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Are you B40/M40/T20?
Pop quiz time! In which income bracket do you belong – B40/M40/T20?
Hints – the answer differs depending on where you live!
TL;DR – Malaysia categorizes households into B40 (bottom 40%), M40 (middle 40%) and the all-coveted T20 (top 20%) based on earnings. When we talk about these brackets, keep in mind: we’re diving into household incomes. And according to the Department of Statistics Malaysia (DOSM), a household isn’t just your immediate family—it’s a group of related or unrelated individuals living together, sharing expenses.
Let’s break it down
B40: Representing the bottom 40% of income earners in Malaysia. As of 2019, if your household income was below RM4,850 per month, you’re in the B40 bracket. And hey, there’s no shame in that. Everyone starts somewhere, right?
M40: Ah, the Middle-Class Marvels. Representing the middle 40% of the income bracket, these are the folks nestled between B40 and T20. By 2019’s numbers, this group was taking home between RM4,850 and RM10,959. Not too shabby, right? Maybe enough for that extra ‘teh tarik’… or five. 🍵
T20: The top 20%. These are the big ballers who earn above RM10,959 per month. But hey, with great power comes great responsibility. 🐝
DOSM last updated their Household Income and Basic Amenities Survey Report in 2019, this table may give you some idea of how you are doing compared to people around you.
But wait, geography matters!
Most high earners live in Kuala Lumpur, but the income gap there might surprise you! Up until 2019, T20 threshold in KL is around 2.5 times of the T20 threshold in Kelantan.
What does it say?
Say your household income is RM8,000 – in Kelantan this figures put you comfortably in the T20 category. But in Kuala Lumpur? You’d be swimming in the B40 pool 🤯.
And Here’s the Trap
Even though you may have the exact household income with the neighbor beside you, two of you may live a heaven and earth life quality – simply due to the number of dependency. To put it simply, earning RM 8000 a month with 5 kids and 2 parents cannot have the same living lifestyle as those having no kids and free of responsibilities. But hey, it’s your life, live your choice.
Whether you’re a B40, M40, or a T20 high flyer, the real win is in how you manage, invest, and grow. Remember, life isn’t just about the bracket; it’s the journey, the strategy – it’s how you play the game. Catch ya on the richer side!
Speaking about managing your finances – every cent matters! I was planning for some travelling myself, so my team and I decided to find the ultimate best travel credit card to utilize every spends in exchange of rewards/lounge. And we did it! It’s legit useful and I’m gonna smash my video link here of Best Travel Credit Cards You Can Own in Malaysia (2023) just in case you want to know it too!
Word of the Week: EBITDA
Definition: EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It is a measure used to analyze a company’s operating performance without being affected by financing decisions, tax environments, and the age & type of assets used. Essentially, it tells you how much a company earned from its operations before these factors come into play.
Imagine a local bakery, “Ziet Delights,” has decided to evaluate its core business performance. The bakery had sales of $500,000 this year.
From those sales, the cost of ingredients, rent, employee salaries, and other direct expenses related to producing and selling bread amounted to $300,000. This leaves the bakery with $200,000.
However, the bakery also has other expenses:
- Interest payments on a loan they took to expand their kitchen: $10,000.
- Taxes: $20,000.
- Depreciation on their ovens and equipment: $30,000.
- Amortization of some intangible assets they bought (like a franchise license): $10,000.
Now, if we calculate the Net Income, we’d subtract all these expenses from the $200,000. But to get EBITDA, we only focus on the bakery’s core operations.
So, EBITDA would be calculated as:
$200,000 (earnings) + $10,000 (interest) + $20,000 (taxes) + $30,000 (depreciation) + $10,000 (amortization) = $270,000.
Thus, the EBITDA of “Ziet Delights” is $270,000. This figure gives stakeholders an idea of the bakery’s operational performance without considering financing decisions, taxes, or asset depreciation and amortization. And that’s EBITDA!
Key Economic Dates:
- 6th September: S&P Global US Services PMI (Aug), ISM Non-Manufacturing PMI (Aug)
What I’ve been reading:
Here are the top stories that caught my eye:
- The US economy grew slower than estimated
- US PCE inflation stayed high in July
- China cuts banks’ FX reserve ratio to support weak yuan
You’re all caught up!
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Cheers,
Ziet
