Does a family of 4 really need $6,426 a month for a basic standard of living? It depends

It is about what people feel they need to be socially accepted, not just what they can afford

Grace Ho
Opinion Editor

SINGAPORE - A family of four needs at least $6,426 a month to afford a basic standard of living, according to a study released in October.

Put together by a group of researchers from the National University of Singapore's Lee Kuan Yew School of Public Policy and Nanyang Technological University, the study caused a stir and even drew a response from the Finance Ministry.

Out of curiosity, I went through the lists of household budgets the study compiled. These were agreed among 196 participants from different backgrounds, and debated over 24 focus group sessions.

Here is an extract for households with two parents, a pre-teen boy (aged seven to 12) and a teenage girl (aged 13 to 18), with reasons given by the participants:

Five-tier wooden bookcase, Shopee: $80 ("To encourage reading habit, shared among children in same bedroom")

Samsung tablet, older model, $200. ("Tablet is needed especially during home-based learning. Every child should have their own as they may need it at the same time.")

Micke desk, Ikea study table with drawer: $149.00 ("Table can be shared by children")

Davidoff Cool Water eau de toilette (EDT) 100ml from Venus Beauty: $39.90 ("For good impression")

Restaurants twice a month: Saizeriya ($5.90 to $13.90 per person), Pastamania ($12.90)

H&M shirts, three pieces: $17.95 ("Children outgrow clothes very fast at this stage")

Annual 4D3N trip to nearby countries e.g. Ipoh and Port Dickson, Syeun Hotel & PD Avillion Admiral Cove, by coach, peak period Nov-Dec 2020: $1516.00

Christmas, Deepavali, Hari Raya, Lunar New Year, including cash gifts such as red packets: $500 each year, shared between couple

Work activities not sponsored by company, such as colleagues' birthdays: Twice a year, $30 per occasion ("For team bonding, important for career")

Friends' birthdays: Annual budget $50, $10 per gift for 5 birthdays, or $25 per gift for two best friends ("To avoid being discriminated")


We can all agree that none of these items are essential. But I instantly recognised on those detailed lists, things that I felt I needed to fit in as teenager but did not have.

For a few years, money at home was tight. I did not go on overseas field trips or to the cinema, and made excuses to skip class gatherings at restaurants. Each missed activity meant one less shared experience and common talking point - and one step closer to feeling as if I did not belong.

This is where the minimum income standard (MIS) approach, which relies on public consensus and not just expert opinion, comes in.

Here is the definition of MIS in the United Kingdom, where the methodology originated:

MIS is the income that people need to reach a minimum socially acceptable standard of living in the UK today, based on what members of the public think. It is calculated by specifying baskets of goods and services required by different types of households to meet these needs and to participate in society.

MIS covers necessities, not luxuries: Items that the public think people need in order to be part of society. In the UK, the MIS has influenced the government to raise the statutory minimum wage and call it a living wage, though not by using the same method.

In a similar vein, economist Amartya Sen advocated a capability approach to poverty, which provided the conceptual underpinning for the UN Human Development Reports:

From such elementary physical ones as being well nourished, being adequately clothed and sheltered, avoiding preventable morbidity, and so forth, to more complex social achievements such as taking part in the life of the community, being able to appear in public without shame, and so on.

In Singapore, such approaches can be useful to understand social aspects of living that involve choice, such as going out with friends and deciding what is a "respectable" amount to put in a wedding red packet. After all, who is a domain expert on whether a poor person should wear Davidoff EDT ($39.90) instead of Value Dollar Shop deodorant spray?

But I can also see why MOF objected to the study.

It is hard to justify treating discretionary expenditure items, such as private enrichment classes, jewellery and overseas trips, as a right and not a privilege or an option.

Nor can government agencies set thresholds based on the negotiated agreement of a small group of 196 persons. What happens when the next group, next year, comes up with a different basket of items and budget?

National University of Singapore associate professor Vincent Chua called it "futile" to adjudicate between the two interpretations.

What is more interesting, is there is in the first place a dissonance between what is "officially" perceived as a need, and what people on the ground regard as needs.

He said this could be because both sides are speaking from opposite ends: "One sees this from the viewpoint of poverty elimination and defines 'means' accordingly. The other is a mirror to people's efforts at achieving wellbeing. Hence the inclusion of 'wants' like travel."

Take a step back from the $6,426 headline number, and there are other notable points from the study.

While there is disagreement over the number and how it was derived, the average wage each working parent needs is $2,906 per month. This assumes that both parents work full-time, and is adjusted for taxes, universal benefits and major means-tested schemes. Those who are on Progressive Wage Model wages, inclusive of CPF contributions, fall a significant 38 to 49 per cent short of this number.

Second, there are inequalities among different workers and sectors. Cleaners, labourers, and casual workers' median incomes fall far short of what is needed, as do those with below secondary education. Those with secondary and post-secondary education fare better, but still fall slightly short.

Third, unwed single parents face particular challenges. Their housing costs are double as compared to their married, widowed, or divorced counterparts.

But with the recent move to allow unwed single parents aged 21 and above to buy new three-room flats in non-mature estates, there ought to be less need for them to spend more to rent on the open market, or move in with their relatives.

The picture is also gendered. Single mothers expressed more anxiety over their children's needs. They were especially articulate in revealing their strategies for stretching limited budgets, and would cut spending even if it meant forgoing their own needs.

Fourth, recreation and culture - which include paid activities such as going to the movies, karaoke sessions, and using community centre badminton courts - account for larger proportions of MIS budgets compared to actual expenditure.

The gap is biggest among households in the lowest income quintile, revealing the extent to which recreation needs are not being met among the lowest-income Singaporeans.

MOF has countered that the study's assumptions under-state government subsidies and financial support to low-income families.

It also had this to say about the study's treatment of mortgage payments for HDB flats:

Researchers considered mortgage payments for flats as an expenditure item, but downplayed the fact that the non-interest components of such payments are more akin to savings that help households build up valuable housing equity.

Since the study is about needs and not savings, are both sides again talking about different things?

My HDB may be an asset. But until the time comes when I am able to sell or rent my flat out to generate income, I still have to pay the mortgage today.

Instead of setting up a false dichotomy, one way to reconcile the two perspectives is that the study adds to the richness of the conversation about what it means to live well in Singapore.

As Dr Chua notes, the mental health crisis precipitated by Covid-19 has underscored the need to study the wellbeing of Singaporeans from a positive psychology lens, and not just mere survival.

The term positive psychology is closely associated with University of Chicago psychologist Mihaly Csikszentmihalyi who, after seeing the pain and suffering of people around him during World War II, studied happiness and what makes life worth living:

Ideas of social inclusion and exclusion broaden the conceptual terrain when discussing what else Singaporeans need. These conversations started years ago, and have gathered pace due to Covid-19:

What is a decent wage for households to meet their basic needs in keeping with social norms, especially those in sectors and occupations whose earnings fall far short of what is needed?

Is there a need to review the income limits and amount of aid given under means-tested financial assistance schemes? These schemes are available only to households whose incomes are already well below the level needed to meet basic needs.

Is there room for more direct delivery of services, or universal subsidies? These could lighten families' financial load significantly, especially in housing, healthcare, education and childcare, which eat up the largest chunk of household budgets.

Continue to find ways to hold down the costs of food and other essential items.


On that last point, MOF made a crucial observation on the availability of affordable alternatives.

I recall how supermarket house brands, from NTUC FairPrice detergent and dishwashing liquid to eggs and vegetables, helped my family tide over a period of income loss. When we found food courts too expensive, we could visit hawker centres and neighbourhood coffee shops.

But even after Covid-19-related supply chain bottlenecks ease, food prices cannot stay at their current levels forever.

Can more be done to offset price increases for the lower-income, such as by expanding the eligibility criteria, time period, and number of merchants for grocery voucher schemes?

Going through the budget lists, an item caught my eye: "Gift for self, annual budget $50".

One participant explained it like this: "To get something special outside of 'normal' budget. Been giving to others, deserve a treat on birthday."

The saying goes that money cannot buy happiness. But there are material things in life that are seen as normative, and can build up or shatter our sense of wellbeing.

At the heart of the debate is this paradox: Both the study and the official numbers are right.

One captures the basic needs - getting by in Singapore. The other captures something more akin to belonging to this society- getting better. But the distinction between choice and constraint is not always clear-cut.

Wrapped up in all of these are people's love, anger, hopes and hurt, and the larger question of what it means to be Singaporean. Navigating this minefield will require both a tough mind and a tender heart.

https://www.straitstimes.com/opinion...udgets-must-be