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A sound family budget?

  1. #57
    MLBW Guest
    Quote Originally Posted by HK2008 View Post
    MLBW and MilkMonster, excellent practices! I think it's easy for me to say 'hey I want to save some money starting from now...', but to make it achievable, I need to sit down and do some good thinking on how to design the budget. I might take MilkMonster's approach and do it by monthly-then carry the previous months balances forward, then it'll be very easy to tell whether my budget is a realistic one and whether adjustment is needed on certain items; and I especially like the idea of 'do not spend on something unless the money is saved up to cover those expenses'. This will definitely help increase my level of self-dicipline. MLBW and Carang, I'm hopeless with cash. I think it's one of the most scary monsters that human beings had created...Then again, it's equally scary to think that I might just as well be sticking my head in the sand with credit card numbers...

    There is also one thing I found in common with both of you: you don't grocery shop on a daily basis. And I think I just found out why I'm always doing needless shopping: Firstly I think going to the shops is a great fun and good way to kill time; secondly I don't have a menu planned ahead and will only know what I'll cook until I see the produce. That's why I also end up picking up something that I don't need; or some luxury items which are not meant to be consumed on a daily basis!(soooo guilty there...) Now I know how important it is to plan the menu(aiming at five days first), then probably reduce to one shopping a week, then I don't have to fight temptations all the time. What a great discovery! I'm seriously over the moon now by the prospect of greater savings without too much sufferings(for me to let go of something that I've seen/touched and badly wanted is like hell).

    MilkMonster or other ladies out there, how do you decide what percentage of income should go to savings? MLBW saves only 10%, does it seem to be on the low side even when each individual situation is very different? What do you suggest could be a reasonable and doable benchmark? I personally think 50% plus is excellent...It'd be interesting to know someone can actually achieve that, or maybe I'm just day-dreaming here?

    Many many thanks again for your food for thought...
    I think the percentage you save depends totally on how much you're bringing in and how much you need to live. For us, 10% is achievable. I don't know anyone who is able to save 50% of their earnings--if they are, they likely earn quite a lot of money. For example, if you're only bringing in 12K/month in HK--and you pay rent, transportation, insurance (out of your own pocket as your employer doesn't pay it for you), food, clothes, utilities and a tiny bit on household goods and entertainment--it's not likely that you could manage to save 50% of your earnings and still be able to live in HK. If you were saving 50% then you would be only living off of 6K/month--and even for a small family of 3, that's stretching it--and for us, more than 1/2 of that would be for rent. Try to make 3K go very far in HK and you'll soon reach a dead end. Of course if you're in a situation where you're bringing in substantially more than 12-15K/month AND your employer gives things like a housing stipend, travel stipend and pays for some health care costs and insurance...then, maybe you could sock that 50% away. So, of course it depends, again on what your goals are and what your income is--which is completely personal.

  2. #58
    MLBW Guest the classic "Personal Finance Books"--10% savings is the beginning place for all savings strategies--especially if you're not a saver by nature (which both my husband and I are)--it's a good place to start. If you live in the USA, your housing is supposed to be no more than 35-40% (some will say 20-30%) of your income--that sort of thing--there is an entire budgeting equation that goes along with this. However, some of this might be thrown straight out the window in the financial climate we're in right now.

  3. #59
    carang's Avatar
    carang is offline Registered User
    Join Date
    Sep 2004
    Sai Kung
    remember savings is just that.... it's NOT miscellaneous expenditures!

    i think that depending on what you are making, what your current debt situation is etc that 50% maybe way on the high side.

    the great thing about cash... you can't spend it if you don't have it.

    credit cards, to me, are WAY to easy to go overboard. it's so easy to hand over that little piece of plastic. you think...oh, well, i'll deal with the $ later. but if you had to hand CASH over for whatever it is you are buying... would you still buy it?

  4. #60
    MilkMonster is offline Registered User
    Join Date
    Aug 2007
    Sai Kung
    We save 25% of our income - split up into retirement, university for the boys and long term savings for down payment on a flat later.

    We also save 15% of our income for taxes every month. This way we are not hit with a huge expense once a year.

    Short term savings is 20% - for preschool, travel, etc (this is how we choose to spend our money instead of using 30% of our income to pay for rent - this will probably change in the future)

    I think it's best to get a real picture first. track your spending unaltered for 3 months. Then you will get to know yourself and your spouses spending habits. Then you can sit down and talk about something that is real and not just an idea of how you think you spend your money.

    During this discussion, you could also talk about your long term goals and then work backwards to see how much you need to be saving on an annual basis if you want to retire at 55 or buy a flat in 5 years, etc. We work backwards a lot. Ex. How much will the kids need for school? how much do we need to save up every month in order to reach that amount? We want a new Plasma (we don't but i'm just putting an example out there) in 2 years, how much does that cost and how much does that cost us every month for the next 24mths?

    Definitely limit the number of times you shop every week! The more often you go the more chances you get to waste money!!

  5. #61
    HK2008 is offline Registered User
    Join Date
    Dec 2008
    Thanks again ladies for replying. MLBW I think you've made a valid point. I initially was thinking people on high incomes tend to spend more on everything---eg. some are paying 50K+ on rent alone; a night out at LKF can easily cost $1000 a head, etc. So I thought a percentage might be relatively comparable and I could just work my way up, ie. put aside a reasonable % as income then work way up to get to each expense item. This way I can be a little relaxed on the budget. I guess you've just taken away my last chance of being a bit of a cheat to myself there...

    MilkMonster, you really struck me as a financial advisor or at least a qualified accountant! I'll definitely sit down NOW with hubby and work on both of our long term and short term finacial goals. Then we'll have a clearer picture how much we should save each month(I'm thinking of at least 40%! Scary but exciting at the same time...)

    I honestly couldn't thank you enough, ladies, I can safely say that 'I'm a changed woman'. It makes me sick to my stomach just by thinking of my old ways of mindless spending! So won't wait for another three months to modify my behaviour...It'll start undoubtely from NOW!

  6. #62
    elgivens is offline Registered User
    Join Date
    Aug 2009
    Hong Kong

    We moved to HK 6 mnths ago, not knowing how we will survive on a single income (I used to work and contribute at least 1/2 to the household). The rent was one thing we tried our darn best at keeping it down. For $16K, we found a 3 bedroom (efficiency is about 650 sq ft) apartment in Kennedy Town. It's new, clean and has facilities (playroom, pool, gym) and is pretty conveniently located (since we need to rely on public transportation). It's more than what we spent on our mortgage back in the US, but I can't complain since others that live in midlevels and nicer beach areas pay at least 10-20K more.

    I used to go crazy with clothes, for myself, my son and my husband. Now, it's what we need. I realize if I keep to simple items that you can mix and match easily, then spend a little on special things like accessories, a cooler jacket, a nice pair of shoes, I can really work with less than half of what I used to spend.

    Grocery shopping is tricky. You can get cheap stuff around, but I'm constantly worried about the safety of the food. Eating out is too expensive, although I do give in to that since I don't have a helper. It's hard to take care of my 5 year old all day, do the chores and then find the inspiration everyday to put on a nutritious, balanced and tasty dinner. I stick with simple breakfast, but making sure it's a good start for the day, such as granola, fruits and milk.

    Also, one big savings is what I don't get for the house. From living in a 2700 sq ft house to over 600 sq ft apartment, I don't buy anymore decorative things for the house. Everything is at least a dual-purpose item. So impulse buying is down to a minimum. We used to have friends over at our house a lot, now, it seems in HK, that's not exactly a popular thing, so we don't worry too much about presentation at all.

    Living without cars too can save you a bunch. Public transportation is pretty good, once you get used to the crowd, the environmental assault and get better at planning for the day.

    One thing we definitely spent more on is signing our boy for soccer class, swimming lessons and now also, taekwondo. That's at least another $3-4K a month. Without the backyard, creek, opened soccer fields and neighbor's houses he is used to spending time at, this is the least we can do for him, besides going to off-islands for hikes and taking him to the beach or Ocean Park once in a while.

    You are an inspiration to me.

  7. #63
    carang's Avatar
    carang is offline Registered User
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    Sep 2004
    Sai Kung
    elgivens... i would strongly suggest getting the annual pass for ocean park. if you go 3 times per year, it's paid for itself. also, when you have the pass, you don't feel like you have to do everything every time. i usually purchase my pass around october-ish so that i get two autumns out of it. both of my kids LOVE it!

    they also do monthly passes at playtown, not too far from you. although, they are much more expensive than even an annual pass at ocean park, it might be worth it.

    one thing i've decided to do for my kids is enroll them in only CHINESE extra-curricular activities (except soccatots). that way, the kids get language learning at the same time. not only that, but it seems to me that classes conducted in chinese are cheaper than those done in english. for example, i charge $175/1.25 hr playgroup class (cheaper than any in central!), but the newly opened music/art centre next door had a summer special... 10 art classes + 3 music (drum) classes for $700!!!! you can't beat that price! my 4.5 yr old LOVES it! i've also discovered that the private swimming teacher that i've employed for my son charges $300/1.25 hr lesson. it sounds like a lot, but most english speaking coaches charge $150/30 minute lesson... so, i'm getting a lot more for my money. not only that, but our coach often buys treats for my son. she's given him goggles, swim cap & nose plug (not charged us for them), and when he does what she's asked during class, she rewards him with a small treat.

    as for going out to dinner... Ruby Tuesday's has a 50% off card that you can buy. 3 months = $400. it seems like a lot, but we found it fantastic! we almost NEVER go out for western food, but with the card, we find it more affordable and have gone once per month, occasionally more. and we have saved over 3 months about $1500! i use the word "saved" loosely as we wouldn't have gone there without the card. but we probably would still have gone out so, it's hard to say exactly how much we really saved....

    good luck all!

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