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Ask yourself

Do you spend all your earnings every month, without any savings?
Do you often feel the urge to spend your entire monthly salary?
Is your salary all gone even before the month ends?

Then you need to break the cycle of living paycheck to paycheck in order to get ahead.

Here's how to recognise such behaviour

Financial management attitude Focus on the present, spend as much as you earn, and let the future take care of itself.
Concept of consumption Always go for the best, the newest and hippest when it comes to clothing, accessories, dining and having a good time.
Attitude towards money No need to save, because you get money by earning, not saving.
Planning for the future Haven't thought about it. Feels like something very distant.

Spending the last cent will lead to poor financial health

You're young and confident. Though your salary might be low when you first start working, you think everything will be fine. You know you need money for essential expenses such as meals and transport, but there are so many other things to spend money on - stylish clothing, new electronic devices, nights out with friends, travel and more.

It doesn't matter if this month's salary is used up - you have credit cards you can charge things to. You'll just pay it back with next month's salary. What's more, you expect to be promoted and your salary will increase in the future, so you can start saving then.
 
The fact is, you're caught in a spiral where you can't get ahead. You might even possibly be getting into debt. You can work for years and increase your salary, but your living costs also go up a lot. It can be very hard to break this cycle of living paycheck to paycheck and the stress that comes with it, but it can be done.

It all comes down to your attitude towards financial management and spending. Would you like, one day, to get married, have children and buy property? If so, you have to stop focusing on instant gratification and plan for your future.

Break the paycheck to paycheck cycle, act now

Here are five realistic steps you can take to ensure a more secure future:

  1. Think about saving before you spend. Set a clear target, such as saving $100,000.
  2. Start with an easier goal. For example, put aside 10% of your salary as savings every month as soon as you get paid. You still have 90% of your salary to cover expenses and entertainment.
  3. Change your consumption habits, prioritise your expenses and reduce spending. Make sure you have enough for essentials, and cut back on non-essential items. For example:
    • Eat out less, or at more affordable restaurants.
    • Don't upgrade your phone so soon.
    • Think about whether you really need another pair of shoes or more clothes.
    You will probably start getting used to the habit of saving after about three months. Then try to increase the portion of savings gradually every month.

    Savings Tips
    Avoid impulse purchase When you see something you like, think about whether this is what you really need, or something you simply desire.
    Delayed purchasing Wait a day or two before making a purchase decision. You may realise that, in fact, you do not like this item that much. You will be glad you didn't buy it.
    Buy a substitute If what you want to buy is too expensive, there is probably something similar that will be within your budget.
    Comparison shopping Be a smart consumer and compare the prices at different retail and online outlets.
    Disciplined shopping Space is a rare commodity in Hong Kong. Before making any purchase, think about whether you have space for it at home. When shopping for birthdays or other festive occasions, make a checklist and set an upper limit, or even try and make a gift yourself.
  4. Track your daily expenses regularly, so you will better understand where you have spent your money. Pay more attention to your own spending habits.
  5. Make use of financial planning tools. Use our online financial calculators or "Money Tracker" Mobile App to help you break the paycheck to paycheck cycle.