MORE than seven in ten formally employed Malaysians are earning RM5,000 or less a month, underscoring the widening gap between wages and the cost of maintaining a reasonable standard of living, according to economists.
Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid saying that 70.2 per cent of formal sector workers fell within this income bracket as of December 2025, making them particularly vulnerable to rising prices and escalating living expenses.
He warned that mounting living costs continue to erode household purchasing power, especially among families with dependants residing in major urban areas.
Drawing on Malaysia’s Monthly Expenditure on a Decent Living framework, he noted that a married couple aged between 18 and 29 with two young children in Kuala Lumpur requires approximately RM6,183 each month merely to meet essential living needs.
"Should a household earn less than RM10,000 a month in urban areas, they may face difficulties in meeting basic needs and other commitments, including building emergency or long-term savings.
"By contrast, a household of the same size in Kuala Terengganu requires only about RM3,845 a month.
"This demonstrates that geographical factors such as urban versus rural locations are indeed major contributors to purchasing power and levels of disposable income," he told BH.
The findings highlight the significant disparity in living costs across the country, with city dwellers facing substantially higher financial demands despite often earning comparatively higher wages.
Afzanizam said financial resilience depends not only on income levels but also on prudent financial management and responsible borrowing practices.
According to data from the Malaysian Department of Insolvency, personal loans remain the leading cause of bankruptcy cases, followed by business loans, vehicle hire-purchase financing, housing loans and credit card debt.
"This shows that uncontrolled debt management can have a major impact on the financial stability of individuals and families," he said.
Separately, Faculty of Economics and Muamalat lecturer at Universiti Sains Islam Malaysia (USIM), Professor Dr Nuradli Ridzwan Shah Mohd Dali, estimated that around 80 per cent of Malaysians continue to live from pay cheque to pay cheque.
He said many households spend the bulk of their monthly income on daily necessities, leaving little or no surplus for emergency savings.
"The majority of Malaysians remain in a very constrained financial position. The difference is that some have a small amount of savings while others have none at all," he said.
Commenting on the growing tendency among some individuals to seek immediate loans to cope with daily expenses, Nuradli acknowledged that such practices exist but said financial distress is not always the sole reason.
"Sometimes individuals who borrow are not necessarily facing extreme hardship, but may be driven by other factors such as no longer qualifying for bank loans, having a poor credit record or being blacklisted.
"Such circumstances lead them to choose unlicensed lending," he said.
However, he strongly cautioned against turning to illegal moneylenders, warning that doing so often worsens financial difficulties rather than solving them.
"People should not choose unlicensed loans or loan sharks as a solution because it will only further worsen their financial position.
"Instead, those who are eligible should seek assistance from zakat institutions, welfare agencies or family members before considering any form of borrowing.
"If borrowing is solely to meet basic needs such as food, shelter and daily necessities, they should seek legitimate and safe channels of assistance.
"Loan shark borrowing is not a solution because it can cause debt burdens to become even larger and more difficult to control," he said. - June 9, 2026
