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James' story

James is a clerk at an accounting firm. Married, he makes $20,000 a month and tends to save rather than spend. His wife used to be in sales and earned about $8,000 a month. But because they have two children, aged three and four, she resigned to be a full-time mother. They also dismissed their domestic helper to cut costs. James' parents are retired and depend on him for financial support. This means he is the sole provider for his extended family and he is feeling the pressure. Though James was promoted and given a 10% raise, his savings are going down and he's worried about the future.

James does not make a budget, or take note of his expenses. Since he doesn't have a clear picture of the family finances, he's not aware when they overspend. It's not surprising, therefore, that his savings are shrinking. James' situation is fairly typical of many families on a single income in Hong Kong.

An Investor Education Centre's research entitled "Financial habits of four key segments (parents, tertiary students, working adults, retirees)" found that just 33% of parents with a monthly income below $25,000 made budgets or record their expenses. A quarter of these families admitted to being "quite stressful"or "extremely stressful" by their financial situations.

Start planning now

Most people don't like to account for their money, though this is essential to financial planning. As a result, they put it off, until they are under financial pressure and are forced to act, like James.

If you are the only income earner, sound finances are especially important to a happy family. Take note of the following and act now:

  1. Fully understand your financial situation, list all your assets and debts.
  2. Work out your monthly income and expenses to make a budget, and manage your savings.
  3. Set aside an emergency fund that can support the family for three to six months.
  4. Check that you and your family have adequate insurance cover.
  5. Set goals, such as balancing income and payments, a vacation or buying a home.
  6. Achieve your goals through saving or investment plans.

Tips to balance income and expenses

  • Prioritise expenses and reduce spending on what you don’t need.
  • If there are quarterly or annual payments, like income tax, divide the full amount by 12 months. This is how much you should set aside every month.
  • Never spend more than you earn. If necessary, discuss with family members and see if allowances can be reduced.
  • Use savings to make long-term investments and increase your financial reserves.
  • Use online tools or mobile apps to record your monthly expenses.