The Malaysian Squeeze: Navigating the Rising Cost of Living

By Mohaini Ahmad Basri

The rising cost of living is felt by many Malaysians. How do you manage to survive while still handling your finances wisely?

A silent economic shift is reshaping the daily lives of millions of Malaysians. The “cost of living” – the money needed to cover essentials like food, housing, utilities, transportation, and healthcare – has been climbing steadily. For many households, this rise has far outpaced wage growth, eating away at disposable income and eroding financial security. This is not simply a perception of hardship but a phenomenon supported by official data: the mean monthly Perbelanjaan Asas Kehidupan Wajar (PAKW) in 2023 was RM4,729 per household and RM5,040 in urban areas.

This article is written from the perspective of a financial planner. Its purpose is not to dissect government policies or macroeconomic strategies, but to focus on what ordinary Malaysians can do within their own control. While systemic changes may take time, individuals can still act today through personal financial planning. The story of Encik Ahmad illustrates how intentional strategies, budgeting, boosting income, and building resilience can help households navigate rising costs.

The Numbers Behind the Squeeze

Recent reports confirm what Malaysians feel in their wallets. While overall inflation showed signs of moderation, the daily reality for families tells a different story.). In January 2023, food and non-alcoholic beverages inflation rose 6.7% year-on-year, compared to 3.7% headline CPI .The price of staples like cooking oil, chicken, eggs, and vegetables, which is indispensable in the Malaysian diet has risen sharply. For Ahmad, this means grocery bills that once hovered around RM650 now average RM800, squeezing his limited disposable income.

DOSM reported that average monthly household consumption expenditure rose from RM4,609 in 2019 to RM5,150 in 2022, an annual growth rate of 3.7%. This expenditure pattern closely mirrors Ahmad’s budget, where groceries, rent, and transportation dominate.

The broader financial vulnerability of Malaysians is a key concern, with analysis noting that household debt stood at RM1.65 trillion as of end-March 2025, equivalent to 84.3% of GDP — one of the highest in Asia.

Ahmad, living in Kuala Lumpur, embodies this squeeze: his wages stretch less each year, while costs mount relentlessly.

A Financial Planning Case Study: Encik Ahmad’s Daily Struggles

Beyond the numbers lies Ahmad’s lived reality. Each month begins with hope, but by the third week he often finds himself counting ringgit to see if it will last. A wedding invitation, a sick parent needing extra medication, or a minor car repair can quickly tip him into overdraft. At times, he leans on his credit card for stopgap relief, but the debt grows faster than he can repay.

The stress takes a toll on his wellbeing. Ahmad admits to restless nights worrying about money, and at times, he avoids social outings to save cash. He has cut back on dining out and no longer subscribes to streaming services, yet still feels like he is running in place. His experience is not unique, surveys show that 50% of Malaysian millennials and 45% of Gen Zs identify cost of living as their top concern, with most living paycheck to paycheck.

Ahmad’s situation mirrors that of the M40 group, but the picture is bleaker for the B40. Over 52% of EPF members under 55 have less than RM10,000 in their accounts, showing the depth of retirement insecurity. For these households, even minor financial shocks can spiral into crises. In 2023, AKPK approved 52,057 Debt Management Programme cases, up from 34,670 in 2022, reflecting more families struggling with repayment burdens. Ahmad recognises that unless he changes his approach, he risks joining the ranks of those perpetually stuck in financial instability.

Step #1: Rebuilding Control Through Budgeting

Ahmad’s first step toward change was to restructure his spending using the 50/30/20 budgeting framework. This meant allocating 50% of his income to essentials, 30% to discretionary spending, and 20% to savings and debt repayment. Initially, these proportions seemed impossible, but by dissecting each expense, he found opportunities for adjustment.

He reduced unnecessary spending by cancelling a couple of streaming subscriptions, saving RM50 monthly. He cut down on food delivery and switched to cooking at home more often, trimming another RM120 from his grocery bill. He also looked at his transportation costs. Whenever possible, Ahmad used public transport for work commutes instead of driving, lowering his fuel and toll expenses. On shorter trips, he sometimes opted for his motorbike, which was far cheaper to run than his car. However, he recognised that this choice carried safety considerations and would not be suitable for everyone.

Through these measures, Ahmad could save around RM200–250 per month, giving him some breathing room in his budget. To strengthen his discipline, Ahmad used a mobile budgeting application to track all his expenses. The app provided a clear view of where his money was going and highlighted patterns such as frequent e-wallet top-ups and impulse purchases. By monitoring his transactions this way, Ahmad was able to cut down on leaks and redirect funds toward more important priorities.

He also set up automatic transfers: RM200 into a savings account for emergencies and RM100 into a long-term investment option every payday. For this portion, Ahmad explored several possibilities — contributing to a PRS fund for retirement, saving in Tabung Haji, or investing in ASB. By diversifying where his money could grow, he aligned his savings strategy with both short-term security and long-term goals.

Step #2: Boosting Income Through Side Hustles

Budgeting helped, but Ahmad recognised that he could not simply “save his way out.” His income was insufficient against rising costs. Like many urban Malaysians, he turned to the gig economy.

On weekends, Ahmad drove for a ride-hailing service, putting in about 8–10 hours across Friday and Saturday evenings. This earned him around RM500–700 monthly. It was not easy, he sacrificed leisure time and often returned home exhausted—but the extra income provided some breathing space and reduced his dependence on credit cards.

He also experimented with small-scale online sales through e-commerce platforms, selling simple household items and convenience products. While the returns were modest—sometimes RM100–200 a month—it added up and gave him more flexibility in managing his budget.

These additional streams of income were not enough to transform his finances overnight, but they played a crucial role in stabilising his cash flow. Ahmad no longer felt as vulnerable to sudden bills, and for the first time, he began to set aside small amounts regularly for future needs.

Step #3: Building Resilience and a Growth Mindset

The final piece of Ahmad’s transformation was psychological. Financial planning is not just about cutting costs or earning more—it requires a shift in mindset. Ahmad embraced value-based spending, distinguishing between purchases that aligned with his long-term goals and those driven by impulse. He cancelled unused subscriptions, resisted online shopping temptations, and focused on experiences that mattered, such as supporting his parents’ healthcare.

He also invested in upskilling. Through government-subsidised courses, Ahmad learned digital marketing skills that enhanced his performance and broadened his career options. More importantly, the new skillset gave him the confidence to pursue better opportunities, whether within his current company or in a new role elsewhere. For Ahmad, upskilling was not just about immediate income—it was about creating pathways for career advancement and financial growth that would sustain him well into the future.

The Bigger Picture: Ahmad as Every Malaysian

Ahmad’s story is deeply personal, yet emblematic of the larger struggles across Malaysian society. Rising costs and financial strain are widespread, as reflected in DOSM’s PAKW of RM4,729 per household in 2023, with RM5,040 in urban areas. But the focus of this article is not on policy solutions. It is on the scope of control individuals still possess.

While external assistance may provide temporary relief, households cannot afford to be passive. Ahmad’s journey demonstrates that with deliberate actions—budgeting, side hustles, disciplined savings, and skill development—individuals can build resilience even amid economic pressures.

This article underscores a key principle: personal financial planning is about taking charge of what you can control. The cost of living squeeze is real, but so too is the power of financial planning to restore dignity, security, and hope.

Overall, in coping with higher living costs, individuals can enhance their position through the following measures:

1. Track your spending to identify leaks.

2. Cancel unused subscriptions immediately.

3. Automate a small savings transfer (e.g., RM50) from your next paycheck.

4. Brainstorm one side hustle idea based on your skills or assets.

5. Explore one free upskilling course on HRDCorp’s portal or similar platforms.

By taking these steps, Malaysians can move from being passive observers of rising costs to active architects of their financial future.

It is important to note that Ahmad’s illustration reflects the experience of an M40 household, and the strategies highlighted here are tailored to his circumstances. Different approaches may be more suitable for B40 or T20 individuals, depending on their income levels and financial realities.

The purpose of this article is not to prescribe a one-size-fits-all solution, but rather to provide a glimpse into the small, practical steps that are within personal control. Rising living costs affect Malaysians across all income levels, but by taking deliberate actions, each individual can begin to regain control and strengthen their financial resilience.

The Role of a Financial Planner in Navigating Rising Costs

While Ahmad’s efforts show that individuals can take action on their own, many Malaysians still struggle to see the bigger picture. This is where a financial planner adds value. First, they provide structured analysis, turning vague concerns about “duit tak cukup” into clear numbers that show how income, expenses, and savings interact. Second, they model future scenarios, projecting how inflation, wage stagnation, or unexpected costs may affect financial security. This shifts the focus from reacting today to preparing for tomorrow.

Planners also act as coaches and accountability partners. Budgeting apps can track spending, but a planner helps build discipline, asking tough questions and ensuring habits align with long-term goals. Importantly, they guide households to optimise financial instruments like EPF, PRS, ASB, or insurance, ensuring every ringgit is put to work effectively. Finally, planners help identify blind spots, rising medical costs, overleveraging on property, or lack of emergency funds before they become crises.

In a country where nearly 60% of households have less than RM10,000 in savings, professional guidance is not a luxury. It is a necessity that turns uncertainty into strategy and gives families a fighting chance to stay resilient against the rising cost of living.

About The Author

Mohaini Ahmad Basri is passionate about leveraging his financial expertise to empowering individuals on their financial journey. With a solid foundation in financial education & corporate experience, he brings unique blend of knowledge and practical insights to the field.