Survey finds EPF guide doesn’t reflect real cost of living

The survey by a financial portal finds average market price of a property is RM372,801 although annual median household income is only RM188,208,

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, a financial portal said today.

iMoney conducted its monthly budget survey this year 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 which makes the budget challenging for single people to adhere to.

“The Belanjawanku guide recommends single people to spend RM300 on housing, but the survey found that the average single person spends RM1,100 every month on housing, bringing their monthly budget up by more than 360%,” iMoney said in a statement.

Houses in the country 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.

iMoney also said that a home is only considered affordable if the median home price is less than three times the median household annual income.

Although EPF’s Belanjawanku guide for the median wage for singles is 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.

“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% spike at the end of 2018,” it said.

The statement said 36% 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 CEO 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 through providing more educational content and workshops.

He also said it is important to ensure 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.