Prime Minister Datuk Seri Najib Razak announced Malaysia’s annual budget last month, with the theme, “Prospering the Rakyat.”
This year’s affair highlighted the government’s plans to narrow its budget deficit, as well as measures to address issues such as the rising cost of living and housing unaffordability.
These measures include increasing its cash handouts under the 1Malaysia People’s Aid (BR1M) assistance programme and raising the minimum wage for workers.
MUST READ: No need to study BR1M recipients' spending...yet
They also introduced new income tax provisions, such as the introduction of tax relief for children who provide for their parents and an increase in tax relief from RM1,000 to RM2,000 for each child from year of assessment 2016.
MUST READ: Income tax for 2016 increases between one and three percent
MUST READ: Taxing the rich more will help reduce income inequality
But let’s face it – amid inflation woes triggered by the sharp drop in the Ringgit, the introduction of the Goods and Services Tax (GST), and the recent increase in toll rates across the Klang Valley – these measures really don’t do much for those already grappling with the rising cost of living.
Middle-income earners who are not eligible for cash aids, and yet do not earn enough to weather the rising living costs, continue to bear the biggest brunt of the current economic situation.
Who are Malaysia’s middle-class?
Many middle-income earners in Malaysia are already resorting to drastically cutting back on their expenses, including fewer trips to restaurants to tackle rising living costs.
A better solution for this would be to boost their disposable income. The million dollar question is, how?
MUST WATCH: [VIDEO] Budget 2016 - Najib's Full Speech
1. Generate your passive income
One of the easiest ways to do this is by increasing your passive income. Unlike active income (which you usually earn through having a job or running a (profitable) business), passive income generation typically requires less time and effort.
Passive income can include investments, especially with low-to-mid risk instruments that let you leverage on capital with minimal active input.
This could be in the form of unit trusts, REITs, shares, investment-linked policies or even in your good ol’ fixed deposit account. They let you accumulate returns while you grow your savings pool.
The more you save, the more returns you will get. Lower-risk financial instruments like fixed deposit will give you lower returns, but they are generally considered safe and are an effective tool to help preserve the value of your contingency funds.
2. Make your money work harder for you
Stretch your Ringgit further by adopting strategies that allow you to save while you spend. For example, buying essential items such as rice and toiletries in bulk can save you a small fortune.
You can also save a few bucks with hypermarket loyalty cards. Benefits often include reward points, special member price for selected items or additional discounts from selected merchants. They may also offer shopping-related benefits.
You can save money on purchases when you shop online as well, or by using a shopping credit card that offers rebates or privileges when you shop online.
MUST READ: Ringgit expected to strengthen to RM3.80 against dollar in medium-term
Bogged down by fluctuating petrol prices? You can fuel up your purchasing power as you fill up your tank when you use a petrol credit card that gives you cashbacks or reward points.
3. Avoid investment mistakes
There’s a difference between investing and investing properly. Anyone can put their money into investment products, but without a sound financial plan, you may not know which investment strategy or products will work best for you, and how to build a balance portfolio.
The key to building your financial strategy starts with understanding your goals and risk appetite. Younger investors typically have a higher tolerance for risk and can afford to make riskier investments due to their longer investment horizon. They also have longer time to work on achieving their financial goals.
Next, you will need to identify your short and long-term goals, and how much you can afford to set aside, in order to determine the type of financial products that will work best for you.
Without taking these factors into consideration, you may end up investing too much in the “wrong products”, or end up putting all your eggs in the same basket, financial advisor and coach Yap Ming Hui explains on his website.
For example, investing in property is not a bad thing. But if you’re putting your entire fortune into a single asset class, you risk “over investing” and exposing yourself to “too much risk”.
MUST READ: Budget 2016: Can You Afford A House Now?
“If the property sector takes a dip, it will badly affect your investment. In addition, it may also affect your cash flow if you take too much loan to finance your property investment,” Yap says.
Having a diversified investment portfolio that comprises various asset classes can help protect your capital from adverse market conditions.
4. Get a financial planner
If you have the capital and a goal but are a little sceptical on how to reach it, a financial planner can give you a nudge in the right direction and help devise a financial strategy to help you get there.
This strategy will work as a road map towards your money goals – whether it is buying a house, saving for your kid’s education, or achieving early retirement.
A financial planner can also help you buy or sell, and manage your investment portfolio on your behalf, depending on the nature of the agreement.
Some planners do not charge a fee but are paid commissions on the financial products you purchase. Meanwhile, others may charge an hourly rate or a retainer fee.
With their expertise, a financial planner can point you to the right financial tools to help you make informed money decisions.
The current economic situation is unlikely to improve in the months and years ahead. For the time being, Malaysians will just have to suck it up and learn to adjust to higher prices.
While you can’t control the economy, do keep your chin up and focus on what you can control – they lie in the choices that you make every day that can determine your financial future.
This article is contributed by iMoney.my, Malaysia's leading financial comparison website. To compare and apply for the best financial products, such as credit card, home loans and personal loans, visit www.iMoney.my
iMoney
Mon Nov 09 2015
Malaysia's middle-income earners are not eligible for cash aids, yet do not earn enough.
Empat wakil negara mara ke separuh akhir kelayakan Kejohanan Skuasy Dunia
Empat wakil negara berjaya melangkah ke separuh akhir Kelayakan Kejohanan Skuasy Dunia Zon Asia yang berlangsung di Pusat Skuasy Jalan Duta hari ini.
Malaysia pantau situasi terkini di Asia Barat, minta semua pihak terlibat supaya bertenang
Malaysia memantau dengan rapi perkembangan terkini di Asia Barat dan menyeru semua pihak yang terlibat supaya bertenang dan terus berusaha mencari jalan penyelesaian diplomatik.
3,850 ibu bekerja di selangor terima insentif MamaKerja RM1,000
Menteri Besar Datuk Seri Amirudin Shari berkata ibu pekerja tersebut merupakan sebahagian daripada keseluruhan 5,595 permohonan yang diterima kerajaan negeri setakat Mac lalu.
Pemandu bas rempuh 11 kenderaan direman empat hari
Perintah reman terhadap lelaki berusia 51 itu dibenarkan Majistret Suhaila Shafi'uddin bagi membantu siasatan mengikut Seksyen 42 Akta Pengangkutan Jalan 1987.
Mahkamah Persekutuan tetap 3 Mei putuskan rayuan berkaitan status agama Islam wanita
Mahkamah Persekutuan telah menetapkan 3 Mei depan untuk memutuskan rayuan seorang wanita berusia 37 tahun bagi mengetepikan keputusan Mahkamah Rayuan yang mengembalikan status agamanya sebagai Islam.
Jangan abai peruntukan untuk pembangunan sukan - Hannah
Kerajaan negeri dinasihatkan untuk tidak 'menganaktirikan' atau menganggap agihan peruntukan bagi tujuan pembangunan sukan tidak penting dalam belanjawan negeri.
Empat pelari yang memenangi acara separa maraton Beijing dilucutkan pingat
Penganjur acara separa maraton Beijing mengumumkan pada Jumaat bahawa empat pelari yang terlibat dalam perlumbaan kontroversi pada Ahad lepas telah dilucutkan pingat.
Lelaki sindrom Down melecur disimbah air panas dalam lif
Seorang lelaki sindrom Down melecur di bahagian badan disyaki akibat disimbah air panas ketika berada di dalam lif sebuah pangsapuri.
Park Jaehong ketua jurulatih baharu KDNFC
KDNFC hari ini mengumumkan Park Jaehong dari Korea Selatan sebagai ketua jurulatih yang baharu bagi membimbing pasukan itu dalam menghadapi saingan Liga Malaysia (Liga-M) musim 2024/25.
Konflik Myanmar: ASEAN tegas kepentingan laksana Konsensus Lima Perkara
ASEAN tegaskan semula komitmen bantu Myanmar cari penyelesaian dengan mewujudkan persekitaran kondusif melalu pelaksanaan Konsensus Lima Perkara.