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Minimum Income Standard (MIS) Of $6,424 For Singapore Families? 5 Things To Understand About The “Basic Cost Of Living” Figures Reported

If you are feeling poor after reading this article, join the club.


A study by the Lee Kuan Yew School of Public Policy released on 8 October shared some concerning statistics about the basic cost of living in Singapore.

According to findings from this study, the monthly budget needed to meet ‘basic needs’ for a Singapore household with two parents and two children (aged 7-12 and 13-18) is $6,424. For a single parent with one child (aged 2-6), the monthly budget needed will be $3,218, or about 50% less than households with two parents and two children.

For a single elderly person, the amount needed is $1,421. It’s worth noting that this amount coincides nicely with what CPF LIFE members can expect to withdraw ($1,478 – $1,635) from age 65 onwards under the CPF LIFE Standard Plan, if they set aside the Full Retirement Sum ($186,000) at age 55.

Read Also: CPF LIFE Standard, Basic Or Escalating Plan. Which CPF LIFE Plans Should You Choose?

This study created quite a fair bit of buzz on social media and has been reported extensively by multiple media sites in Singapore.

One of the reasons for this is likely because it explores a sensitive topic – How much income does a household in Singapore need to meet its basic needs.

Also, the amount cited may appear higher than what many of us expected. When someone says a family of four (two parents, two kids) needs at least $6,424 a month to meet its ‘basic needs’ in Singapore, reality quickly sinks in. That’s likely to be many of us!

For example, the Minimum Income Standard (MIS) calculator shared that in my family of four (me, my wife, and two young girls), I would need about $5,249 a month.

I’m not sure about you, but if someone tells me I need to spend at least $5,249 a month for my family of four to achieve a basic standard of living in Singapore, I would be slightly surprised.

Two things to note. Unlike other studies that report the average amount Singapore household tends to spend on, the amount cited above isn’t only an average. Rather, the study is suggesting this is the minimum amount that you and I need for us to achieve a basic standard of living in Singapore for our family.

Even as we process some of this information being shared in the report, here are 5 things we should also understand about the “basic cost” of living being reported.

#1 Sample Size Of The Group Is 196

The finding for this study was based on focus group participants across different types of profiles. These include gender, age, living arrangements, number of children, ethnicity, education level and housing types. The total number of participants in this study was 196.

As (rightly) pointed out in a MOF statement in response to the minimum income standard (MIS) study, MOF said that “the methodology used to arrive at the Minimum Income Standard is highly dependant on group dynamics and the profile of the participants. With most participants having post-secondary education and 15% living in private properties, the findings expressed may not be reflective of the circumstances of the lower-income families”.

#2 Housing, Healthcare, Education & Childcare Form About 30-40% Of Cost For Households

The study gave a detailed breakdown of the minimum income standard (MIS) required for three different groups of households based on the different types of spending categories. These include big-ticket items such as housing purchase cost, healthcare, education and childcare.

Some observations that is worth noting.

> Excluding housing purchase, healthcare, education and childcare, households would spend about $1,947 (one parent, one child) and $4,639 (two parents, two children). This is 60% and 72% respectively of the total amount that households can expect to spend to upkeep a basic standard of living in Singapore.

> At just $0.92 per week on “medical products” for each elderly person, or less than $4 per month, we feel this is a little low and possibly, based on the assumption that the elderly person is healthy. Also, this contrast significantly from households with 2 children who will need to spend about $33.48 on ‘medical products’, or about $130 a month.

> Tuition and other fees include private tuitions, which may be deemed by some parents as not absolutely a basic need. However, at the same time, it also shows how living in Singapore today may include expenditures that the previous generation considered as a luxury. For example, while my parents never sent me for tuition during my school years, I would expect this to be a cost area that I will need to bear once my kids enter formal education.

#3 The Amount Shown Is What We Need To Spend, Not Necessarily What We Need To Earn

There appears to be a conception that is overlooked with some news reports on this study.

The amount that is being published is the amount that we need to meet basic household needs in Singapore, and not necessarily what we need to be earning in Singapore.

Based on a household of four with two parents and two children, the MIS needed for living needs is $6,426. Since the studies assume both parents work, each parent is ‘responsible’ for contributing $3,213. The study then also states that the median income in Singapore in 2020 was $4,534.

The problem with the median income level in Singapore is that the amount includes the employer’s CPF contribution. For most of us, our employer contributes 17% to our CPF, on top of the 20% of employees’ CPF contribution. However, rarely do we think of this as our salary.

For example, if your gross salary is $4,000, your total salary (inclusive of 17% employer CPF contribution) will be $4,680, or slightly above the median salary level in Singapore. However, your take-home salary will be $3,200, after accounting for your 20% employee’s CPF contribution. In other words, you will make slightly lesser than the amount that is supposedly required to meet basic household needs in Singapore.

Read Also: What’s The Median Salary In Singapore (At Every Age, Gender, Education and Race)

At this point, it would be fair to include statistics for the 2017/2018 Household Expenditure Survey for comparison. According to the Department of Statistics, Singapore households spend an average of about $4,908 each month, or about $1,628 per household member. From a per household member point of view, the $1,628 per household member is very similar to what the study suggests is the minimum income standard (MIS) for what’s needed for a household of 4 ($6,426/4 = $1,606).

However, the difference is that while Singstats provide information based on what the average households spend on, the MIS shows what is supposedly needed for a basic cost of living in Singapore per household member.

#4 Older Parents Are Not Necessarily Earning More, But They Have Kids Who Need Greater Financial Support

Based on the information provided in the study extracted from MOM, work income for full-time workers tend to increase and peak at the age bracket of 40-44, before they start to decline.

At the same time, the study also shared that households with kids tend to spend about the same amount until their kids reach the age of 19-25. In Singapore, this is when children are in university. It’s also when parents can expect to spend the most on their children.

#5 30% Of Working Households Earn Lesser Than The Minimum Income Standard

One of the key outcomes from this study that concerns the researchers, and should concern many of us, is that based on what the study have attempted to define as the Minimum Income Standard (MIS) for households in Singapore, around 3 out of 10 working households currently earn less than the amount required to meet their basic needs.

We think this may even be an underestimation.

That’s because the national average monthly work income shown above includes employer CPF contribution (see point 3). If we consider what’s the take-home income, then 4 in 10 working households may be earning less than the amount required to meet basic household needs.

Minimum Income Standard Seems Closer To What An Average Household Spends On

As stated by MOF in their response to the study, the “MIS budget required is around $1,600 per month per capita for both single and partnered households. This $1600 is in fact closer to what an average household spends, based on the Household Expenditure Survey 2017/2018.”

According to MOF, this means “it is in excess of basic needs for an average household”

Before we end off, it’s worth explaining the concept of basic poverty and relative poverty. Basic poverty refers to not being able to have sufficient income to cover our basic requirements in life. These would include food, shelter, clothes, education, healthcare, basic telecommunication and leisure needs.

The second type of poverty would be relative poverty, this refers to the amount that is needed to avoid being “socially excluded” from society. Such spending may be required for those who wish to spend on items that go beyond the basic needs we have. These may include private enrichment classes and overseas holidays.

This is obviously a controversial topic and it’s not every day we see an education institution publishing a study that gets a response from the government commenting on its methodology.

Whether you agree with the study or not could be an individual preference. For those who are interested, do read up the 80-page full report to find out more about the details of this study.

Read Also: 3 Hard Truths About Poverty In Singapore

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