Sadly, Hong Kong has yet to find a female focused financial planning platform like Ellevest. In fact, we have yet to see any sort of digital service that makes financial planning easy, accessible and transparent.

However, this does not mean we should give up on planning our financial future. As mentioned in my previous article, women in Hong Kong face unique circumstances that require us to save (and invest) more in order to satisfy our needs and wants . Here are some easy steps that we can take to begin financial planning in Hong Kong, even if you are new to the world of finance.

Step 1. Dig Deep Into Your Current Financial Status

Just like a medical check up , financial planning starts off requiring you to be truthful to yourself and know what your existing net worth is. Your net worth is composed of your assets which is then deducted from your liabilities. Assets are everything that you own which includes your salary, existing cash in banks, investments (stocks, bonds, unit trusts, insurance products, real estate and so forth). Liabilities, on the other hand, are the opposite which constitutes everything you owe to third parties such as your mortgages, credit card balances, car loans and any other form of borrowings.

An easy way to calculate your assets is through Online Net Worth Calculators that are provided by third parties such as the Chin Family or HSBC. These will give you a snapshot of your personal balance sheet.

Step 2. Create Your Own Budget

Creating your own budget requires you to understand yourself by tracking your income and expenses, scrutinising your habits and formulating a forecast of your future financial status to ensure that you monitor and stay in control of your wealth.

It is important to track down every single ins (salary, bonus, pensions etc) and outs (interest payments for loans, credit card balance, general cash expenses on food etc) of your finances and then to begin taking control of your spendings. The latter can be done by understanding which of the expense items can be avoided, like those Louboutin shoes that you probably already own in a different colour.

There are a lot online budget planners that are accessible from Hong Kong, such as the Chin Family and Toshl Finance.

Step 3. Set Your Goals

Based on the results of your budgeting process, you will then identify feasible short, medium and long term financial goals. For example, you may want to save up for your wedding, buy a home or send your child to an international school. It is critical list out all of your goals, prioritise them and to know when and how much money is required to achieve them.

One thing to note is that you should include debt owed to third parties as not only a goal, but as part of your top priorities. You would not want to incur unnecessary additional charges for not fulfilling your financial obligations.

Step 4. Determine Your Required Action Plan

After understanding your budget and goals, you are then able to determine the required actions to realise your objectives. These include identifying how much you will need to save each month and, in terms of investments, understanding the required return, time horizon, the asset class and investment amount that will be needed. It is always good to have a diversifed portfolio of investments and to monitor them regularly so to know if there is a need of rebalancing.

It is important in this step to understand your risk appetite to decide on which asset classes to invest in. Risk is the probability or likelihood of occurrence of losses relative to the expected return on any particular investment. In the market, potential higher returns usually means higher risks. There are many variables that determine what your risk appetite is or should be. If you are highly risk averse, it will probably be more ideal for you to invest in government or corporate bonds. On the other hand, if you are willing to take up high risk, you could opt for purchasing options or be an angel investor in Hong Kong, where the startup scene is currently proliferating.

Step 5. Create Your Financial Plan

Develop your financial plan with a feasible regular savings and investment target to meet your goals. In addition, you should include funds for emergency, insurance and your children’s education, if applicable. All the facets of your financial plan are interconnected.

Step 6. Regularly review your plan

Strict discipline should be exercised when following your financial plan. Regulary monitor and review your plan to make sure that it is working and make any necessary amendments that makes it more accurate and effective.

Though it isn’t rocket science, it does require effort and discipline. However, once you make this a habit it will be worth it!

Recommend0 recommendationsPublished in Budgeting, Hong Kong


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