Stretch the ringgit with these tricks.

Most people are worried about costs going up when the Goods and Services Tax (GST) kicks in this April. But not Liew Ooi Han who heads money management site Save Money.

He claims we could continue with our current lifestyle and still have money left to put away, if we know the tricks to stretch the ringgit.

Liew’s magic phrase is “money makeover” – you start by going through every sen you spend.

“It is a thorough audit on a person’s entire spending life, which can help save thousands of ringgit a year.

“Spend a day reviewing your expenditure and ask yourself these three questions on your spending. ‘Do I need it?’, ‘Can I afford it?’ and then, ‘Can I get it cheaper elsewhere?’

“For instance, take the data plan for your mobile phone. You need it but can you afford your current plan? Consider what your needs are and then see if there is a plan that meets your needs but saves you money. Maybe your current plan exceeds what you need. Change to a cheaper plan which still allows you to do what you need. You can do the same with your credit cards or your housing loan too,” says Liew, a London School of Economics graduate.

For instance, when it comes to credit cards, we need to examine our needs and then look for the most appropriate plan. For instance, a person applying for his first credit card would choose a bank that doesn’t charge annual fee, while a businessman who often uses his card would prefer low late payment fees.

There are websites that compare different financial products, such as loans and insurance plans, to help us shop wisely.

Learning and understanding money matters are important in doing a money makeover, and it’s crucial to know what GST is. We also need to know what items will be taxed under GST, and which will be exempted.

“The first thing to note is that GST is not a new tax. It is actually a tax system to replace the existing Sales Tax and Service Tax (SST). Many people are panicking because they anticipate that the GST will raise prices across the board. One common question on consumers’ minds is whether they should make purchases now, before the GST kicks in, or wait till after.

“What many don’t realise however is that certain items are already subjected to the 10% sales tax which will be abolished with the introduction of the 6% GST.

“While goods and services which were previously not covered by the sales and service tax system (SST) may become more expensive, items which were previously taxed at 10% for SST may actually drop in prices. Some things, like cars and electronic items, may experience a drop in prices,” says Liew, 29, who educates the public on savings on his web site.

He expects a one-time inflation with the implementation of the GST in April, but is optimistic that we could weather through uncertainties with some prudent planning.

“Budgeting is good, but the problem is nobody sticks to it. It is easy to plan, but the practice is hard,” he says.

It’s not enough to just have the intention to save, but to have the right mind set towards money management.

Getting into the habit of planning and prioritising our spending is a habit we should all have, Liew stresses. Saving should be the first priority, and not something you do when you have extra money.

“Why not bill ourselves? Many of us are committed to paying our bills. We pay our bills and loan installments every month. Don’t treat saving as something to do at the end of each month.

“Make it a priority, like the bills you pay. Bill yourselves every month. Have a separate account for yourselves that is not easily accessible and put money away every month. Your future should be the most important thing. If you don’t save, you’ve got nothing left for retirement,” he says.

Some links to GST-related sites: gst.customs.gov.my; savemoney.my; 1gst.com.my; gst.com.my; gstmalaysia.co; loanstreet.com.my