Survey Finds Middle-Class Households Starting to Separate Spending Allocations

Jakarta: Pressure on the cost of living and economic uncertainty are pushing households, particularly the middle class, to be more disciplined in managing their finances. One method increasingly used is separating expenditures by need using the ‘kantong’ feature in digital financial services.

Some 51.8 per cent of people have separated money for monthly bills and daily needs as part of their financial management strategy, according to a Katadata Insight Centre (KIC) survey. In addition, 68 per cent of respondents said they plan their income and expenditure, while 44.9 per cent routinely record daily outlays.

This situation arises amid pressures on the middle class. Data for 2024 show the number of middle-class Indonesians fell from 57.3 million in 2019 to 47.2 million in 2024.

Nevertheless, this group remains the main pillar of domestic household consumption, contributing 81.5 per cent.

In practice, separating expenditures has become easier thanks to the ‘kantong’ feature available across various digital banking services. The feature allows users to allocate funds into several posts, such as monthly bills, savings, transport, emergency funds, and daily needs.

Other survey findings show that 86 per cent of the public are aware of this feature because it has been adopted by banks such as Bank Jago, BCA and Mandiri. The majority of respondents also said they first learned about the feature through Bank Jago.

Nine in ten users also say the kantong feature helps create a healthier financial condition because spending is more controlled and measured.

Beyond functional impact, the kantong feature is also seen as having a psychological effect. A total of 96.1 per cent of users say they feel calmer because financial planning is clearer.

Indef’s Centre for Digital Economy and MSMEs researcher Fadhila Maulida says the kantong feature in digital banks is essentially the digitisation of the manual money management method already used by society.

‘Actually, digital banks are more the enabler of turning those envelopes into digital,’ Maulida said.

Prasasti Piter Abdullah, Director of Programmes and Policy at the Centre for Policy Studies, said the growth of digital financial services is also shaping how people manage money.

‘Now you can open an account without going to a bank, and you can have multiple kantong accounts in one account. All sorts of ecosystems involved in finance exist now,’ he said.

He added that the kantong feature is also relevant for micro, small and medium-sized enterprises (MSMEs) to separate and monitor business cash flow more neatly and transparently.

Meanwhile, Trioksa Siahaan, Head of Research and Product Development at the Indonesian Banking Development Institute (LPPI), cautioned on the importance of discipline in prioritising expenditures, especially for the middle class.

‘When you earn income, allocate what is for essential needs; you must be able to distinguish what is essential from lifestyle,’ he said.

The survey also notes that the use of the kantong feature has reduced the share of people who hold money without a clear allocation from 33.8 per cent to 12.8 per cent.