When lifestyle spending outpaces income

WITH the cost of living rising and wages struggling to keep pace, many Malaysians are rethinking how they spend, not by cutting back entirely, but by reshuffling priorities in ways that often conceal deeper financial pressure.

Licensed financial planner Rafiq Hidayat Mohd Ramli said households are tightening their budgets, even as overall spending remains high because rising essential costs leave little room to manoeuvre.

“Costs of food, transport and utilities keep increasing. But people aren’t necessarily spending less, they’re reallocating,” he said.

At the same time, Rafiq noted that a significant portion of spending growth reflects lifestyle inflation, where higher spending becomes normalised as incomes rise or when credit facilities make expensive items appear more affordable.

“When income rises, or when instalment plans make costly items seem manageable, people stretch their spending to match what feels ‘normal’ for their peer group,” he said.

Rafiq stressed that true affordability means being able to make a purchase without affecting savings, emergency funds or essential expenses.

Stagnant wage growth, he added, remains a major pressure point, particularly for younger earners and early-career professionals.

“When income doesn’t rise but expenses increase every year, people feel squeezed. To maintain a certain lifestyle, many turn to credit cards, Buy Now Pay Later (BNPL) services or instalment plans,” he said.

Photo for illustrative purposes only. - Photo: CANVA

While these tools offer short-term relief, Rafiq warned that they often mask long-term risks.

“Instalments make spending feel manageable. But when people take on multiple small commitments, it creates a snowball effect that quietly turns into a heavy monthly burden,” he said.

This pattern is especially common among young people, who face higher living costs, relatively low starting salaries and limited savings.

Rafiq said this group also spends differently, prioritising convenience, lifestyle and experiences — habits shaped by digital culture and social media.

“When it comes to items that offer social validation or perceived happiness, people are more willing to stretch financially,” he said.

He added that social media amplifies this behaviour by reinforcing comparison and fear of missing out, making lifestyle upgrades feel necessary rather than optional.

As financial pressure builds, spending itself can become a coping mechanism.

“People look for instant relief in food delivery, gadgets and small luxuries. It feels harmless, but it reinforces unhealthy habits and delays addressing the root problem,” Rafiq said.

He identified warning signs that spending is no longer aligned with income, including using credit for basic expenses, paying only the minimum on credit cards, juggling multiple BNPL plans and having no savings despite a stable income.

To regain control, Rafiq advised taking small but consistent steps: tracking expenses, clearly separating needs from wants, limiting instalments to essentials and building even a modest savings buffer.

“RM50 or RM100 a month may seem small, but it reduces reliance on credit when something unexpected happens,” he said.