‘Malaysians unable to keep up with EPF spending guide’

KUALA LUMPUR: Malaysians are unable to keep up with the Employees Provident Fund’s (EPF) “Belanjawanku Expenditure Guide”, with the challenges lying in low incomes and high housing costs, said iMoney.my.

iMoney, a financial comparison website, conducted its Monthly Budget Survey 2019 with 1,000 respondents based in the Klang Valley to check if the guide tallies with the real cost of living in Malaysia.

According to the survey, there are two discrepancies in the Belanjawanku guide that makes the budget challenging for single people to adhere to.

Single people are spending over 360 per cent more on housing, while recommended budgets do not match the median income for singles and Malaysians are making up for it with personal loans, iMoney said in a statement yesterday.

“The Belanjawanku guide recommends single people to spend RM300 on housing, but the survey found that the average single person spends approximately RM1,100 every month on housing, bringing their monthly budget up by over 360 per cent,” it said.

Malaysian houses have become unaffordable, with the average market price of a property at RM372,801 while the annual median household income is only RM188,208, it said, noting that a home is only considered affordable if the median home price is less than three times the median household annual income, it added.

Although EPF’s Belanjawanku guide for the median wage for singles is approximately RM2,650 in Kuala Lumpur, iMoney’s survey found that single-car owning individuals spend a total of RM2,695, without taking into account expenses for personal care, annual expenses and savings, it said.

“To make up for the actual costs of living, Malaysians have been increasingly leaning on personal loans.

“Based on iMoney’s internal data and customer surveys, there has been a sharp rise in applications for personal loans between 2016 and 2018 with a 370 per cent spike by the end of 2018,” it said.

Thirty-six per cent of the applications were made with the intention of personal refinancing and debt consolidation, indicating that there is a substantial number of Malaysians still struggling with debt.

Group chief executive officer Mitul Lakhani said the spike in personal loan applications, as well as loan defaults in personal financing, is an indicator of the challenges Malaysians are facing in maintaining good financial health.

He said there is a crucial need to improve financial literacy not only through providing more educational content and workshops, but also by ensuring that there are facilities such as an accessible credit score report and consultation that can help with better decision making when it comes to personal finance.

With iMoney’s CreditScore tool provided for free, he said Malaysians can access their credit score to better understand their credit health and debt-service ratio.

“With that information on hand, Malaysians will be better informed when making financial decisions, particularly when selecting and applying for financial products.

“It is important for Malaysians to obtain a full picture of their financial health and we hope that this will encourage them to be more responsible in their borrowing and managing of personal finance,” he added.