M
ounting expenses in the first three months of 2026 weigh heavily on the minds of many Malaysians, especially those from the low- and medium-income groups.
Even before the burden of school-related expenses begins to ease, Ramadan is set to arrive, followed closely by Hari Raya Aidilfitri in March.
They are not complaining, but it would not be an exaggeration to say that the families concerned will find themselves caught in a cycle of spending that leaves little room to pause, let alone save.
The month of January alone requires families to fork out for school fees, bus fares, uniforms, shoes, bags, stationery, supplementary books and pocket money for the children.
For families with more than one school-going child, the financial burden is multiplied. While certain forms of assistance are available, the reality is that many basic necessities still have to be borne out of pocket.
February and March will usher in preparations for Ramadan and Hari Raya Aidilfitri. Although the fasting month is associated with moderation, household spending patterns do tend to change as families resort to buying food from outside for breaking of fast due to time constraints.
And, as the month of Syawal draws near, households must also contend with shopping for new attire and other festive necessities, as well as balik kampung expenses.
MAJOR COMMITMENTS
Sharing his views, senior fellow and director of the Centre for Economics and Social Studies at the Institute of Islamic Understanding Malaysia (IKIM) Dr Muhammad Hisyam Mohamad said while financial pressure on households is not unusual, it becomes more pronounced when major financial commitments arise over three consecutive months.
The month of January alone requires families to fork out for school fees, bus fares, uniforms, shoes, bags, stationery, supplementary books and pocket money for the children.
“Within a short span (January to March), households have to cope with education-related expenses, higher daily food costs, as well as festive spending. The core issue is that the rise in the cost of living is outpacing the growth of real incomes, particularly among B40 households and parts of the M40 group.
“Although the national economy is growing, the disposable incomes of many households remain constrained by fixed commitments such as rent, transportation costs, utility bills, medical costs and other daily expenses. As a result, seasonal spending is often financed by savings or relying on short-term debt, which in turn heightens financial stress,” he told Bernama.
According to Muhammad Hisyam, this financial pressure is not solely due to poor personal financial planning, but also reflects economic structural issues, including heavy reliance on monthly income and low household savings levels. It is also an indication that the social protection system for vulnerable groups still needs to be strengthened.
“At the same time, financial literacy plays a crucial role. Without a sound understanding of cash flow management, seasonal spending planning and the importance of emergency savings, households will continue to be exposed to financial shocks,” he said.
LONG-TERM IMPLICATIONS
He cautioned that recurring seasonal spending without adequate savings could lead to a cycle of chronic debt and long-term financial instability for family institutions, eroding wealth-building capacity, increasing mental stress and affecting children’s education.
Senior fellow and director of the Centre for Economics and Social Studies at the Institute of Islamic Understanding Malaysia (IKIM) Dr Muhammad Hisyam Mohamad .
He noted that as of March 2025, Malaysia’s household debt stood at 84 percent of the Gross Domestic Product (GDP), among the highest in ASEAN.
“Although the debt service ratio (DSR) – the proportion of monthly debt obligations relative to an individual or household’s net monthly income – remains within a non-alarming range, with the median DSR for outstanding loans at around 34 percent, and 41 percent for newly approved loans, the situation could change if people continue to rely on personal loans or credit cards to finance seasonal spending.
“The impact can already be seen in reduced disposable income for use as savings. This, in turn, raises concerns over inadequate emergency funds, especially when households face crises such as job loss, health issues or family emergencies.
“Individuals will also lose investment opportunities and face difficulties in achieving their financial goals, such as for retirement and education. Other consequences include a widening wealth gap among the B40 and M40 groups, as well as a higher risk of loan or financing defaults,” he said, adding that this could eventually damage their credit records and make it harder for them to secure financing or loans in the future.
He also said financial stress among parents can have far-reaching psychosocial effects on their families, affecting their children’s mental well-being and self-confidence, and ultimately placing strain on family relationships.
Muhammad Hisyam added that children who grow up in environments of prolonged financial stress face the risk of becoming overly materialistic or losing motivation due to limited opportunities.
“Ensuring household economic stability is, in fact, a long-term social investment in the development of the nation’s human capital. Family conflict arising from financial stress can lead children to experience emotional withdrawal, chronic anxiety and poor academic performance due to disrupted focus.
“Low socioeconomic status hampers cognitive development and creates patterns of toxic stress that affect children’s minds from an early age. Children in families where debt is frequently seen as a default solution tend to develop materialistic values, as well as a cynical attitude about the importance of future savings,” he said, adding that this could result in them viewing financial education as unimportant, which ultimately increases the risk of intergenerational poverty.
SIGNIFICANT GOVERNMENT INITIATIVES
Muhammad Hisyam also acknowledged the significant role played by the government in rolling out various initiatives to ease the financial burden on the public, particularly among low- and middle-income groups.
The 2026 Monthly SARA payments were first disbursed on Jan 9 for five million households and senior citizens living alone, and will be followed by payments to 3.1 million single individuals on Jan 16.
Among them are the monthly Rahmah Basic Contribution (SARA), introduced under Budget 2026, aimed at improving the economic standing of vulnerable groups through targeted cash assistance; Early Schooling Aid (BAP) to help parents cope with their children’s schooling expenses at the start of the new academic year; and Rahmah Cash Contribution (STR), a cash aid for eligible Malaysians to alleviate their financial burden.
SARA For All (SARA Untuk Semua, a one-off RM100 cash contribution for Malaysian citizens aged 18 and above, to be disbursed beginning Feb 9, 2026) and the seven percent salary increase for civil servants effective Jan 1, 2026 under Phase Two of the Public Service Remuneration System (SSPA) adjustment are also important measures to boost disposable income, strengthen purchasing power and stimulate domestic economic activity.
Muhammad Hisyam added that the 2026 Aidilfitri Special Financial Assistance of RM500 for civil servants in Grade 15 and below, as well as contract staff, and RM250 for pensioners and veterans, to be paid in early March 2026; and price controls on essential goods; targeted subsidies; and skills enhancement programmes also contribute to strengthening household economic resilience.
“These financial assistance measures must be accompanied by continuous financial education and stronger social protection networks. A holistic approach that combines inclusive economic policies, targeted aid and financial literacy empowerment is key to building sustainable family economic well-being.
“In conclusion, the seasonal financial pressures faced by the public today reflect broader economic challenges. Addressing them requires cooperation from all parties, particularly the government, to ensure that the economic and social well-being of society can be strengthened on an ongoing basis,” he said.
CHANGES IN ‘ECONOMIC WEATHER’
Meanwhile, the Corporate Communications Department of the Credit Counselling and Debt Management Agency (AKPK) shared financial management and budgeting advice to help households and individuals navigate potential setbacks.
The RM150 Early Schooling Aid (BAP) is a government initiative aimed at easing the financial burden of parents or guardians at the start of the school session.
It said many people, in their financial journey, tend to focus too much on outcomes or end results, forgetting that the process of achieving those goals is equally important and an indicator of success.
“Often, people become stuck with their financial resolutions because they see them as a finish line. When they fail to reach that goal, they begin to feel like failures and lose the motivation to keep going.
“Financial management also requires flexibility and continuous adjustment. The economy is constantly changing, and the ‘economic weather’ of 2026 may not be the same as in 2025. If we become too rigidly attached to a single goal, we can easily become discouraged when circumstances change, such as rising living costs. Our finances need to be flexible enough to adapt to these changes.
“Focus on survival. This means individuals should not only focus on ‘winning’, but also on staying afloat and moving forward. In financial terms, this means always being ready to adjust our budgeting strategies according to priorities,” it explained.
The agency added that a financial ‘journey’ is a never-ending one, and the process itself should be appreciated.
“As long as we live, we will continue this journey. Therefore, we should focus on how we organise our steps each day, adopt smarter approaches, carry lighter ‘baggage’, and use financial knowledge as our guide along the way.
“In conventional planning, we are often taught to set a final destination. For example, ‘I want to be debt-free by the age of 40’. While this is a good goal, the reality is that life is an ongoing journey. Life is dynamic, not static.
“In financial terms, once we succeed in settling education loans, for instance, we may then face new commitments such as starting a family or caring for elderly parents. If our financial resolutions are too rigid and purely destination-oriented, we may easily give up when the journey becomes more challenging than expected,” it said.
Sharing several financial tips to enhance resilience and realism, the agency advised individuals to always prioritise needs over wants, remain flexible in the face of changing circumstances and avoid unnecessary debt.
Touching on emergency funds, the agency stressed that such savings are a basic necessity in financial management.
“Do not focus too much on high-risk investments if your ‘safety buffer’ is still weak. Make sure you have savings equivalent to at least three to six months of expenses before venturing into more complex investments.
“Practising mindfulness in managing every ringgit is crucial to ensuring financial sustainability and well-being, while also bringing peace of mind and emotional calm.
“Based on AKPK’s Money and Mental Well-Being study, there is a link between levels of indebtedness and mental health. The study found that chronic financial stress not only affects one’s wallet, but can also lead to serious anxiety and depression,” it said.
The agency added that seeking help is not merely about fixing financial figures, but about safeguarding overall well-being.
“Continue to learn about financial management to build finances safely, without falling for dangerous ‘shortcuts’, including get-rich-quick schemes that ultimately trap individuals,” it said.
