Our RMFLS 2025 report tells a story that many Malaysians already know: the middle class is under pressure. For middle-income earners (those making between RM5,000 and RM10,000 monthly), financial stability is becoming harder to maintain.

This isn’t just about individual households struggling. Middle-income Malaysians are the backbone of our economy, driving consumption, investing in property, and supporting local businesses. When this group faces financial strain, it ripples across the entire nation. Our survey reveals just how significant that strain has become.

The Data Behind The Squeeze

The numbers paint a clear picture of declining financial health among middle-income earners.

Savings Are Shrinking Fast

Middle-income Malaysians are the only income group reporting a drop in savings capacity:

• 39% now save less than RM500 per month, up from 31% last year
• Only 23% can save between RM1,001 and RM1,500, down from 29% in 2024

To put this in perspective, in 2022, 33% of middle-income earners saved RM1,001 to RM1,500 monthly. That dropped to 27% in 2023, then 29% in 2024, and now sits at just 23%. Meanwhile, those saving under RM500 stood at 32% in 2022, jumped to 35% in 2023, improved slightly to 31% in 2024, but has now climbed to 39%.

The downward drift is unique to this income bracket. Other income groups have maintained or even improved their savings rates, which makes the middle-income decline particularly striking.

Emergency Funds Are Running Thin

A shrinking savings rate has a direct impact on financial resilience. The data shows middle-income earners have less cushion to fall back on:

• Only 27% could survive more than six months on their savings if they lost their job, down from 32% in 2024
• Nearly half (47%) report living paycheck to paycheck

In 2022 and 2023, 28% of this group could survive over six months on savings. That improved to 32% in 2024, but has now fallen back to 27%. These figures mean that one unexpected expense (a medical emergency, car breakdown, or job loss) could push many middle-income households into financial distress.

Financial Optimism Is Fading

Despite taking active steps to manage their money, middle-income earners are feeling less confident about their financial future:

• Only 37% say they are happy or satisfied with their current financial situation, down from 41% in 2024
• Just 54% believe their financial situation has improved since last year, down from 58% in 2024

Comparing this to the rest of the nation, 48% of all Malaysians feel their situation has improved. Middle-income earners are falling behind, even though they’re actively trying to manage their finances better.

How Middle-Income Earners Are Adapting to Rising Costs

Middle-income Malaysians aren’t sitting idle. Our data shows they’re the only income group making significant lifestyle adjustments in multiple spending categories.

Cutting Discretionary Spending Across the Board

The behavioral changes are widespread and consistent:

Leisure Activities: 60% are spending less on entertainment, hobbies, and weekend activities, up from 57% in 2024. This represents a significant lifestyle shift for a group that traditionally had more discretionary income.

Dining Out: 59% are eating out less frequently, up from 54% in 2024. The increase suggests cost pressures are intensifying, forcing families to cook at home more often.

Subscription Services: 43% have reviewed and cut subscriptions (from streaming services to gym memberships), up from 40% in 2024. Every recurring expense is now under scrutiny.

These aren’t small adjustments. Middle-income earners are changing how they live to stretch their ringgit further.

Seeking Additional Income

Traditional belt-tightening isn’t enough. Our survey reveals that 41% of middle-income earners are now exploring freelance work or side income opportunities. That side hustle need is driven by wider  economic uncertainty and mirrors the national trend, where 39% of all respondents are looking for additional income streams.

The challenge? Taking on extra work after a full-time job is exhausting. But for many in this bracket, it’s becoming necessary rather than optional.

Despite all the proactive budgeting measures (spending less on leisure and dining, cutting subscriptions, seeking side income), middle-income earners still report declining financial optimism. Their efforts are being outpaced by rising costs, particularly in essentials like housing, utilities, transportation, and food.

What This Really Means

The middle-income squeeze isn’t only about numbers on a spreadsheet and balancing a budget. It’s clear that for many inflation eroding purchasing power faster than income growth or spending cuts can compensate.

The middle income group sits in a particularly difficult position. They earn too much to qualify for many government assistance programs designed for lower-income Malaysians, yet don’t have the financial cushion that higher earners possess. When costs rise across the board, middle-income households feel it acutely because:

1. Fixed commitments eat up more of their budget – mortgages, car loans, insurance premiums, and children’s education don’t shrink when discretionary spending gets cut.
2. The safety net is thinner – with emergency funds declining and paycheck-to-paycheck living increasing, there’s little room for error.
3. Lifestyle expectations clash with reality – many middle-income earners are expected to be building wealth, not struggling to maintain what they have.

Our data suggests that without intervention (either through income growth, targeted support, or significant cost relief), this squeeze will continue to tighten.

Actionable Strategies For Middle-Income Earners

The financial pressure is undeniable, but with the right strategies, it’s possible to regain control and rebuild a financial cushion.

1. Target the Big Expenses
With mortgages, car loans, and insurance premiums eating up most budgets, trimming here brings the biggest relief. Even a small refinance or switching to a better plan can free up hundreds each month.

2. Rebuild a Safety Net
Nearly half of this group lives paycheck-to-paycheck, which means one emergency can tip things over. Start small: save RM1,000, then RM3,000, then one month’s expenses. Automating transfers to a savings account helps you stay consistent without overthinking.

3. Make Side Income Work Smarter
About 41% are already taking on freelance or gig work. To make it worthwhile, focus on opportunities that match your skills and schedule. That way, the time and effort you invest can contribute more meaningfully to your financial goals.

4. Budget With Precision
When confidence is fading, clarity helps. Tracking every ringgit for 30 days gives you a reality check and highlights leaks. Pair that with a simple 50/30/20 rule (or your own adapted version) to gradually shift from survival mode to rebuilding savings.

The Road Ahead

Middle-income Malaysians are facing genuine financial pressure that goes beyond individual money management. Rising costs, stagnant wage growth, and reduced purchasing power are structural challenges requiring attention at multiple levels.

As RinggitPlus CEO Yuen Tuck Siew noted, “Malaysia’s middle class deserves renewed attention and support. As Malaysia progresses toward developed nation status, ensuring our middle class has the right tools and opportunities to rebuild their financial strength will be crucial for sustainable economic growth.”

 While the situation is serious, the data underscores the toughness and adaptability of middle-income earners. With the right strategies and support, this group can overcome current pressures and strengthen their financial foundations.

Want The Full Picture?

Curious how your financial situation compares to other Malaysians? Use our Money Meter to measure yourself against national benchmarks from the RMFLS 2025 survey. You’ll see where you stand, and where you might need to make changes.

For deeper insights on saving, investing, and managing debt, download the complete 2025 survey report for detailed findings and analysis.

Follow the RinggitPlus blog as we continue unpacking these results with practical advice, expert insights, and real solutions for everyday Malaysians.

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• RMFLS
• RMFLS 2025