Can you afford it?

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Posted on 6 October 2011 - 03:17am

Natalie Shobana Ambrose
INTERNATIONALLY acclaimed Suzie Ormon’s interactive TV segment Can I afford it? is hard hitting. A woman who doesn’t mince words, Suzie will tell participants who have been dreaming of doing or owning something if they can afford it or not. Expenses detailed, savings listed, the dream stated – and within minutes Suzie will scream DENIED, tell you off for lousy budgeting habits or reward you accordingly.

So in Suzie Ormon fashion and in view of tomorrow’s budget revelation, let’s see if Adam, a 25-year-old engineer living at home with his parents, can afford to live independently in Kuala Lumpur.

Adam earns RM5,000 a month. Once he is done with the basic contributions – tax and EPF – our version of superannuation, Adam’s take-home pay a month is slightly more than RM4,000. Now out of that, he needs to eat, clothe and house himself before he sorts out his wheels – just the bare necessities. Will Adam make ends meet?

Now this is a modest budget for someone like Adam who grew up in a middle-class family, enjoyed meals at restaurants, satellite TV, the comforts of living in a house with a small garden and not just room. On his salary and based on this modest budget, Adam lives in continual rising debt each month and has zero savings – nor can he afford a holiday, buy a computer or meet with any accident – hospital bills and car repairs would cost too much.
Furthermore, in order to afford property and the mortgage, he would not be able to eat in order to save for the 10% down payment and lawyer’s fees. With banks offering 30-40 year loans, Adam at 25 should already have a home loan with a 35-year tenure, meaning he would have to work until he was 60 to pay off that loan.
It’s proven that single people end up paying substantially more proportionally towards basic living costs compared to married people. So what happens if Adam gets married, has a child and his wife becomes a homemaker? How will he afford to feed two more mouths, milk formula, diapers, baby clothes, insurance, save for the child’s education, maternity care and the list does go on.

The face of Malaysia’s urban poor has evolved and now includes different segments of society. Imagine if Adam were on a tight budget, what other Malaysians earning less are living without. The experts and politicians say we need to live within our means and save 30% of our income. In Adam’s case, saving RM1,500 is next to impossible unless we cook the books and he stops eating. We can argue that he should take public transport – but our public transport system is not very reliable nor does it connect well – so Adam will be spending more time waiting for the bus that is either too packed or has missed a stop, then heading to the train station, and then taking a cab to work – all of which will cost quite a bit in time also. If Adam works late, or if torrential rains hit, he will be stuck.

Adam should live closer to his office, but the cost of real estate in the city is not at all affordable. We haven’t even discussed issues of safety, work-life balance and the occasional splurge, or say McDonalds.

If we do basic calculations – the cost of a Double Cheeseburger in Malaysia is RM6.55, while it costs US$1 (RM3) in the States. The cost of a whole uncooked chicken in England is £4 (RM20) compared to RM15 here. Now if we take the percentage of wage earned to cost of living, Malaysians bear a very high cost of living. The 2010 Prices and Wages report by Swiss Bank UBS AG states that Malaysians have 33.8% purchasing power compared to New York, and 42% that of London, 31.6% that of Zurich and 33.7% of Sydney. Imagine how much better Adam’s classmates working overseas are doing – and we wonder why the brain drain figures are so high in this country.

Now, how much more can Adam tighten his belt and live within his means if his salary doesn’t allow him to live independently. In the words of Suzie Ormon, Adam has been DENIED living on his own.

Who knows when Adam will be able to afford to live independently, provide for a family and look after his parents. Instead his aging parents who paid for his education so that he wouldn’t have a study loan to service, will have to continue supporting him if the cost of living continues to head upwards and salaries remain as they are.

In view of tomorrow’s budget, I’m glad it’s touted to be one that cares for the people. I would also hope that instead of just pumping more and more money from a deficit budget, greater efforts are concentrated on curbing corruption and frivolous spending, so that the real benefactors of the budget would be the people.

Natalie hopes this budget will live up to its promises and that Adam’s generation will be able to provide like their parents did.

Pandangan aku la kan, taraf hidup kat Malaysia ni memang tinggi. Gaji tak setimpal. Dan paling penting sekali, kekayaan hanya berlegar antara golongan tertentu sahaja. Renung-renungkan la..