The wealth figure to becoming middle class in Malaysia
After a few months of saving 50% of my pay, I question on what’s next. What's the asset number do I need to be considered in the middle class? At what point could I say – I will stop saving and be all-out-generous? Because I feel poor. Despite earning the national median income, I feel like I can't afford the lifestyle with Starbucks and Topshop that many teenagers do. They must have a lot of wealth to fund this lifestyle, income aside. Here's my little quest to find out that figure.
The first reference I have is the Global Wealth Report released by Credit Suisse Research Institute. In 2016, the average wealth of Malaysian individuals is $24,429, about RM95,000 depending on currency change. The second reference I have is on income distribution. Not an apple to apple reports but that’s what I could do best for a quick two-hour analysis.
What I gathered is, if the average wealth per person is RM95,000, 5 people will make an RM475,000 pie. The wealthiest person (Top 20) controls 53.8% of the pie, so if you are the top 20% rich, you own RM255,000. Under this statistic, about 6 million people in Malaysia would have an asset of RM255,000. If you own assets of this value, you are the top 20% richest in this land.
I am not very convinced of this figure. That's 5 Myvi's to be the top 20%. An entry level car cost RM40,000, and a small service condo in KL, JB, Penang, Miri, Kuching, even Ipoh would cost RM350,000. I am living with decent food, minimal insurance, bare basic rent and transportation – RM2,000 a month. If I buy a house, RM250,000 will easily be the housing interest cost while RM95,000 will only cover my 3-4 year expenses. I can’t possibly stop saving and be all-out-generous at that figure.
When you are stuck, you always refer to the next best. In this case, I choose Singapore. We share the same sun, one big giant sun and drink the same water. One generation has passed since both nations started at the same track, we can't be that different. How much money do I need there to be considered as the medium class? On the same Global Wealth Report, Singapore adults have an average wealth of $276,885, or RM1.1 million. (Or 30-40 years at my current expenses), much more realistic?
It's sad that I will need to work without hiccups till retire and may not necessarily achieve that figure. But it seems important. I will suffer the drop in living standard if I don’t keep up with global standard. When I look into the figures of other developed nations, it seems like $200,000 is the reality. RM1.1mil is the minimum requirement for the middle class if we become a developed nation.
What do you think? Is RM255,000 asset enough for you to live a lifestyle of the middle-class group? How likely would you reach a million if not?
Note: As always, statistical figure is just a guide. It shouldn't determine how exciting and impactful we could choose to live this life.