When people talk about saving money consistently for a rainy day, most often than not the feedback would be “If I had that extra money to save, I would.” These are the people that pay their bills first and only use whatever balance leftover to pay themselves later.
I can seriously identify with this situation when I first started working after graduating with a Chemical Engineering degree years ago. My starting salary was RM1500 which is considered the average starting salary. After deducting EPF, income tax and SOCSO, my take home pay was about RM1200. This is the money I used to pay for my bills and other living cost. Whatever amount leftover at the end of the month will be my savings. Therefore my savings fluctuated every month. It was hard to meet my savings goal in this situation.
Earning RM1500 may not be considered low income to some people and for me it was acceptable back then. I cannot imagine how those earning below RM1000 can manage their money to make it stretch sufficiently. This is considered low income to me. So, I considered myself lucky to be earning above that. I had two choices, one was not to use up all of my income and to pay myself first and the other was to earn higher. Going with the first choice was practical as it was easily within my control.
How I survive and manage to save money
There were several factors that enabled me to pay myself first and save a portion of my take home pay.
• In the beginning of my career, I stayed home with my parents and hence did not have to pay rent.
• I used my parents’ old car to drive to work and only had to pay for the petrol. I did not have to fork out money to service a car loan.
• I had no subscription bills to pay like ASTRO, hand phone, magazines, internet line, etc.
• My employer covered my medical and dental bills. Lunch meals and work uniforms were also provided. So shopping for work clothes was unnecessary. I also did not waste money going out for lunches or coffee breaks.
• I did not go out much for entertainment preferring to stay home most of the time.
Most of my income went towards food or groceries, personal necessities, personal insurance, petrol and utilities. Hence, I was able to save money and invest it, albeit slowly.
I believe a whole book can be written when it comes to surviving on a low income. It is difficult but not totally impossible especially when you do not have a family to support yet. The important lesson for me back then was and still is “learning to live without”. My constant motto was and still is “Do not buy if you cannot afford it or if you do not need it.”
As the years go by, my earnings increased gradually but I still live the same frugal lifestyle. The pressure is stronger as I am now supporting a family. Although the income is higher, the responsibilities, bills and commitments are also much higher. For example, I have set a target to put aside about RM300, 000 as an education fund for each of my children. With three children, I have to accumulate RM900, 000 in total.
When there is a family to support, I consider RM3000 to be low income and insufficient to lead a reasonably comfortable lifestyle. What do you consider to be low income for a single person and for a family of four (husband and wife with two kids)?