First-time Parenting: Creating a Family Budget Plan in Hong Kong
Learning how to budget for a family in Hong Kong is an important step to ensure that you can survive in this expensive city. According to the survey conducted by Mercer, a human resource firm in New York, Hong Kong landed second to the most expensive urban centres in the world.
This data was actually intended for expats planning to live in Hong Kong. While they have a choice whether they want to live in this expensive city or not, the local residents of Hong Kong have to deal with the harsh reality of this city’s cost of living.
Usually, expensive cities justify the cost of living with high wages. But then again, how do the wages fare in Hong Kong? According to the data published by the South China Morning Post, fresh graduates are given HK$10,860 as their first salary. Do you think that is enough for you to live by?
Obviously, when you reach the point when you have to budget for a family, you should have gone through a couple of salary increases. Let us say that you are already earning HK$20,000 when you decided to start a family. Is that enough?
Would you know how to budget for a family in Hong Kong if you are earning only this much?
How does the average household spend in Hong Kong
Before we can answer that, how does the average household spend in Hong Kong? The Census and Statistics Department conduct a study every 5 years to determine how much Hongkongers spend on a monthly basis.
Between 2014 to 2015, the average household in Hong Kong spends HK$27,627. Of course, this amount is spent by the whole family. So if you are earning HK$20,000 a month, you obviously need your spouse to work and earn at least HK$7,627 to afford living in this city.
But what exactly are the locals spending on? Based on the data, the breakdown of monthly expenses according to the most expensive are as follows:
- Housing: HK$9,473 (34.29%)
- Food: HK$7,539 (27.29%)
- Miscellaneous services: HK$4,368 (15.81%)
- Transportation: HK$2,205 (7.98%)
- Durable goods: HK$1,285 (4.65%)
- Miscellaneous goods: HK$984 (3.56%)
- Clothing and footwear: HK$887 (3.21%)
- Utilities (electricity, gas, water): HK$738 (2.67%)
- Alcoholic drinks, tobacco: HK$149 (0.54%)
This data from the Statistics is mostly derived from the budget for a family of 2 or more people (mostly 2-4 people per household). Given these costs, how do you think your salary will fare?
Tips to help your family stick to your budget plan
Knowing what you need to spend will only take you halfway through the journey of creating a budget for a family in Hong Kong.
But the most important factor that will define your budget is your lifestyle. You need to choose your lifestyle wisely. We all want to live the affluent life – but that will not guarantee that your life will be a great one.
Try not to measure your success by the material things that you own. With that mindset, your budget for clothing and footwear should go down. It should not matter if you have the new car model – as long as the vehicle is fuel efficient, you should be alright.
If you have to spend on something, do not measure the quality by the amount that you spend.
According to the statistics above, people spend more (HK$4,901) when they eat out than when they cook their meals at home (HK$2,638). It is not the location that matters when you eat. It is the people that you eat with that will give you the memories that will last forever.
When you have created your budget, the next step is to make sure that the family will stick to it. Learning how to budget will be for nothing if you cannot get your family to follow the budget. To make sure they will follow through, here are some tips.
Involve all members when planning your budget.
Usually, women manage the household finances. But that does not mean you should not consult your husband about it. Even if he gives you freedom when it comes to the budget, make sure he knows what you are spending on.
Also, you may want to include your kids too. While this is something that should be kept between couples, it is a good idea to involve them because this will instil in them the importance of budgeting.
Check your budget plan now and then.
Our budget is usually based on our current priorities. If you want to buy a house, you need to save for a deposit. That means prioritizing your savings. But you will not prioritize your deposit forever. This is why you need to check your budget now and then to make sure that it is always aligned with your priorities.
Do not forget about entertainment expenses.
When finances are tight, we usually sacrifice entertainment expenses. Do not make this mistake. You need to budget for this because you will end up splurging when you end up having enough of your usual routine. It is better to just budget for entertainment expenses so you know your limit.
Budget for unexpected expenses.
Finally, you have to make sure that you will budget for the unexpected. Otherwise, you will be forced to borrow money when an emergency happens. Do not put yourself in a position that will force you into debt.
Save up for your emergency fund. If you do not have it, make sure you make it your first priority. That is how you can make your family financially secure.
Creating a budget for a family is tough when you live in an expensive city like Hong Kong. But the more difficult it is, the more you need budgeting. So make sure your finances are in order by creating a budget that your family can follow without feeling too restricted. Just remember to make it realistic and practical.
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