Planning Your Family’s Finances with Budget 2012 in Mind

As a Malaysian, you would probably be aware of the tabling of the 2012 Budget by our Prime Minister Datuk Seri Najib Tun Razak in Parliament recently. What is your opinion of the Budget? At a time when most Malaysians are concerned with the rising cost of living, the Budget 2012 announcement has shifted the focus back to the rakyat. No doubt, the 2012 Budget will have an effect on all of us, especially for those with family. In this article, we will discuss how your financial management plans can be adapted according to the Budget.

#1:     RM500 Financial Aid for Households with a Combined Income of RM3,000  or Less

This announcement will surely bring smiles to many faces. RM500 may not seem like much, but for a parent, RM500 is very helpful as it can be used to buy diapers, food, and baby clothes. In fact, the money can also be used on essential items for school such as uniforms, stationeries and books. Remember! Spend the money on important items only and do not be wasteful.

#2:     My First Home Scheme (MFHS) Purchase Limit Raised to RM400,000 for Joint Loans (Husband and Wife)

Aspiring first-time house buyers, you are now one step closer to your dream of owning a house! Previously, the purchase limit under the MFHS was RM220,000 and this really limited options, especially for couples who live in urban areas. With the purchase limit increased, you can now plan on a bigger property and/or a better location. When choosing your dream house, remember to take into account various factors such as location, public amenities, the neighbourhood, distance from workplace, space, number of household members and most importantly, your budget. Even if you can easily afford the monthly housing loan repayments, do not forget that there may be other costs to bear such as service, assessment and maintenance fees.    

#3:     Full Import and Excise Duty Exemption For Hybrid Vehicles       

Do you and your family want to save money while preserving the environment? How about considering purchasing a hybrid vehicle? Hybrid vehicles are proven to save petrol (compared to conventional petrol cars) and be less polluting, especially when driven sensibly. If you and your family frequently use a car as the main mode of transport, a hybrid car could be your best choice. The Government’s decision to extend the full import and excise duty exemption for hybrid vehicles to 2013 is timely, making them more affordable and attractive to own.    

#4:     Abolishment of School Fees

This is a very important step taken by the Government, because for the first time in history, education is given free to the rakyat. Parents with many children can breathe a sigh of relief as the burden of paying school fees is now a bit lighter. Although the saved amount is small (RM24.50 and RM33.50 for primary and secondary students respectively), it is still enough to cover your child’s daily pocket money for a month. The abolishment of school fees is also something that has been eagerly awaited by lower income families with many children. If a couple had, say, six children with three of them in secondary school, they would stand to save RM174. By not having to pay school fees, you can use the money saved to buy essential school items or increase your own savings.  

Furthermore, all primary school students stand to receive RM100 in “pocket money”. When your child has received the money, do advise him or her  to save it or spend it on essential items only.

#5:     Employees Provident Fund (EPF) Contribution for Private Sector Workers Increased from 12% to 13% (for Those Earning Less Than RM5,000 Monthly)

At first glance, 1% of our salary seems like such a miniscule amount! However, this 1% increase is actually very useful to private sector workers in the long term. We at SC always emphasise the importance of planning for retirement as early as possible, and the increase under the EPF will be a boon for those plans. Add to that the fact that studies show 70% of retirees exhaust their retirement fund within 10 years, and the value of 1% becomes extremely obvious.

#6:     Citizens aged 60 and above to be exempted from outpatient registration fees in Government hospitals and health clinics      

To all citizens who are in the “golden age” category, rejoice as you are now exempted from outpatient registration fees in Government hospitals and health clinics! With the quality of facilities and medical care in Government hospitals and health clinics improving, now is the time for you to save money on medical expenses. With this move, you now no longer need to worry about medical costs or rely on your children to cover your medical bills.

#7:     A Half-Month Bonus (Minimum Payment of RM500) In December Salary for Civil Servants and RM500 Aid for Government Retirees

We have saved the best part of Budget 2012 for last, and that is the bonus and aid payment for civil servants and Government retirees. But no matter what the final amount of your bonus is, whether you are a civil servant or private sector worker, we would like to advise that you:

  • save a part of it first before allocating the balance for expenses. At the very least, try to save 10% of it;
  •  invest part of the money in a legitimate investment scheme. The Government also announced the launch of Skim Amanah Rakyat 1Malaysia (SARA 1 Malaysia) during the tabling of Budget 2012. For those interested in this scheme, you need to have a household income of less than RM3,000 monthly. You may also want to consider applying for the RM5,000 5-year loan which is being offered under the same scheme;
  • plan and manage your finances with care; and
  • log on to the InvestSmart website (www.investsmartsc.my) for helpful tips, advice and knowledge on financial management.
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