💰 The 50/30/20 Rule: A Must-Learn Financial Management Formula for Hong Kongers

In Hong Kong, wages can’t keep up with property prices, and living expenses are rising day by day, so saving money is really not easy.
However, there is an internationally recognized financial management rule - the 50/30/20 rule , which is simple and easy to understand and can help you allocate your monthly income.
Don't worry about "the pond is dry at the end of the month" or "the number of cards is exploding"💳🔥.

This method was proposed by US Senator Elizabeth Warren in her book All Your Worth.
Now it has become one of the most popular introductory financial management strategies in the world.

🔑 What's the use of the 50/30/20 rule?

🏠 50% Necessary Expenses (Needs)

Essential expenses are fixed expenses that you cannot ignore in your daily life:

• Rent/Mortgage🏢
• Water, electricity, gas, Wi-Fi, and phone bills🔌📶
• Transportation expenses (Octopus/gas)🚇
• Basic meals (excluding extravagant meals)🍚

👉 Principle: Don’t spend more than half of your income, otherwise it will squeeze your savings and entertainment space.

Hong Kong example :
For a monthly income of HK$20,000, essential expenses should be kept around HK$10,000 .
If you already spend $7,000 on rent, you need to tighten your belt a bit on other aspects of your life to avoid going over budget.

Editor's perspective :
Rent is the biggest burden for Hong Kong people. If you can move farther away or find roommates to share the rent,
Saving a few thousand dollars a month can add up to tens of thousands of dollars a year, enough for travel and gadgets!

💰 20% Savings & Investments

This is the key to financial freedom . Long-term value creation depends on:

• Emergency fund (at least 3-6 months of living expenses) 🆘
• Fixed Deposit 🏦
• Fund Investment/ETF 📈
• MPF Voluntary Contributions📊

👉 Principle: Treat your savings as a fixed expense and allocate them as soon as you get paid. Don't wait until you have some left over before you think about it.

Hong Kong example :
If you earn HK$20,000 a month, you should compulsorily save HK$4,000 a month.
For example: 2,000 in an emergency fund and 2,000 in ETFs.

Editor's perspective :
The editor's salary is automatically transferred to another account immediately.
Once there is less money in the account, people will naturally stop laundering.
Don’t rely on willpower, rely on the system to keep it going for the long term!

🎉 30% Flexible Spending (Wants)

Life can't be all about being frugal; it's important to enjoy life appropriately:

• Eating out, afternoon tea ☕🍰
• Travel ✈️
• Shopping 🛍️
• Netflix, music streaming 🎶
• Interest classes🎨

👉 Principle: Enjoy in moderation and do not exceed 30% of your income.

Hong Kong example :
With a monthly income of HK$20,000, you can set aside HK$6,000 for "fun money".
As long as it's within your budget, eating well or traveling is no problem.

Editor's perspective :
The editor believes that "flexible spending" is the secret weapon for the long-term battle of financial management.
If you are just stingy and your life is boring, you will soon burst into tears.
Keep a "Happy Money" bag to keep your mood and motivation first!

📊 Practical application: Hong Kong artificial example

Assuming a monthly income of HK$20,000 :

• 50% of necessary expenses → HK$10,000
• Savings investment 20% → HK$4,000
• Flexible spending 30% → HK$6,000

If the salary increases to HK$25,000 , don't increase your expenses immediately.
Instead, an extra $5,000 will be spent on "savings/investment".
This way you will have the opportunity to achieve your financial goals faster💪💡.

🤔 Who is suitable for using 50/30/20?

• A wage earner with a stable income👩💼👨💼
• Financial management beginners, want a simple formula
• I don't want to be a busy office worker counting the days.

⚠️ If your income is too low and basic expenses exceed 50%, you need to make flexible adjustments.
For example, first use the "631 rule" to speed up savings, and then slowly return to 50/30/20.

✨ Editor’s Summary

The biggest advantage of the 50/30/20 rule is that it is simple and easy to follow, and can be adhered to over the long term :

• Life is guaranteed✅
• Savings have improved✅
• There is space for entertainment✅

Editor's Quote:
👉 "Financial management isn't about suppressing yourself; it's about finding a balance between enjoyment and the future."