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Saturday, 16 November 2013
By: YAP MING HUI
There are sweeteners for the people
AS in the previous years, the Government’s budget for 2014 contains a number of sweeteners for the man-in-the-street. There are, however, many measures that will make the people spend more money.
Being human, we tend to complain about having to pay more for anything. So, the removal of the subsidy for sugar, for example, triggers an alarm on the rise in the cost of living in Malaysia.
Despite the increase in the prices of necessities and the impending Goods and Sales Tax (GST), we need to acknowledge that there are some benefits in the budget.
Personal income tax, for instance, will be reduced by 1% to 3% for all taxpayers. While the chances of owning a house has improved for the middle-income group with the RM30,000 subsidy for developers to focus on affordable housing.
So, like all budgets, it is a mixed bag of goodies. How we react to its pluses and minuses makes the difference between being pessimistic about the year ahead and having a can-do attitude towards the opportunities that it offers.
The same holds true for managing our personal finances. If we focus on the down side of the situation, the outlook may seem bleak. But if we choose to see things positively, we will notice opportunities rather than setbacks and obstacles. It’s that simple, really.
Looking back on the global financial crisis of 2008, we find examples of people who saw a silver lining when others thought it was the end of the world. For the pessimists, it was a time to curb spending, tighten the belt and wait until the storm is over.
As for the proactive folk, however, it was the perfect opportunity to look for good stocks that were going for a bargain despite their intrinsic value. Naturally, when the market rebounded in 2009, these go-getters made good money.
Coming back to the Budget 2014, those who will benefit directly from it, including recipients of cash handouts or bonuses, are the winners in this round. On the other hand, those who will suffer a financial setback, such as property speculators, are disadvantaged this time around.
The truth is that nobody will be 100% happy with the budget. Individually, we may benefit from some new measures, such as an income tax rebate, but lose out on others, such as the GST when it is implemented in April 2015.
There is a story about a person who expected God to save him from a flood that is relevant in this situation. The man, who believed that his faith in God would save him, turned down the help of his neighbours, a passing boatman and rescue helicopter. When he drowned and went to heaven, he asked God why He had not come to save him. God replied, “I sent you a warning, a car, a boat and a helicopter. What more were you looking for?”
Those who are perplexed or upset by the bad news in the budget are like the man who could not recognise the help that came his way. They choose to ignore the good measures in the budget that they can benefit from.
Instead, they complain about being disadvantaged by the budget proposals and blame the authorities for making their lives difficult. They feel that they should be taken care of but instead they are left out or victimised.
In one sense, they are not wrong because on the face of it, they actually lose out by having to pay extra costs or higher taxes. However, their disadvantage will become their loss if they just complain and do not take steps to rectify the situation.
The mistake is to focus on something that we cannot control. One thing is clear: if we continue to spend as we have always done, and stick to our present methods of saving and investment, our financial status will not improve.
Now let us look at how the real winners react to the budget. They too are disturbed by the bad news. The difference is that these people searched for opportunities by looking at the tax incentives that are being offered, additional tax reliefs and other good news. They decide to focus on what they can control.
Real winners are determined to address tough situations with positive actions. As the saying goes, “when the going gets tough, the tough get going.” When they are faced with rising living costs, they start to explore ways to increase their money-making capabilities. With effort, they can hopefully generate more income.
They examine their current expenditure, cut out unnecessary items and force themselves to save more from whatever tax relief and incentives given. They know that they cannot afford to stay in the comfort zone anymore. They choose to educate themselves to invest for higher returns with lower risk.
These people are the real winners. They are winners not because they benefit 100% from the Budget 2014, but because their attitude makes them win no matter how tough the environment is. It does not matter whether it is the rising cost of living, weakening ringgit, tightening property lending or volatile stock prices. They choose to believe that there is a silver living in every crisis.
Ask yourself: Do you want to be a winner in the Budget 2014? If so, think big and take action.
YAP MING HUI (firstname.lastname@example.org) will be organising a charity fund raising seminar on Nov 23. At the YMH 2014 Money Optimisation seminar, Yap will discuss opportunities in the budget, and share the latest money optimisation strategies to help participants prepare for 2014. For more information, please visit www.yapminghui.com
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