It has been 2 years since the Singapore Government first announced its plans in 2018 to increase Goods and Services Tax (GST) from 7% to 9%. While the GST will remain at 7% this year, the GST hike cannot be deferred indefinitely, and will take place by 2025.
Instead of lamenting over things we cannot change, let’s prepare for the expected rise in the cost of living. Here’s how you can start with these 5 easy ways.
1. Review your budget
With GST slated to increase by 2% within the next four years, you know your expenditure’s going to rise. To arrive at a better financial position, you need to assess your earning capacity and your expenditures now.
Besides trying to increase your income, it helps to be more prudent with how you spend. Prioritise your spending by differentiating needs from wants. For example, do you really need that gym membership to stay fit and healthy? How about jogging outdoors or following YouTube workouts at home?
Better yet, factor in the 9% GST into your budget now, so that you will be able to set aside the money required for the projected increase in advance.
2. Buy big-ticket items before the GST hike
If you are thinking of purchasing big-ticket items such as furniture, home appliances or car, you may want to do so before the GST hike. Say you are planning to buy a new car, which will cost at least S$70,000 (excluding COE), a GST hike of 2% will make you S$1,400 poorer. Therefore, it makes sense to time and evaluate your purchases as the savings will be substantial.
Wait! Don’t get ahead of yourself. If you are wondering “How can I get GST voucher?”, check your eligibility here first.
3. Support small local businesses
Not all businesses will be affected by the projected GST hike, as they only need to be registered for GST when their taxable turnover exceed S$1 million. Therefore, if you buy your groceries from a small, family-run provision shop in your neighbourhood, instead of a chain supermarket, you can save money on GST.
Furthermore, you are helping another local family stay afloat. Definitely a win-win situation when you support small local businesses in such times!
4. Keep track of ongoing expenses
Do you have ongoing expenses, such as your cable TV or Netflix subscription or that club membership that will be affected by the GST hike in future? Are they really essentials you can’t do without? Or can you cancel them and go for cheaper alternatives?
Keep track of your usage patterns for these recurring expenses so you can review your real need for these expenditures.
5. Plan your finances for the long term
Like it or not, the GST hike by 2025 will result in a general rise in the cost of living. This does not only impact your budget and expenses, but may also change your long-term financial plans. In light of the rising taxes, you should review your emergency funds and intended retirement income.
You can get a financial planner to help you on this. In addition, you may also want to consider boosting your savings with GIGANTIQ, the popular all-in-one insurance savings plan with at 1.8% p.a.1 to achieve your life goals. Currently, GIGANTIQ is fully subscribed, but you can still register your interest here!
#TiqOurWord Did you know you can earn additional interest of up to 0.25% p.a. for every rider2 purchased? Keep saving as you protect!
Are you ready for the GST Hike?
Prepare for the impending GST hike early so you will be ready for the increase when it comes. Get GIGANTIQ via the Tiq by Etiqa mobile app to grow your savings, so you can manage your account on the go.
In addition to higher returns on your first S$10,000 for the first year, there is no lock-in period and you get back 100% of your capital whenever you need the funds. 5 minutes is all it takes to start growing your savings with just S$50. Learn more here now!
Information is accurate as at 26 January 2021. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC.
1Guaranteed 1% p.a. + 0.8% p.a. bonus for first policy year, available on a first come, first served basis.
2 Selected Life or General insurance products offered as supplementary coverage under GIGANTIQ from time to time. Additional interest earned from each rider is only applicable to the first S$10,000 while rider is active.
GIGANTIQ is not a bank account or a fixed deposit. It is an insurance savings plan that earns a crediting interest rate. This product’s availability is based on a first-come, first-served basis and Etiqa Insurance reserves the right to close the tranche at any time without prior notice.
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This advertisement has not been reviewed by the Monetary Authority of Singapore.
Tiq by Etiqa Insurance Pte. Ltd.
A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.
With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.
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