Now, let’s start with the mother of all topics; The Good and Services Tax (GST) 2015. As announced by the Prime Minister, Dato Seri Najib Tun Razak on 25th October 2013, the GST will be officially implemented on the 1st of April, 2015.
As explained on GST, the good and services tax is also known as value added tax (VAT) which are also imposed in many other countries. It is a multi-stage consumption tax on goods and services. There are many countries in the world who have been on GST for the longest times. Some good news would be that some countries have much higher GST rates than Malaysia; Indonesia’s current rate is 10% and it has been implemented since 1984 and China is a staggering 17% since 1994. 6% isn’t that bad right? Below are charts from 7 countries in the ASEAN region and 19 countries around Asia that have the GST implemented on them;
|ASEAN (7 Countries)|
|No.||Country||GDP Per Capita
(World Bank, 2011, USD)
|Year of Implementation||Initial Rate (%)||Current Rate (%)|
|ASIA (19 Countries)|
|No.||Country||GDP Per Capita
(World Bank, 2011, USD)
|Year of Implementation||Current Rate (%)|
|13||Papua New Guinea||1,845||2004||10.0|
The GST will not be imposed on ALL items; some of the exempted items are many types of vegetables, fruits, meats, pastas and many more!
Back to what the GST actually does. 6% will be charged extra besides having also to pay the service charges and taxes. In other words, consumers will only need to pay tax ONCE on the goods they purchase which actually results to almost the same price as before or it might even be more affordable.
With an extra 6% being charged ALMOST everywhere, many Malaysians question whether it’s still possible to save their hard-earned money every month? The answers vary for each individual because there are many responsibilities to consider, especially when it comes to saving extra money but it is POSSIBLE. It depends on your saving expectations and how you’re going to save it.
Firstly, determine your:
According to and suggested by Harvard professor, Elizabeth Warren, try making out your income and savings to a ratio of 50-30-20 of your after-tax (EPF & SOCSO). 50% is for your fixed and committed expenses such as rent, petrol, meals, etc. 30% is for discretionary expenses such as entertainment, leisure, hobbies, etc. And finally, 20% of it should be put into your savings account.
I know, this personal savings scheme might seem a little bit intimidating at first, leaving you to almost zero expenditure on other things. In the long run, when you get used to it, you’ll see the figures in your bank account grow.
2. Re-examine your lifestyle
Sit down, relax and think. Think on how you spend your money daily, overall. You can also be deep in thought about the things you spend on a daily basis and during the weekends. Do you really need that daily dose of premium coffee that costs almost RM 15 every day? Do you need to go to that 50% sale off at Zara and Forever 21 this weekend? Do you really need to spend so much on your daily lunches with your colleagues? If you smoke, do you need to buy two packets of cigarettes every week?
Let’s set a calculation for one of the estimated examples above;
Premium coffee (that you actually don’t need): RM 15 (or even more) x 5 days of the week = RM75 a week!
By cutting down and buying your own espresso beans or instant coffee powder, varying from RM 9 to RM 25 per packet or bottle. Packeted coffee sachets usually contain around 15 sachets and these will last you roughly around 2 weeks, a cup per day. This will help you save more than 50% on just coffee! You can do the math on your other spendings and it will all total up to a very big sum.
By cutting down or totally limiting yourself off all these unnecessary expenses, you will save A LOT. At the end of the day, you will feel more satisfied with the amount you have saved rather than the big amount you spend on things you can actually save on.
3. Get a savings account/fixed deposit account
Saving is important for everyone, even for fresh graduates. In general, it is roughly estimated that young Malaysians are not saving enough according to the Employees Provident Fund (EPF). There are around 2 million working adults, including those who are self-employed, that are not covered under the EPF and that is dangerous news. This is dangerous because if a working individual does not save and is not protected by the EPF, this could result in a jeopardizing future ahead of them.
Savings are very important for self-protection and reliance on one’s own money. Instead of looking for other sources to cover their living expenses in the future when they are older and retired, your own savings and EPF are the only reliable sources to sustain your living lifestyle after retirement.
One of the quickest and easiest solutions now is to get a savings account first. Survey around and find the best rates from different banks for your savings. When you have saved enough, deposit some or most of your savings into a fixed deposit account. This is because the annual returning rates from your savings will benefit you in the long run. The faster you save, the more you will get in return.
4. Paying off loans vs savings
With so many responsibilities in our hands, what do we do when we need to pay off debts, loans and also save at the same time? The answer to this is paying off your loans and debts first because they are more important than saving.
This is simply because you would not want the numbers in your debts to rise. Although you think your savings might be more than the total number of your debts and loans, this is not true. Bank rates go up and down all the time and there is no total security to how you think the number of your savings and fixed deposits will increase.
Paying off your debts and loans like study loans, credit card debts and car instalment plans are more important than saving. Even if you have zero to save after deducting all your money for these debts and loans, they are more important. Focus on your career goals during this time, get increments and slowly save up. Not being blacklisted is more important in these shorter termed loans and saving up can come later.
Last, but not least;
5. Are you ready to plan a wedding?
It is important to note that a wedding can cost A LOT depending on how lavish you want your ceremony to be. From wedding attire, pre-wedding photo shoots and photographs, wedding venue, wedding lunch/dinner, bridesmaids dresses, wedding accessories, invitation cards and gift favours, dowry and so many more, it is a lot to think about cost-wise.
If you’re a young working adult who is climbing up the ladder and you’re able to pay for yourself, can you afford to pay for another person in the future when you get married? A marriage is a unity of two individuals and mind you, your expenses will double up and so will your partner’s. If both of you can afford spending RM 10,000 or more without expecting any help from the parents or wishing for any of the money spent in return (in the form of red packets from the wedding dinner/reception), then you’re good to go!
Plan well and save more when you’re still young and active with your finances, so that you can spend more on your big day without worrying too much on over-spending. Good luck on saving for your future and dream wedding!