So a Bank Negara financial literacy survey just revealed that three out of four Malaysians can’t even pull together RM1,000 if there was an emergency that required a little extra spending. I have to say that I am not surprised.

Personally, I have started to feel that crunch in the economy that everyone has been talking about and to be honest, it has nothing to do with financial illiteracy. Most people in Malaysia are pretty aware of the need for proper financial management.

It’s not that they do not know how to handle the finances, it’s just that the finances are limited and what we can do with one ringgit today is so little compared to what could be done with it maybe a decade or two ago.

When I started working in 2000, the starting pay for a fresh graduate with a college degree was about RM2,000. I started with that pay and within five years, I managed to buy an affordable local car and a medium-cost walk-up apartment.

Today, almost 20 years later, the starting pay for a fresh graduate with a college degree is still around RM2,000. But what is that worth today? With car prices and real estate skyrocketing, it’s a tough situation.

I thought I would try to do some basic calculations using what is considered the average monthly household income in Malaysia, and that would be RM5,900, which is what the latest available research says in 2014.

The average income may be the average income. But does it mean that we can lead a good quality of life with that income? We most definitely need to consider the costs as well and we all know that is rising almost by the day now.

Okay, let’s say an average family living in an average city in Malaysia is earning the average monthly income of RM5,900 and spending on all the average living costs that they have to incur today.

Income tax and EPF

Let’s say the total deduction for both comes to roughly 30 percent of the monthly salary. That would mean a RM1,770 deduction. So now they’re left with RM4,130...