Best Places to Raise a Family in Malaysia Based on Cost of Living 2024

This article is also available in Malay here: Negeri Mana Paling Strategik untuk Besarkan Keluarga di Malaysia?.

Choosing where to raise a family is one of the biggest financial decisions you will ever make. It is not just about where you like to live, but how much you need to spend every month to live decently — and how much is left for savings, education, home ownership and investing.

Malaysia now has a better dataset for this decision. The Department of Statistics Malaysia (DOSM) has published its Cost of Living Indicators 2024, which allows households to compare the cost of decent living by state, district and state capital. For families, this is more useful than a simple list of “cheap places”, because the real question is: where can your income go furthest without sacrificing quality of life?

What Is the Cost of Living Indicator 2024?

The key measure in DOSM’s report is the Basic Expenditure for Decent Living Index, known in Malay as Perbelanjaan Asas Kehidupan Wajar (PAKW). It estimates the basic spending required for a household to live decently — not merely survive. This includes nutritious food, housing, transport, education, healthcare needs and participation in society.

Kuala Lumpur is used as the benchmark with an index value of 100. A location with an index of 70 means the cost of decent living there is roughly 30% lower than Kuala Lumpur. The index is also calculated by household size, which matters because the cost profile for a single adult is very different from a family with children.

Short Answer: Where Is Strategic for Families?

If your only goal is the lowest cost of living, states such as Kelantan, Kedah, Perlis and Sarawak stand out. Their PAKW readings are far below Kuala Lumpur, meaning families may need much less spending to maintain a decent standard of living.

But the most strategic place to raise a family is not automatically the cheapest place. It is the place where the gap between household income and cost of living is widest. A low-cost town is not helpful if income opportunities are too limited. A high-cost city can still make sense if your income is high enough and your career prospects are strong.

Cost of Living by State

At state level, the pattern is clear. Selangor, Penang and Putrajaya sit among the more expensive locations, while Kelantan, Sarawak, Kedah and Perlis are among the lower-cost locations.

Higher-cost states include:

• Selangor — 92.0 index points for a single-person household
• Penang — 84.2 index points
• Putrajaya — 83.1 index points

Lower-cost states include:

• Kelantan — 53.7 index points
• Sarawak — 53.7 index points
• Kedah — 56.6 index points

The same broad pattern appears across different household sizes. Selangor remains relatively expensive, while Kelantan, Kedah, Perlis and Sabah consistently appear in the lower-cost group. For a family of four, this difference can be meaningful over 18 years of raising a child.

Districts and State Capitals Matter More Than State Averages

The 2024 report is especially useful because it goes beyond state averages. Within the same state, one district can be far more expensive than another. In Selangor, for example, Petaling is much more expensive than many outer districts.

At district level, Petaling, Selangor is one of the most expensive areas, with an index above Kuala Lumpur for several household categories. Gombak and Johor Bahru also appear in the higher-cost group. Among state capitals, Shah Alam records a high PAKW index and can even exceed Kuala Lumpur depending on household size, while Kangar, Kota Bharu and Kuala Terengganu are among the lower-cost capitals.

This matters because families do not always need to move to another state to reduce costs. Sometimes, moving from one district to another within the same region can improve affordability while keeping access to jobs, schools and family support.

Why the Cheapest Place Is Not Always the Best Place

A common mistake is to look at the lowest PAKW reading and assume that location is automatically the best. Cost is only one side of the equation. The other side is income.

• A household earning RM8,000 in Petaling may still have room to save despite higher costs.
• A household earning RM4,000 in Kuala Terengganu may enjoy a healthy surplus because the cost base is lower.
• A household earning RM3,000 in Petaling may struggle because high costs consume most of the income.

The strategic location is the one where income comfortably exceeds the cost of decent living, leaving room for emergency savings, children’s education funds, insurance, home ownership and long-term investments.

Four Factors to Consider Before Moving

1. Income-to-cost ratio. Compare expected household income with the PAKW estimate for the location. A good target is to keep the cost of decent living well below net income so there is space for savings and investing.

2. Housing cost. Housing is often the biggest long-term expense for Malaysian families. A slightly lower-cost district can help a family buy a home earlier and reduce financial stress.

3. Career opportunities. A cheaper location is not useful if it limits career growth. Look for areas where your industry, spouse’s work and future earning power remain strong.

4. Education, healthcare and infrastructure. Schools, clinics, hospitals, childcare, public transport and family support networks all affect the real cost of raising children.

Use MyPAKW as a Planning Tool

DOSM’s MyPAKW calculator can help households estimate decent-living expenses based on household size, age profile and location. A practical way to use it is to compare your current location with two or three alternative locations, then estimate your income in each place.

1. Calculate the cost for your current household.
2. Compare several alternative districts or state capitals.
3. Estimate your realistic household income in each location.
4. Compare the monthly surplus after basic decent-living expenses.

For many families, the best answer may be a middle-cost city or district: affordable enough to save, but developed enough to provide jobs, schools and healthcare.

Financial Impact: Savings, Investing and Home Ownership

The location decision compounds over time. If one family can save an extra RM1,000 per month simply because its housing, transport and daily living costs are lower, that surplus can become a major wealth-building advantage over 10 to 20 years.

The key is to use the surplus intentionally:

• Emergency fund — build 3 to 6 months of expenses.
• Education savings — plan for children’s future education costs.
• Stock market investing — invest consistently for long-term growth.
• Home ownership — reduce debt pressure and build household assets.

A lower cost of living only becomes powerful if the savings are converted into assets. If the extra money is absorbed by lifestyle upgrades, the advantage disappears.

FAQ

Which Malaysian state is cheapest for raising a family?

Based on the PAKW index, Kelantan, Kedah, Perlis and Sarawak are among the lower-cost states. However, families should also consider income opportunities, schools, healthcare and career growth.

What does PAKW mean?

PAKW stands for Perbelanjaan Asas Kehidupan Wajar, or Basic Expenditure for Decent Living. It estimates the spending needed for a household to live decently in a specific location.

Why can Shah Alam be more expensive than Kuala Lumpur?

According to DOSM’s 2024 data, Shah Alam records high PAKW readings due to costs such as housing, transport and daily necessities in a developed urban area.

Should families move to the cheapest state?

Not necessarily. A cheaper location is only better if your income does not fall too much. The best location is where income minus cost of living leaves the largest sustainable surplus.

Conclusion

DOSM’s Cost of Living Indicators 2024 gives Malaysian families a more data-driven way to choose where to live. Selangor and Petaling are expensive, while Kelantan, Kedah, Perlis and Sarawak are more affordable. But the most strategic place to raise a family is not simply the cheapest — it is the place where your income, living costs, career prospects and family needs create the best long-term financial outcome.

Once you create a monthly surplus, the next step is to make that money work for your family through emergency savings, education planning, home ownership and long-term investing.

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