💰Why does everyone need financial management? The truth about wealth management that Hong Kong people must know! 📊

Dear readers, today I'd like to share with you a crucial issue every Hong Konger must face: **Financial Management! **💡 In this cosmopolitan city with an ever-increasing cost of living, if you still think financial management is something only the wealthy consider, you really need to rethink! According to the latest survey data, the housing price-to-income ratio in Hong Kong has reached 14.4 times, meaning the average family would have to live without food or clothing for over 14 years to afford a single apartment. While the average monthly savings of Hong Kong residents has reached a record high of HK$9,800, it still presents significant challenges amidst eroding inflation and retirement planning needs.

🏠The cost of living in Hong Kong is the highest in the world! Not managing money will really make you lose your health.

🔥High property prices: Buying a property has become an impossible task

The issue most acutely felt by Hong Kong residents is undoubtedly housing prices! According to a report by Demographia, an international public policy consultancy, Hong Kong has been ranked the world's least affordable city for housing for 15 consecutive years. While prices have declined in recent years, the price-to-income ratio remains high at 14.4 times, far exceeding the second-highest ratio in Sydney, Australia, at 13.8 times.

Let me tell you, what does this number mean? For a family with an annual income of HK$400,000, they'd need HK$5.76 million (400,000 x 14.4 times) to buy an average-priced apartment. According to the Rating and Valuation Department, the average price of a 45-square-meter apartment is HK$6.35 million. Based on the median household income of HK$38,000 for private housing, mortgage payments account for a whopping 46% of their income!

📈Inflation erodes purchasing power: Money is becoming less and less valuable

Besides housing prices, inflation is also a significant financial threat that shouldn't be ignored! According to the latest data from the Census and Statistics Department, Hong Kong's Composite Consumer Price Index rose by 2% year-on-year in January 2025. Over the past 10 years, overall prices in Hong Kong have increased by 21.5%, with an average inflation rate of 2%.

Let me do the math: Assuming inflation remains at 2.12%, an item originally worth $100 will cost about $122 in 10 years—an increase of over 20%! If your salary growth doesn't keep up with inflation, your real purchasing power will continue to decline. In particular, "tobacco and alcohol," "food," and "electricity, gas, and water" have the highest inflation rates, with average annual increases of 4.2%, 3.1%, and 2.3%, respectively.

💸The retirement savings gap is staggering: You need $5 million to feel secure first

When it comes to retirement planning, Hong Kong residents face even greater challenges! According to a Deposit Insurance Board survey, pre-retirees (working individuals aged 50-65) need an average of HK$5.45 million in savings to feel secure in their retirement. Another survey revealed that over half of Hong Kong residents believe they need to accumulate cash assets exceeding HK$5 million to enjoy a comfortable retirement.

Even more worrying is that the survey found that Hong Kong people believe that a comfortable retirement life requires about HK$8.6 million, but the gap between the average savings and the ideal is as high as HK$6.3 million! This figure is truly staggering 😱

💡Financial management isn't just for the rich! Five reasons every Hong Konger needs it

🛡️The first reason: Building a financial safety net to deal with emergencies

I often hear friends say, "I earn so little, how can I manage my finances?" But the more limited your income, the more important it is to manage your finances! Hong Kong Monetary Authority data shows that Hong Kong's household debt-to-GDP ratio is as high as 90%, reflecting the widespread debt burden among Hong Kong people.

Through financial management, you can:

• Establish an emergency fund, usually 3-6 months of living expenses

• Purchase appropriate insurance to transfer the risk of major expenses

• Avoid falling into debt crisis due to unexpected events

According to data from the Investment Committee, although the financial management knowledge of Hong Kong adults has improved, the financial management behavior score has declined, indicating that knowing is easy but doing is difficult.

🚀The second reason: Fighting inflation and protecting purchasing power

As an international financial center, Hong Kong is inevitably subject to the impact of inflation. Over the past decade, the average inflation rate has been 2.12%. If you simply keep your money in a bank deposit, your actual purchasing power will continue to erode.

Financial management can help you:

• Obtain returns above inflation through appropriate investment tools

• Diversify investments across different asset classes to reduce the risk of a single investment

• Use the compound interest effect to grow wealth over time

🎯The third reason: to achieve life goals and improve the quality of life

Whether it's buying a home, getting married, educating your children, or planning for retirement, every stage of life presents different financial needs. The Council on Financial Education points out that financial planning can help you develop and implement a feasible financial plan to achieve your goals.

Young people in Hong Kong face particularly significant challenges:

• 58% of young people feel that social mobility is not as good as their parents' generation

• The prevalence of loose credit and consumerism has made young people more vulnerable to debt crises.

• A "live for today" mentality affects long-term planning

⚖️The fourth reason: Develop good spending habits and avoid debt traps

Bankruptcy cases in Hong Kong have continued to rise in recent years, with personal bankruptcy petitions reaching a nine-year high of 9,190 in 2024. Many cases are caused by overspending and misuse of credit.

Financial education can help you:

• Learn to distinguish between "needs" and "wants" to avoid impulsive spending

• Create a monthly budget and control your spending

• Develop a healthy financial management habit of "saving first, spending later"

🏆The fifth reason: Enhance financial independence and improve life freedom

Financial independence is one of the cornerstones of the government's youth development strategy. Having a clear financial plan can help you:

• Reduce stress and anxiety caused by financial insecurity

• More freedom to choose: further study, start a business, and retire early

• Even achieve a flexible lifestyle of "micro-retirement"

📊Hong Kongers' Financial Management Status: Savings but Lack of Strategy

💰Positive savings habits but conservative investments

According to the latest survey by the Deposit Insurance Board, Hong Kong people's savings performance is actually quite good:

• The average monthly savings per person reached HK$9,800, an increase of nearly 10% over last year.

• 67% of respondents have a habit of saving

• The 30-39 age group has the best savings habits, with nearly 87% having savings habits.

However, Hong Kong people are relatively conservative when it comes to investment:

• Nearly 80% of respondents still mainly save in bank current or fixed deposit accounts

• Pre-retirees most commonly save money in the form of bank savings (57%), while only 30% invest in financial products.

🧠Financial management knowledge needs to be improved

Although financial literacy among Hong Kong adults has improved, there is still room for improvement:

• Hong Kong adults' financial literacy score is 14.8 points, still far from the total score of 21 points.

• Nearly a third of Hong Kong adults don't understand how compound interest works

• Less than 7% of financial education programs target vulnerable groups, such as low-income groups.

👨👩👧👦Different financial management concepts among different generations

The three major generations in Hong Kong have distinct financial management attitudes:

Generation X (born 1965-1980) :

• Having experienced Hong Kong's economic boom, I understand the principle of "saving a penny is worth a penny".

• They have a conservative financial attitude and place emphasis on savings and long-term retirement planning.

• Prefer low-risk products such as bank savings and insurance

Generation Y (Millennials) :

• Growing with the internet and making good use of digital financial tools

• Strike a balance between investment and consumption

• Facing the pressure of buying a house, financial management goals are clear

Generation Z (born 1997-2012) :

• True "digital natives" are accustomed to cashless transactions

• Consumption opportunities increase, but the concept of money becomes more vague

• Need to receive financial education early to establish correct concepts

🔧A complete guide to financial management tools for Hong Kong residents

💳Basic financial management tools: from simple to advanced

1. Bank deposits 💰

• Demand deposits: high flexibility but lower interest rates

• Fixed deposit: higher interest rates but funds need to be locked

• Virtual banks: generally offer higher deposit interest rates

2. Accounting Apps 📱
Popular local accounting applications:

• Gini: Locally developed, supports linking to bank accounts

• iPYGG (now known as ONEFi): Links to MPF and cryptocurrency accounts

• Bank apps: HSBC Personal Budget, Hang Seng Savings Planner, etc.

📈Advanced investment tools: increasing wealth

1. Stock Investment📊
Major Hong Kong stock investment platforms:

• Futu NiuNiu: Instant deposit within 5 minutes, 24-hour deposit

• Webull: Funds arrive within 3 hours, clear and easy-to-use interface

• Yaocai: Traditional securities firm with 26 years of history

2. Funds and ETFs 🏦

• Suitable for diversified investment and professional management

• ETFs have lower costs and are suitable for long-term investment

• Regular investment through dollar-cost averaging

3. Smart Investment Platform 🤖

• For example, StashAway uses algorithms to provide personalized investment advice

• Suitable for those who lack investment experience but want to diversify their investments

⚠️Avoid financial traps

Common investing mistakes:

1. Rushing into the market without any financial planning

2. Overestimating one's own abilities without self-reflection or self-examination

3. Chasing highs and selling lows, emotional investing

4. Excessive concentration of investment in a single product

5. Believe in online investment scams

Beware of online investment scams:

• High-return fake investment platforms (such as the JPEX incident)

• Fake financial institution scam

• "Pig Killing" Emotional Investment Scam

🎓 Cultivate financial management concepts from a young age: Education is key

🧒Children's financial education cannot be neglected

The Hong Kong Investor and Financial Education Council emphasizes that financial education should start from an early age:

• Adult financial management skills are directly derived from what they saw and learned as children

• Providing financial education to children is more effective than providing remedial measures as adults

• With the prevalence of cashless transactions, children have a more vague understanding of money.

Since 2005, the Hong Kong Institute of Certified Public Accountants has launched the "Poor Boy, Rich Boy" financial education programme and has hosted over 1,000 seminars, benefiting nearly 190,000 primary and secondary school students.

👨👩👧👦 Parents play an important role

Parents' financial management attitudes will have a subtle influence on the next generation. Parents are advised to:

• Discuss the use of pocket money with your children and guide them in setting financial goals

• Teach the difference between "needs" and "wants"

• Encourage discussions about financial matters with trusted adults

🏫 School financial education needs to be strengthened

Although financial management is taught in various subjects in Hong Kong's primary and secondary schools, it is rather fragmented. Experts recommend:

• Introducing phenomenon-oriented learning and exploring financial management phenomena across disciplines

• Formulate teaching topics based on students' daily life experiences

• Strengthen teacher training to enhance the quality of financial education

🌟Editor 's friendly reminder: Practical advice for getting started with financial management

💪Step 1: Set financial goals

No matter how much you earn now, you should set clear financial goals:

• Short-term goals (within 1 year): Build an emergency fund and pay off high-interest debt

• Medium-term goals (2-5 years): Saving for a down payment on a house, wedding fund

• Long-term goals (more than 5 years): retirement planning, children's education fund

📊Step 2: Establish a budget system

Use the "631 Rule" or "541 Rule" to allocate income:

• 60% or 50% for daily expenses

• 30% or 40% is used for investment and financial management

• 10% for risk management (insurance, etc.)

🔒Step 3: Build an emergency fund

Prioritize saving 3-6 months of living expenses as an emergency fund. This amount should:

• Deposit in an easily accessible account

• Do not use for any investment, maintain liquidity

• Only use in true emergencies

📈Step 4: Start investing and increasing your value

After building your emergency fund, consider:

• Start with low-risk products (such as fixed deposits, bond funds)

• Learn basic investment knowledge and understand the relationship between risk and return

• Use the dollar-cost averaging method to invest regularly

• Diversify your investments and don't put all your eggs in one basket

🛡️Step 5: Manage Risks

Purchase appropriate insurance coverage:

• Health insurance: coping with medical expenses

• Life insurance: protecting your family’s life

• Accident insurance: to deal with unexpected accidents

• Critical Illness Insurance: Coping with Major Illness Expenses

🏁Summary: Financial management is a compulsory course for every Hong Kong person

I've written this incredibly detailed guide to financial management in the hope that every Hong Konger will understand the importance of financial management! 💪 In this environment of high living costs, skyrocketing property prices, and persistent inflation, if you still cling to a "things will work out when the time comes" mentality, you'll find it incredibly difficult to cope with future financial challenges.

Remember, financial management isn't just for the wealthy; it's a fundamental skill everyone should master if they want to improve their quality of life and achieve their life goals! Regardless of your current monthly income, you can start by creating a budget and developing a savings habit, taking steps towards financial freedom.

Finally, I want to remind everyone: Financial management is a long-term process that requires patience and perseverance. Don't give up because of short-term market fluctuations, and don't be greedy for high returns while ignoring risks. As long as you are willing to learn and take action, and with the effect of compounding over time, I believe everyone in Hong Kong can improve their financial situation through financial management! 💰✨

Dear readers, if this article was helpful to you, please remember to share it with your friends! Let's learn about financial management together and work towards financial freedom together! 🚀