Recently, the gov decided to allow the people to reduce their EPF contributions from 11% to 8% for the next 3 years due to the economic crisis. At work, we had a meeting to decide whether we want 11% or 8%. Thankfully, most if not all of my colleagues opt for 11%. The gov wants us to increase our disposable income, that we will end up spending more and saving less. This I feel, is hardly a very smart move.
For a regular person earning around RM2000 a month, reducing the contribution to 8% will only give them an extra RM60 to spend a month. Now what is RM60 to someone like that? It probably cannot cover their monthly phone fees. However, if you take the RM60 (which is 3% of the normal 11% contribution) and opt for the 11% contribution, in one year, the contribution would have been RM720. If the person is in the 30s and assuming he works another 20 years with his salary still at RM2000, that little bit of insignificant 3% totals RM14,400. Now, isn’t it wiser to let the unseen money multiply itself in the long run, rather than take it out now and dispose of it casually without much thought?
It is hard enough for young yuppies to start saving, what with so many commitments, car loans, house loans, expenses. Young people are getting less educated in how to save. A large portion of single young men in their 30s, living in the city, actually use up more than 90% of their monthly income and do not keep a 5 digit savings account. What more to say of young women, who tend to expect to find a rich chap and get married and depend on his savings. Sorry for sounding stereotypical here, but that’s the truth, I even know of people who struggle when their salary comes late. Sometimes, we don’t even know what we spend on!
At the moment, I’m tracking my expenses using this cool tool, www.expenseregister.com. Everytime I spend on something, I just key in my expenses. I can even do my budgeting there. At the end of the month, I can generate some graphs to see expenses compared to income and stuffs like that. Basically, I’m using it to make me realise when I’m spending too much on certain areas, else I’d feel like I always have extra to use and spend…which of course, is not true. 😛
So, were you given a choice of 8% or 11% by your employer?
I want to remain as 11%. Instead of reducing EPF, why not the Govt reduce our taxes?
I vote for 11%. Since 3% is nothing for people who have low income. But I heard that if we all taking back our 3%, Malaysian will have 480 million disposable income a year. Correct me if I’m wrong.
Actually, if all contributors choose to lower there contribution, disposable income would go up to 4.8 billion annually…now that’s a lot of spending in a year.