Be money-wise with your summer income
The summer holidays are coming and most of you have probably planned for a variety of activities like travelling, taking summer courses, joining foreign exchange programmes and of course, starting summer jobs.
With a summer job, you can not only gain work experience, but also a taste of financial independence. Knowing how to manage your money from the summer job is important regardless of how much you've earned. If you make good use of the income and develop good money management skills, you'll have solid financial footing which can put you to good stead over the long term.
When you start working, you usually do not get paid in the beginning. In other words, you have to pay for transport, meals and even wear-to-work clothes for the first month using your own savings. If your savings are not sufficient to pay for the expenses, you should discuss this with your family to seek for their financial support.
Spending less than you earn and setting up a budget
Whether you are spending your own income and savings, or the pocket money given by your parents, you must always remember the principle of spending within your means. You should also set a monthly budget plan. Some people often do not care where their money goes to when they spend. However, if you are clear about what the money spent on, and prioritise your expenses according to your 'needs' and 'wants', then you will be able to control your budget and spend within your means.
To start with, you can make use of the Investor Education Centre's budget planner, and list out all your income, including pocket money and income from giving tuition, other part-time jobs and summer jobs. You'll also need to have good knowledge how you get paid - with a fixed monthly salary or by hour. Also, do you get sales commission? If you do, don't overestimate your ability to earn the commission on your first job.
The second step is to record the amount of money you save and list out the actual expenses you have, such as money given to your parents, transportation, meals, clothes, electronic devices and entertainment with friends. Start from 1 June 2014, if your pay is between HKD 7,100 and HKD 30,000, then 5% of the income will be deducted for your Mandatory Provident Fund, subject to a maximum of HKD 1,500. In other words, your disposable income will be reduced accordingly.
If your expenditure exceeds your income, then you will have to review all your expenses and cut down the unnecessary spending to balance your budget.
After working hard for a month and receiving your first salary, you may feel excited and want to celebrate with your family and friends. This is completely understandable. However, do not forget the principle of spending less than you earn. Before giving your family and friends a treat or buying them gifts, bear in mind to decide the amount that you can afford. Make sure that you don't need to live on bread and water every day in the following month after your decision, or even resort to borrow money from family and friends!