The past generations used to aspire to make it to middle-class status as it means having a decent home and affordability to lead a comfortable lifestyle.
The middle-tier households are also one of the main economic populations in a country, contributing to the nation’s economic growth.
How Much Do Mid-Tier Households Earn?
In Malaysia, people are segregated into three income groups namely, the bottom 40% income earners (B40), middle 40% income earners (M40) and top 20% income earners (T20).
According to the Department of Statistics Malaysia (DOSM), households in the M40 income group constitute of those earning a collective monthly income of RM5,250 to RM11,819.
Households in the B40 income group earn anywhere from below RM2,560 to RM5,249. Meanwhile, the highest income earners in the country have an income of RM11,820 to RM15,870 and above.
| Income Group | Average Income | Income Threshold | |
| T20 | T2 | RM20,776 | RM15,870 and above |
| T1 | RM13,475 | RM11,820 – RM15,869 | |
| M40 | M4 | RM10,552 | RM9,450 – RM11,819 |
| M3 | RM8,523 | RM7,690 – RM9,449 | |
| M2 | RM6.979 | RM6,340 – RM7,689 | |
| M1 | RM5,770 | RM5,250 – RM6,339 | |
| B40 | B4 | RM4,764 | RM4,310 – RM5,249 |
| B3 | RM3,875 | RM3,440 – RM4,309 | |
| B2 | RM3,034 | RM2,560 – RM3,439 | |
| B1 | RM2,012 | Less than RM2,560 |
Source: Department of Statistics Malaysia (DOSM)
Household Expenses
Household expenses vary depending on several factors like the city one lives in and size of a family. Highly populated urban cities such as Kuala Lumpur are likely to have higher living costs than other cities due to higher demand for residential properties with rentals being more expensive.
According to EPF’s household expenses guide Belanjawanku Guide 2022/2023, the estimated living costs for a married couple with two children living in Kuala Lumpur is RM6,890 per month. Belanjawanku Guide provides estimated minimum monthly expenses on goods and services required by Malaysians to have a reasonable and acceptable standard of living. Meanwhile, the same household would require RM5,430 to live in Alor Setar, Kedah – the most affordable city to live in in the country.
The expenses have surpassed the monthly income of households in the lower bracket of M40, who earn salaries starting from RM5,250.
The expenses for a married couple with one child in Kuala Lumpur are RM5,980 per month while it would cost a married couple RM4,630 per month to live in the city.
Challenges Faced By Middle-Income Households
As living costs increase, some households including those in the M40 category could face difficulties coping with daily expenses. In the aftermath of the pandemic in 2020, around 20% of households in the M40 group had dropped to the B40 group, according to news reports.
The financial challenges could also be exacerbated by their ineligibility to receive government aid and subsidies reserved only for the bottom 40% income earners.
Currently, the Malaysian government is reevaluating the calculation of Net Disposable Income (NDI) to improve the method of determining the households that are in need. The government will be looking at the Basic Minimum Living Expenditure, which is the cost needed to have basic necessities.
Follow Us On Telegram & Instagram!
Join our Malaysia Telegram channel (@dollarsandsensemy) and follow our Malaysia Instagram Page (@dnsmalaysia) as we bring you the latest finance content in Malaysia!
