PUTTING aside monthly savings is a big challenge for those in the lower income group due to unforeseen expenses and other financial commitments.

Representatives of the Bottom 40 income-earners, or B40, told The Malaysian Insight how much they can save depends on many factors, such as whether they are married, and how many dependents they have. 

The B40 median household income is below RM3,000, according to the Household Income and Basic Amenity Survey 2019 research findings.

They were responding to advice from an expert that those in the B40 group should to try to save 30% of their monthly income, including EPF contributions, for rainy days and retirement.

This is based on Employees Provident Fund (EPF) guidelines released in April, called the Belanjawanku, which was aimed at helping Malaysia’s B40 to manage their expenditure, set aside a portion for savings and not fall into the debt trap.

Nur Fatihah Yusoff , a corporate social responsibility officer in a private company, earns a monthly salary of RM2,500, and would have about RM200 left for savings on months where there are no additional expenses.

“I have savings set aside from my EPF contributions. However, it’s not stable because I do have some commitments. The amount each month is not the same,” she said.

“There are unexpected expenses sometimes, like healthcare, emergency, giving family money,” said the 27-year old who lives with her family in a rented home.

Nur Fatihah’s monthly expenses typically include rent, food, insurance, servicing her education loan and personal contributions.

For 25-year-old Iskandar, who works as a despatch clerk, being unmarried with a monthly salary of RM1,100, he has been able to set aside a portion of his salary for rainy days.

“I have been able to cover my expenses and give my parents money. I think it is possible because I don’t have commitments and I am not married,” he said.

“My EPF is a safety net for the future,” he said.

As for 43-year old Syazarul, a father of five with a monthly income of RM3,000, saving is almost impossible.

“With the cost of living in the Klang Valley, it is not possible to save, especially if you have commitments. The biggest expenditures are on food, transport and fuel.

“Four of my kids are going to school and they take the train. It is not cheap. That alone comes to almost RM40 a day,” he said.

Syazarul has contributed to EPF for 10 years. He said his account has RM30,000. He is now employed at City Hall in its pension scheme unit.

“We have to take up more than one job to survive in Kuala Lumpur,” he said.

“If you are single and you earn RM3,000, then perhaps you will have some money for savings. It is not possible for people with family,” he said.

Navamani, 56, who contributed to EPF for three years when she was employed at a hospital, said she withdrew the RM4,800 for housing purposes.

“I used to earn RM950 at that time. I was contributing and I had a son who was unwell,” said Navamani who lives in a DBKL flat with a monthly rental of RM124.

“Right now, I am not contributing as I work for a cleaning company on a contract basis. I still earn RM950.

“But I’ve never had savings due to my son’s condition,” Navamani told The Malaysian Insight.

She said the salary was enough to sustain for about half a month, including her son’s medical bills.

Former journalist, Ragunathan, 57, said he had only managed to accumulate slightly more than RM100,000 in EPF savings at the time of his retirement.

“I am just a SPM holder and the most I have earned was RM2,200, so how much in EPF contributions would I have. It came to around RM100,000 plus, that too, we withdrew part of it and bought a house,” he said.

According to the EPF, one should ideally have RM240,000 in his account to live on for 20 years after retirement.

Ragunathan said low wages may also serve as a hindrance for contributors, especially those belonging to the low income group, to raise RM240,000 by the time they retire.

The EPF Belanjawanku guide estimates that a resident in the Klang Valley, who is single and uses public transport, requires RM1,870 a month to get by, while those with their own transport need RM2,490 a month.

A married couple requires RM4,420-RM6,620 a month depending on the number of children. An elderly couple can get by on RM3,090 a month. – August 17, 2019.