Regular Financial Updates 2019 Q2

Hi guys!

This is Jerry, the author of this blog! I decided to post the total asset I have so that you guys could witness my growth.

This is the second quarter asset report of 2019:

I should have done this in June but I foresee that I will be busy in June so I decided to do it at the end of May.

Before interpreting the numbers, I have to mention that in the previous recorded months I forgot to input a very significant amount which is the Mandatory Provident Fund (MPF). It is a retirement scheme of Hong Kong citizen in which you must deposit 5% of your monthly salary into that account until age of 65. As a result, you can see the graph is a little steeper this quarter.

However, if I do not count the MPF, there aren't many gains in assets. This is very weird for me because my expense records told me that I spent far less than my earnings. After some investigations(haha), I found out that there are two reasons. First, it is the stock market. The market has dropped quite a lot for the past few months. Second, there is a loophole in my expense record. I didn't record the money I gave to my girlfriend. (Yes, I voluntarily gave her money to support her living.) Therefore, I will include this category in my expense and my budget so as to make all the records more accurate.

All in all, my financial goal of 2019 is to make it around 1.1 million. I reached nearly 90% of the goal so far. Do you think I will be successful? Please comment below!

Thank you for your time! See you next time!

May Expenses 2019

Hello, everyone!

I am Jerry, the author of this blog!

Here comes the expenses of May:

Money for parents: $5500
This is the money I gave to my parents every month. If you are a foreigner, you may find it strange. Yet, this is a common practice in Hong Kong or some other Asian countries.

Food& Beverages: $924
I hanged out with my friends and colleagues three times this month, but the amount spent in this category is still low. It is because I counted the expenses towards the entertainment category.

Entertainments: $2275.6
There is no travelling this month so it is much lower than that of last month. However, it is still quite high because after watching Avengers 4, I spent quite a lot on their Marvel games. Also, I bought a new tablet($1199) for playing mobile games as a birthday present for myself.

Transportation: $418.7
This is about my average. Yet, the actual amount will be less since the HK government is now subsidising our transportation fee for around $20-30 dollars per month depending on your amount.

Household products: $741
I bought a lot of personal care products for my family. They probably won't need me to buy again for the next few months.

Miscellaneous: $116
This is the phone bill.

TOTAL: $9975.3
Compared with that last month, the expenses this month is much lower. The saving rate is around 70%. I think this is almost the least amount I can live on. Of course, I can always spend less by downgrading my quality of life (e.g. not meeting with any friends, not buying myself birthday present, not spending on games, etc). However, I find these expenses necessary as life is not just about achieving financial freedom. It is also about finding happiness during the journey.

What about you? How much did you spend in May? Please let me know by commenting below! See you next time!

April Expenses 2019

Hello, everyone!

I am Jerry, the author of this blog!

Here comes the expenses of April:

Money for parents: $5500
This is the money I gave to my parents every month. If you are a foreigner, you may find it strange. Yet, this is a common practice in Hong Kong or some other Asian countries.

Food& Beverages: $942.25
I hanged out with my friends and colleagues twice this month, but the amount spent in this category is still low. It is because I count the money spent during travel into the entertainment category.

Entertainments: $10213.14
I put all the expenses during the trip to Phu Quoc in Vietnam with my girlfriend under this category. It seems a lot but in fact it is the expenses of two people. (Yes, I paid for her expenses.) Therefore, the amount doesn't surprise me much. I also bought some birthday presents for her.

Transportation: $459.4
This is about my average. Yet, the actual amount will be less since the HK government is now subsidising our transportation fee for around $20-30 dollars per month depending on your amount.

Household products: $97.9
I bought mosquitoes repellent and sunblock for the trip.

Miscellaneous: $324
This includes haircut, lottery tickets and some small stuff.

TOTAL: $17536.69
I spent quite a lot this month because of the trip. The saving rate is around 50% this month. Even though I wish I could save more this month, I did not regret the trip. After all, money is just a tool. Happiness is the ultimate goal. This trip created many memories for me and my girlfriend. It is worth the price.

What about you? How much did you spend last month? Please let me know by commenting below! See you next time!

Is Tax Deductible Voluntary Contributions of MPF worth it? (1)

Hi, everyone! This is Jerry, the author of this blog.

HK government has recently made a new policy encouraging people to save early for retirements. It is called Tax Deductible Voluntary Contributions (TVC) scheme.  It is like the mandatory provident fund (MPF). The contribution could only be withdrawn at the age of 65. However, the amount you contributed is tax-deductible. The cap is $60k.

For details, please visit: http://www.mpfa.org.hk/eng/mpf_system/system_features/tvc/index.jsp

In order to find out if this TVC is worth investing, I will first calculate how much tax is deducted through maximizing TVC.

If you make $15k per month, you will only save $780.
Since your original tax is $780, you only have to contribute $39k in order to deduct all your tax.
Tax deduction: $780= 0.052 months of salary
Contributions: $39000=2.6 months of salary
It looks unattractive at all when you compared the tax saved and the contributions, not to mention the liquidity of the money sacrificed. Worse still, we haven't counted the management fee which will probably eat up your $780.

If you make $30k per month, you will save $8700.
The original tax is $17.7k while the deducted tax is $9k.
Tax deduction: $8700= 0.29 months of salary
Contributions: $60000= 2 months of salary
Though the tax is nearly halved, it is still not quite attractive unless you don't have better investment options.

If you make $40k per month, you will save $10200
The original tax is $38.1k while the deducted tax is $27.9k.
Tax deduction: $10200= 0.26 months of salary
Contributions: $60000= 1.5 months of salary
This may be attractive if you have idle money. Yet, you still have to look into the details of the fund and compare the cost of it with that of investing by yourself.

If you make $60k per month, you will save $10200.
The original tax is $78.9k while the deducted tax is $68.7k.
Tax deduction: $10200= 0.17 months of salary
Contribution: $60000=1 month
Similar with the previous group. If you have some spare money, you may consider TVC. Otherwise, it is better to invest it yourself.

Even though TVC may be not attractive in numbers, it sill have some advantages. For example, you could use it to diversify your portfolio. Some funds help you invest in stocks outside Hong Kong while some funds helps you invest in bonds. Besides, it is helpful in developing a saving habit as the money is automatically deducted each month.

All in all, as the Chinese old saying, "A faulty move causes you the whole game." Before putting your money in TVC or any other investments, you should look carefully the terms and the fees as well as the reputation of the provider.

Thank you for your reading! See you next time!

Disclaimer: I am not a certified financial planner. Any articles here should not be considered financial advice.

FRUG1001 How to Make A Budget

Hello, everyone! This is Jerry, the author of this blog.

I decided to start a new series named FRUG1001. Yes, it is the freshman course of frugality. I will take about ways to lead a frugal yet fruitful life. This is the first 'lesson'. I would like to talk about how I draft my budget each month.

As we all know, in order to keep our expenses in check, making a budget is essential. As digital payment methods become more common, we become less sensitive to the pain of paying our bills and hence more easily over-spend. As a result, it is important to make a budget which make me more aware of the money we have.

I summarised into three easy steps of making a monthly budget.

1. Know your spending habit
First of all, you have to divide your spending into categories such as transportation, food, housing, clothes, phone bill, travel etc. You might not name all the categories at once but you might add some more categories later on.

Just one quick tip. It is better to separate one-off or irregular spending from daily spending. For example, I will have a category 'social gathering' and 'travel' instead of putting them under 'entertainments'. This allows you to track where your money goes.

2. Calculate the numbers
Then you calculate how much you will spend on each category. This is not a very difficult task for a full-time working class in Hong Kong as most of us have quite regular spending habits. For example, we take the same buses or train to the same working place on weekdays. We could always google the ticket price of the public transport.

As for food, lunch in Hong Kong costs around $30-50. You could simply multiply that with the number of days you will eat out. Similar method could be applied to hanging-out. You multiply the average amount of money you spend on hanging out with how many times you hang out each month.

3. Sum them up
last but not least, you could get the total sum by adding up the numbers of all categories. Personally, I will add an extra 10% as a buffer because usually there are some unforeseeable expenses. I have an Excel sheet to help me do this job so that I do not need to reinvent the wheel every month.

That's it! Making a budget is not difficult at all. It just takes some time at the beginning, but once you get used to it, it's a piece of cake yet a very powerful tool to keep your spending low and saving high!

Go ahead and try to make your own budget! Thank you for reading!

March Expenses 2019

Hello, everyone!

I am Jerry, the author of this blog!

Here comes the expenses of March:

Money for parents: $5500
This is the money I gave to my parents every month. If you are a foreigner, you may find it strange. Yet, this is a common practice in Hong Kong or some other Asian countries.

Food& Beverages: $1107.1
This includes the eating out with friends so it might vary month to month. I had a gathering with my old friends in college and hanged out once with my colleagues. Therefore, I spent a little bit more than last month.

Entertainments: $4349.2
Wow! This amount is 10 times that of last month. This is because I went to Vietnam to visit my girlfriend. I also did some online shopping. I bought some little presents for her as I didn't buy her anything on Valentine's Day.

Transportation: $499.3
This is a little bit above my average due to the gatherings. Yet, the actual amount will be less since the HK government is now subsidising our transportation fee for around $20-30 dollars per month depending on your amount.

Household products: $108
I bought a passport holder so as to avoid money loss again.

Mobile fee: $4307
I bought a new iPhone for my girlfriend as she lost hers.

TOTAL: $15870.72
I spent quite a lot this month. The saving rate is around 60% this month. Well, if I can travel back to March, I still couldn't figure out any ways to cut the expenses. I might choose not to eat out with my colleagues.

What about you? How much did you spend last month? Please let me know by commenting below! See you next time!

Inspiration from a short video (看「理財真人Show」後感)

Hi guys and girls! This is Jerry, the author of this blog! Today, I will deliver my promise by translating one of my old posts to English so that my English reader could also read about it!

慳錢大挑戰 為咗租樓可以去到幾盡？下集【理財真人Show】第一季Ep.2

In case any of you who doesn't know Cantonese or is too lazy to open the link, I will do a very short summary of the video. It is a reality show of a young adult who wants to rent a place to live. In order to make it happen, his mentor assigned $625 to him to spend for a week. Spending nearly 30% of the amount on the first day, he failed to meet his budget at last.

In my opinion, this kind of videos are nothing ground-breaking for Hong Kong people, but it makes me understand how people of my age spend money.

I am lucky that I have a relatively high-paid job, but I still choose to be frugal in a certain degree. For example, I have never paid to watch a football match and I tried my best to turn down unimportant social gatherings. I also spend as little as I can on my lunch. Yet, I do not find my frugal life tough because it is my own choice. I know, in order to achieve early financial freedom, I must save a lot first and think about ways to create wealth from my saving.

A festive meal or a fascinating football match might bring satisfaction for a period of time. Yet, I believe happiness is not created from spending money to buy some stuff or experience. Happiness is inside us waiting to be found.

All in all, I am very grateful of myself choosing a different path. There are still a lot to learn on the way to financial freedom. I hope I could keep this mentality until the day of freedom.
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(Original Chinese version)
有興趣的網友可點上面的Link觀看該節目。

這種舊調重彈的節目實在不能叫發人深省，但只少讓我明白與我年紀相約的朋友理財觀是怎樣。

也許幸運的緣故(其實最主是因為我刻苦努力)，小弟有一份較高薪的工作，可是仍非常節儉，球賽我不看，朋友聚會盡量推卻，還常常吃老麥當午餐。可是，我不覺得很辛苦，一切都是我自己的選擇。我知道要財務自由，首先就要量入為出，然後再想辦法創造財富。

另外，我覺得快樂是在心中的。也許一個豐盛的午餐或一場精彩的球賽能帶給我們一刻的快感，但是我覺得一個人快樂與否從來與物質無關。因此，我只有少量的娛樂支出。

但是，我自問仍有很多理財觀念尚需學習，希望能繼續保持這種心態，直到自由的那一天。