Many people wrongly believe that the B40 categorization is limited to the national average of RM 4,850.
In reality, this categorization is determined by the state in which you reside.
You are still classified as B40 if you live in Kuala Lumpur and your household income is less than RM 9,150.
Keep in mind that the income group definitions are not fixed.
The names, B40, M40, and T20, represent percentages of the country’s population of Bottom 40%, Middle 40%, and Top 20% respectively.
The values may increase or decrease year-to-year, depending on the country’s GDP, which is why the median household income is used as the determinant instead.
Though the income levels for each group has improved over the past three years, we should not ignore the escalating costs of living resulting from inflation and slower wage growth. To be exact, if we include inflation into the picture (3.15%, 2.1%, 2.09%, and 4.1% respectively in 2014, 2015, 2016, and first half of 2017), the ringgit’s value is diminishing.
At least 600,000 M40 households have fallen into the B40 group due to the impact of Covid-19 on the economy. This would mean that there’s a possibility for people in the B40 to fall even deeper than what has already been set as a low-income group.