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Wednesday, November 1, 2017

Which Household Income Group Do You Belong To? Top Middle or Bottom?

Department of Statistics Malaysia recently has released Report of Household Income And Basic Amenities Survey 2016 in their website on 9 October 2017. Personal interviewing approach was used for a period of twelve months starting from May 2016 until April 2017 to collect data on the characteristics of Malaysian household particularly on income and basic amenities.



What is Household Income?
#YourFinanceDoctor came across some Facebook posts where people seems to be confused with the data. First and foremost, Do bear in mind that Household Income is not the same as Personal Income. Household Income refer to total incomes received (accrued) by all members of households, both in cash and in kinds which occur repeatedly within the reference period (within a year). 




So remember, the figure is not just your salary alone, you have to add it all together with your spouse, parents or whoever that is staying with you. Next, the difference of median and mean. What is median and mean? Why both are important?


What is Median? 
If you still remember the maths in high school, Median is the middle number in a sorted list of numbers. For this survey report, all the household income data collected will be sorted from smallest to largest. So, Median is the middle value that separating the higher half from the lower half. 


What is Mean?
Mean is the average of all the values, which computed by dividing the total of all values by the number of values. In other words, all the household income data collected were being summed and divided by number of household. 


Why Median & Mean are Important?
A lot of you might be curious what does Median tell us? Well, in this case, Median gives a helpful measure of center of the data, especially if there is an extreme value which could impact the Mean. 


RM3,000    RM4,000    RM5,000   RM6,000    RM200,000 (extreme)

Mean = RM218,000 / 5 = RM43,600
Median = RM5,000


For example, if there is a millionaire (extreme value) which earns RM200,000 a month, then it would greatly increases the Mean (RM43,600). However, the Median (RM5,000) would more accurately represent the income of most of the people in this example. 


Which one should I use?
BOTH. For this Household Income case, Median would be more preferrable, but Mean tells you something too! Ideally, if Mean and Median are having the same figure, then the data are normally distributed or also known as the "Bell Curve". So by comparison of Median and Mean...



Conclusion...
1. Malaysia as a whole, rich people are a lot richer!
As shown in the first figure, Malaysia Household Income as a whole has a Median of RM5,228 which is lower than the Mean of RM6,958. In other words, those higher than the middle value, Median (RM5,228), is a lot richer. 

2. T20 of Malaysia, rich people are a lot more richer! 
For the T20, Median of RM13,148 is lower than the Mean of RM16,088. So there must be extreme value in the T20 from the super duper rich! 

3. M40 of Malaysia, near to normally distributed 
For the M40, Median of RM6,275 is slightly lower than the Mean of RM6,502.

4. B40 of Malaysia, poor people are a lot poorer!
Lastly, for the B40, Median of RM3,000 is higher than the Mean of RM2,848. In other words, there are extreme values from the B40, which is way below of RM2,848.


By now, you should roughly know which household income group you belong to. And within the group itself, is your household income higher or lower than the Mean and Median? Regardless which group you are in, as a Malaysian, let's do our part by earning more money to help Malaysia achieve high income nation status by 2020! 




Click to enlarge


p/s: Data taken from Department of Statistics Malaysia

20 comments:

  1. I dare not say where I belong - but I know for sure, what I haven ow is not enough. Huhu

    ReplyDelete
    Replies
    1. haha that's what everyone said! so the next question is... do you know how much is consider enough for you? ;)

      How to Start Planning Financially?

      Delete
  2. Replies
    1. Thanks! Share it to your friends too ya. so that Wawasan 2020 can be achieved! haha

      Delete
  3. Agreed with you. We should save more for our future.

    ReplyDelete
  4. Info yang bermanfaat ni . Kadang-kadang serba sedikit kena tahu jugak pendapatan sebagai household ni

    ReplyDelete
  5. Thanks for the explanation, now I understand better, this was a good read.

    ReplyDelete
  6. I think I am in the middle income to own real estate from what you have said this.

    ReplyDelete
    Replies
    1. that's great! So plan well and make it to the T20! :D

      Delete
  7. Personal income ada but household income tak ada coz stay with daughter yg still sekolah, so mcm mana tu?

    ReplyDelete
    Replies
    1. Basically sesiapa yang ada income dekat rumah then tambah sekali, if you are the only income earner, then your personal income = household income. ;)

      Delete
  8. wah info yang bagus ni..power2x

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  9. Even though i'm 21yearsold but i'm still bawah tanggungan my parent. Tak tau la mana satu kitaorang huhuu

    ReplyDelete
  10. Need to invest to get extra income. Good info on this, hopefully there is a good plan to invest maybe property or forex.

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  11. I need to start do more savings. thanks for the info :)

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  12. ME & MY wife plus together, looks enough for us, but act still not enough hehe

    ReplyDelete

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