Recently, an anonymous housewife shared how she manages to save RM200-250 per month on her husband’s RM1,500 salary, even with 3 kids.

After EPF deductions, the take-home pay is only RM1,335. 😬

In the post, she mentioned that she is a full-time housewife, her husband is the sole breadwinner, and they have three children.

They are currently staying in a People’s Housing Program (PPR) flat and pays RM124 per month for rent.

Fyi, PPR is initiated by the government to meet the housing needs of low-income groups. The rent can go as low as RM124 per month for a 3 bedroom, 2 bathroom apartment, with the size exceeding 700 sq ft.

Requirements to be eligible:

• Malaysian

• Above 18 years old

• <RM3,000 total monthly household income

• Applicant and spouse have never owned a home

• Adhere to the additional conditions set by the State Government

Apart from staying in a low cost flat, the housewife also saves money by breastfeeding and using cloth pampers for her baby, which she washes and reuses.

She even allocates RM200 per month for both parents. As for insurance, she pays RM20.40/mo for life coverage.

More importantly, she buys stuff using cash, not with instalments.

Her discipline and dedication on saving has allowed her to go for a budget holiday twice a year. So far, she has managed to save up enough to afford a Kancil, two motors, and other essentials. 🎉

The post has gone viral on Facebook and shocked netizens. Many praised her discipline and dedication on saving and felt grateful of their own financial situation.

That said, there are also comments saying that though the housewife can live off RM1,500, it is by no means a justification that the minimum wage should stay this way.

Some even questioned the validity of her breakdown and said that divided weekly, she spent no more than RM100 for groceries, which is unrealistic in this day and age.

I conducted a live session centered around this topic on Sunday (19 Jan) with financial experts Hann Liew and Sani Hamid. We also tackled practical budgeting tips that you should know, regardless of your current income.

Listen to the full replay on Spotify.

Scroll down for a QNA breakdown of the discussion.

Q1: What are some of the budgeting tips that can be taken away from the post?

Hann: The housewife ensures that she manages to save RM200-250 per month. Bear in mind, she’s able to do so even with her husband’s pay literally at the minimum wage.

So if you feel that you’re struggling to save even with a higher pay, you should probably look at this housewife’s breakdown - she lists all of her expenses and knows exactly how much she spends, down to every penny.

But if you find it difficult to breakdown your expenses, here’s a simpler method: treat yourself as a bill every month and pay yourself first.

This housewife is saving 10-17% of her husband’s pay, which if combined with EPF contributions, her monthly saving rate is actually 21-28%. You can use this as a benchmark to determine how much you should save.

During the start of the month, allocate 10-17% of your pay to somewhere else—a different savings account, cash app, or ASB/ASM—it doesn’t matter, as long as you don’t see the money frequently.

This way, you can spend the remainder of your money without any guilt because you’ve already saved for your future.

Sani: If you look into the housewife’s breakdown, you’ll see that she’s accumulating a positive balance every month. This is the key towards financial freedom.

The equation is simple: Income - Expenses = Savings

But simple is not easy. Every month, you have to make sure that you spend less than you earn, so you won’t accumulate debt.

Q2: The housewife mentioned that she pays for stuff upfront with cash and does not dare to use instalments. Do you think this is a good approach?

Sani: Debt is a trap that people fall into very easily, especially with the existence of more convenient options (like Buy Now Pay Later, Instalment plans, etc.). You’ll think that: “Oh it’s just RM120 per month. I can pay it off with my RM2.5k salary. I’ll make sure to set aside this amount every month.”

Banks and loan providers are fine if you pay your loans on time, but they’re just waiting for that one missed payment, that one month where you said “My budget is a bit tight this month. CNY is coming, and I have to buy new clothes and spend a little more on food. I guess I’ll just skip this month’s repayment and pay it next month.”

The interest of your missed payments will quickly add up, and the next month you’ll probably say: “I’ll wait for my salary to come in. This time I’ll pay up.”

Then it leads to you waiting for your bonuses, waiting for your income to increase, waiting and waiting for another month.

You can see where this leads to: A Debt Spiral.

So, try to avoid buying items with instalment or BNPL as much as possible, unless you’re very disciplined. These “easy debts” are a gateway for people to snowball their debt.

Q3: Though the housewife can live off RM1,500, it is not a justification that the minimum wage should stay this way. Do you agree? What’s stopping the government from hiking wages to RM3,000?

Sani: In a free market, businesses have to remain competitive. Currently the mandate that they’re abiding by is RM1,500 as the minimum wage. If the government hikes it to RM1,700 (which is already confirmed and will start on 1 Feb), employers have to readjust their costs and eliminate inefficiencies (ie. by automating some of the work or laying off employees that add no value to the company).

However, if the government hikes the wage to RM3,000, employers and businesses cannot keep up with this drastic change. Many of them will close down or even go bankrupt.

This is the reality of a competitive market. I’m not trying to say that wages should stay stagnant, rather, they should increase along with productivity.

Q4: There are youngsters taking up loans to buy Honda Civic with RM2k salary. Are there any guidelines for people to follow so they can comfortably afford a car, house, splurge on luxuries, etc.?

Hann: I only have one rule. Ask yourself, after purchasing the Honda Civic, are you left with a positive balance at the end of every month? If yes, then go ahead and make the purchase.

But if you’re sacrificing your wellbeing and going into a negative balance, then it’s a telltale sign that you cannot afford the purchase.

That said, there is a more practical budgeting guideline that you can refer to: The 50/30/20 Rule

You can adjust these percentages to fit your budget, but make sure to allocate some (at least 10%) for your savings. Ensure that housing doesn’t take up more than 30% of your income. Instalments for your car should be less than 20% of your salary.

Q5: What’s something that citizens can change starting today to better their financial situation?

Sani: Take out a pen and paper, list down on the left, all your expenses and current debts. On the right, list down your income. Deduct the Income with Expenses.

If you end up with a negative balance, it means you’re accumulating debt every month. You’ll need to work on cutting down your expenses, increasing your income, or a combination of both.

If you have a positive balance, figure out ways to further increase that sum every month, so you can achieve financial freedom sooner.

Hann: The housewife’s case proves that no matter how much you’re currently earning, there is always someone who’s making less than you and still manages to save every month.

So, if you’re earning RM3,000 right now and find it difficult to save, ask yourself: “How can I live like someone who’s earning RM2,600? How can I change my habits and spending to live slightly below my means?”

By doing so, you’ll instantly save RM400 per month.

Listen to the full replay on Spotify:

Hann Liew is a personal finance expert with over a decade of experience in the financial industry. Previously the CEO of RinggitPlus, he is a licensed financial planner (CFP) and a chartered financial analyst (CFA), and has helped tens of thousands of Malaysians on their path toward financial literacy. Hann is currently the founder of Halogen Capital, the world's first Shariah-compliant crypto fund manager that provides institutional exposure to Bitcoin and other cryptocurrencies.

Mr. Sani Hamid is an economist and certified financial planner (CFA). He’s a frequent commentator in the media and has over 30 years of experience in the financial markets, having worked for companies such as S&P Ratings as a Director in the sovereign team overseeing the ratings of countries such as Indonesia, India, Malaysia, and Singapore.

⚠️ Disclaimer: Financial planning is a complex process and these two speakers can only offer their general opinions on budgeting. If you want more detailed planning and advice, you can DM both of these speakers personally (priority is given to patrons of The Futurizts).