during his office. The more relevant question is whether progress on his economic and democratic reforms are leaving Malaysia's B40 and M40 cost-to-income issues unresolved.
My two cents to the Prime Minister is to consider policy reforms that are pro-financial inclusion. I view financial inclusion simply as ensuring every B40 and M40 has access to the knowledge and tools to manage their personal finances better.
The logic is irrefutable. When Malaysians are struggling to make ends meet, financial literacy will take a back seat to immediate needs.
Therefore, the next iteration of the National Strategy for Financial Literacy 2019-2023 by the Financial Education Network (FEN), and financial literacy resources provided by organisations like the Credit Counselling and Debt Management Agency (AKPK), Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) should focus on financial inclusion and security.
This means policy, knowledge and tools to help B40s and M40s work better, earn better, spend better and save better. Only thereafter will they be in a position to invest and retire better.
On the same note, Malaysians also need to help themselves and each other to better understand the Moneyverse and manage their finances.
*The writer is the Money Expert with The Better Foundation, and Creator of The Better Approach to achieve financial inclusion and security