Can You Afford To Give Money To Your Parents?
We are bound tightly by the concept of filial piety as Asians. It’s a simple social contract: your parents raised you in your youth and you are now responsible for supporting them in their twilight years.
For most, this means giving them spending money each month. The amount tends to vary according to how much each person can afford. According to this online discussion from 2017, it ranges from RM200 to RM1000 on average. Some even claim that it should be 10% of your income.
Here’s the thing that you need to understand about giving spending money to your parents: you cannot afford it.
US Senator Elizabeth Warren’s 50/30/20 rule of budgeting has become one of the more popular methods for managing money. It’s quite helpful for those looking to figure out how much of their salary should be put into savings.
The median salary in 2018 urban Malaysia came in at RM2,415, and was a little lower in rural areas. Based on this, the budgeting breakdown would look something like this:
|Needs - 50% (bills, groceries, rent, loans)||RM1,207.50|
|Wants - 30% (shopping, entertainment, hobbies)||RM724.50|
According to the Employee Provident Fund’s (EPF) Belanjawanku guide, an unmarried adult with a car will need a salary of RM2,490 to sustain himself/herself.
Our own iMoney monthly budget survey showed that a similar individual would need RM2,695 each month; and that doesn’t cover all the expenses that Belanjawanku included in its guide.
Based on this, the median salary just about covers the bare necessities for someone to live in urban Malaysia. However, the assumption is that you’re ready to skimp on a few luxuries to make ends meet.
Here lies the problem. None of these calculations take into account giving money to your parents. That RM300 you give to your mother to take care of her groceries is coming out of your own savings; reducing your ability to take care of yourself in emergencies.
Now, you want to give RM300 to your parents each month, but you can’t cut back on your necessities without ending up homeless. In the same vein, you are likely going to keep using your discretionary spending on keeping your sanity at work.
In most cases, people end up reducing the amount they save. A situation that is evident from an AKPK survey that showed 20% of Malaysians cannot afford to save any money, and that half of us would have trouble scraping together RM1,000 for an emergency.
However, you are not earning minimum wage and can still afford to throw that RM180 into your savings account at the end of each month. It’s not much, but still translates into RM2,160 per year.
All this is fine provided that you have an alternative source of income to deal with expenses that don’t fit into monthly budgets like annual car insurance premiums (which set you back a couple of hundred ringgit), traveling for celebrations, and medical bills.
Malaysians are known to spend a lot of money on new clothes and food during celebrations. The average household expenditure on Chinese New Year in 2017 was RM4,201; while 22% of those preparing for Hari Raya end up spending more than double their monthly budget.
Your parents might be glad to have a dutiful child that sends them money every year, but it doesn’t help if you have to keep borrowing money from them.
But say you’re out on your own and still want to contribute to the family back home. Is there a better way to do this?
First of all, this entire situation can be remedied if you still live with your parents. If this is your situation, then the portion of your budget that would have been used for paying rent and groceries can safely be given to them with little risk to yourself. Consider it as your rental for staying at home.
Those of you who are out on your own – whether you’re single or have your own household to watch – will need a different approach.
Firstly, you need to stabilise your finances and manage your debt. It’s better to first build emergency savings before you do anything else. This will prevent you from going into (additional) debt if anything goes wrong.
Experts generally recommend having at least six months’ worth of expenses (bills, rent, loans, groceries) saved up. So, if you’re making the median wage this should be around RM7,200 that needs to be put away. This guarantees that you are insulated from financial shocks and won’t have to borrow money from family members in emergencies.
Once you’ve secured this position, you should figure out why you’re giving your parents money. If they need a little help with household expenses, then you might want to offer to buy groceries and pay bills instead.
Doing this will allow you to put the purchases on a credit card and earn bonus points/cashback. Yes, this sounds a little self-serving, but having a better financial position allows you to take better care of your parents when they need it.
Alternatively, you might just be giving them money as a symbolic gesture. Showing that you appreciate all that they did in raising you doesn’t have to involve huge sums. Instead, a small amount of RM100 or so will be more than enough to avoid overburdening yourself.
It’s understandable to give more if you can afford it. And if you can’t afford it, maybe you can invest some time and energy instead. Having dinner once a month might cost less and be more valuable in the long run. For everyone reading this, you already know that you can certainly afford to spare an evening just for your parents.