[Finance Wiz @Daniel] How much do Hong Kong families spend each month? 4 handy tips for building a savings plan!
Finance2025-04-16
8 Mins Read
Recently, a Hong Kong mother shared a post online, expressing that a couple earning a combined monthly income of HKD110,000 still finds it difficult to save money. The costs of raising two children are significant, and their household expenses approach HKD100,000 per month. Their story quickly sparked heated discussion and even alarmed some young couples who are considering starting a family.
It’s true—many people dream of a happy family life and hope to give their children and loved ones the very best. However, with the cost of living and child-rearing on the rise in recent years, sound financial planning is now more essential than ever, whether you’re a couple or living in a multi-generational household. Everyone should establish clear and achievable savings goals as early as possible, in order to build a financial safety net for the family. Today, let me share with you some practical tips on family budgeting and saving, so you can better prepare for the future!
Monthly household expenses in Hong Kong – How much do you know?
To create an effective savings plan for your family, it’s crucial to first understand the typical expenses faced by households in Hong Kong. The cost of living here is notoriously high, especially when it comes to housing, education, and daily necessities. According to figures from the Census and Statistics Department for 2019/20, the average monthly household expenditure in Hong Kong already reached HKD30,230#—and that was before the rising inflation in recent years. This highlights the importance of setting a comprehensive budget and savings goal.
1. Housing costs: monthly rent or mortgage payments
Housing is undoubtedly the largest expense for most families in Hong Kong. Rent and mortgage repayments vary significantly depending on the location and type of property. In general, families living in urban areas may spend around 40%* of their household income on rent or mortgage payments—if not more. Whether renting or buying, it’s essential to plan ahead financially and ensure long-term affordability.
2. Daily living expenses: food, essentials and more
Daily living expenses include food, beverages, transport, and household items. These are core components of monthly spending. The amount spent in this category can vary widely depending on a family’s dietary preferences and lifestyle habits.
3. Education costs: tuition fees and extra-curricular activities
For families with children, education is one of the biggest ongoing expenses. From school tuition and after-school activities to learning materials, these costs require significant financial preparation. As children grow, education expenses are likely to increase year by year. For families planning to send their children abroad for further studies, the costs can be even more substantial. You can click here to learn more about overseas education expenses.
4. Healthcare: family medical insurance and day-to-day health expenses
Medical expenses are another key part of a household budget. To prepare for unexpected health issues, many families choose to purchase medical insurance to protect their loved ones. Regular health check-ups, medication, and other related costs are also part of day-to-day spending.
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How to create an effective savings plan?
After understanding the basic expenses of a household, the next focus is on how to develop a savings plan that suits your family’s needs. An effective savings plan ensures you have enough funds to meet future expenses and reduces the pressure of unexpected financial challenges. Here are some financial tips to help you prepare for the future.
1. Set specific savings goals
The first step in a savings plan is to set clear savings goals. Ask yourself: ‘What financial goals do I want to achieve?’ These goals can be divided into medium-term and long-term. For example, a medium-term goal might be saving for your children’s education or buying a home, while a long-term goal could be saving for retirement.
- Medium-term goals: For instance, setting a target amount for child-rearing expenses, including tuition fees, living costs, and extracurricular activities, and calculating how much needs to be saved each month. If you plan to send your children abroad for further studies, the amount needed will be even higher.
- Long-term goals: For example, dividing the amount needed for retirement in 25 years into annual savings amounts.
2. Set a savings ratio: ensure a fixed savings amount
Setting a percentage for your monthly savings is crucial for maintaining a sustainable savings plan. According to the ‘50-30-20 rule’, allocate 50% of your income to essential expenses, 30% to lifestyle consumption, and 20% for savings. If your household income is higher or your expenses are lower, you can consider increasing the savings ratio.
- Save first, spend later: As soon as your income comes in each month, save first, then allocate the remaining amount for living expenses, or set up an automatic transfer of a fixed amount into your savings account. This ensures that your savings plan is implemented consistently.
3. Build an emergency fund and purchase insurance: Prepare for unexpected events
Life is full of unforeseen situations such as illness, accidents, vehicle damage, or job loss. It’s important for every family to prepare for emergencies so that you don't need to dip into long-term savings during unexpected events.
- Set an emergency fund goal and review it regularly: Your emergency fund should cover 3 to 6 months of essential living expenses, and it should be checked and adjusted annually as your family’s situation changes.
- Include insurance in your monthly essential expenses: Various types of insurance, such as general or medical insurance, provide protection for every aspect of life. These can serve as a strong safety net for your family during times of challenge. Savings insurance, which combines protection with savings, is another useful financial product. It not only provides life protection but also acts as a wealth-building tool, allowing policyholders to accumulate capital and returns gradually.
4. Invest wisely to grow savings
With the Consumer Price Index continuing to rise, growing your funds is an essential part of financial planning, in addition to saving. Depending on your risk tolerance, choose an investment strategy that suits you and take advantage of opportunities to increase your savings.
- Choose low-risk financial tools: You may opt for lower-risk, relatively stable options like fixed deposits or savings insurance, ensuring that your family’s savings grow steadily without large fluctuations.
- Build an investment portfolio: Diversify your funds across different investment areas, such as stocks, funds, and bonds. This way, even if one investment performs poorly, the others can offset the loss. Savings insurance can help diversify your investment risks, as it typically invests in a range of financial tools, including listed equities, corporate bonds, government bonds, real estate, and private equities which usually have high entry requirements, to achieve risk diversification. This strategy can reduce the risks associated with individual assets and enhance the stability and security of your investment portfolio.
- Regularly adjust your investment portfolio: Adjust your portfolio periodically in response to market changes to maximise investment returns. Savings insurance is a good option to consider, as insurance companies employ flexible strategies to manage investments with a wide range of asset allocations. Factors that include, but are not limited to, the current market conditions and fund performance are taken into account, and investment strategies are adjusted when necessary to ensure guaranteed benefits are realised while maintaining the potential for overall returns, supporting the distribution of non-guaranteed bonuses.
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How to choose the right financial tools to achieve your savings goals?
1. Fixed deposits: A stable savings option
Fixed deposits are one of the most common forms of saving, suitable for families with a low risk tolerance. The returns are generally not high, and the savings period is relatively short, meaning you’ll need to constantly research and compare fixed deposit interest rates from various banks. If you want your funds to grow steadily and are willing to keep an eye on interest rate changes over the long term, you could consider allocating some of your funds into fixed deposits.
2. Savings insurance: Protection and growth combined
Savings insurance provides both life protection for your family and the opportunity for your savings to grow. Over time, it allows the accumulation of capital and returns through the compounding effect. If you want both protection and steady asset growth, savings insurance is often a good choice for family savings.
3. Investment funds: high growth potential, but higher risk
If you have a certain level of risk tolerance, you might consider investing your funds in investment funds. Fund investments have the potential to generate higher returns, but they also carry a higher level of risk. Therefore, when choosing a fund, it is important to be cautious and select one based on your family’s financial situation and risk appetite.
Why should young people planning to start a family consider savings insurance?
For young people who are still new to financial planning, starting a family may bring many challenges, with one of the most important being how to accumulate enough funds to meet future expenses. Savings insurance, as a financial tool that combines both savings and insurance functions, can not only provide protection but also help young people build long-term savings plans to meet both medium-term and long-term goals. Below are three key benefits of savings insurance for young families:
1. Stable growth: Helping family funds grow steadily
One of the main advantages of savings insurance is the potential returns of it offers. During the term of the policy, the insurance company uses flexible strategies to manage investments with a broad range of asset allocations. Factors include but not limited to market conditions and fund earnings are considered, and investment strategies are adjusted when necessary to ensure guaranteed benefits are realised, while maintaining the potential for overall returns to support the distribution of non-guaranteed bonuses. For young families, this stable growth can help accumulate funds needed for future expenses, including overseas education costs, or even achieving wealth transfer goals.
- Long-term education fund accumulation: As parents, you naturally want the best future for your children. With education costs continuously rising, especially for parents planning to send their children abroad, this can place a significant financial strain. To ensure your child receives a quality education and has more options in the future, parents need clear savings goals and effective plans. As children grow, they will face different milestones, making the flexibility of savings insurance particularly important. For example, parents can generally withdraw part of the policy’s cash value to support their child’s overseas tuition fees, while the remaining cash value continues to grow, helping them achieve their goals. Even when parents pass away, they can leave their legacy to their children, ensuring wealth transfer. AXA’s latest WealthAhead Savings Plan is an example of a flexible plan that allows policy value withdrawals after a certain period. Policy owners can change the insured as many times as needed and designate a contingent insured, accommodating the changing needs of a family.
- Retirement savings: The stability and compound growth of savings insurance help achieve steady wealth growth, allowing young people to secure their quality of life post-retirement without taking on too much risk. AXA’s WealthAhead Savings Plan also features a short premium payment term of two years, with a low annual premium contribution threshold starting at just USD 10,000. Policyholders can choose to pay premiums in USD, RMB, or HKD, helping them take full control of their financial planning and quickly embark on the journey to wealth growth, gradually achieving their goals.
2. Risk control
The risks associated with savings insurance are relatively low because insurance companies typically offer guaranteed cash value in life savings policies, clearly promising to achieve a break-even point after a certain number of years. Additionally, savings insurance usually invests funds in a diversified range of financial instruments, including listed equities, corporate bonds, government bonds, real estate, and private equities which usually have high entry requirements. This strategy helps achieve risk diversification. Such an investment approach reduces the risk associated with individual assets and enhances the stability and security of the investment portfolio.
3. Compound interest effect: effective capital growth in long-term savings
The premiums and dividends in savings insurance are reinvested, managed by professional teams to achieve asset growth, allowing funds to grow steadily over time while ensuring risk control. The compound interest effect enables investors to realise long-term wealth growth.
- The earlier you start saving, the more significant the compound effect: Young people investing in savings insurance should start as early as possible, allowing their funds to benefit from compound growth over the long term.
This makes savings insurance an ideal wealth growth tool in the Hong Kong market, especially for those planning to start a family. For example, AXA’s latest WealthAhead Savings Plan provides both savings growth potential and life insurance protection. It also features an ultra-short premium payment term of 2 years, allowing you to quickly embark on the wealth-building journey, create substantial potential returns in the future, and achieve various life goals.
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Triple your savings, live life to the fullest. Enjoy 6.8% p.a. guaranteed preferential interest rate2 for the first year on prepaid premiums.
Savings insurance: The cornerstone of financial planning for young families
As a relatively stable financial product, savings insurance provides solid financial protection for families when facing future expenses such as education, healthcare, and retirement. This is especially important in Hong Kong, a city with high living costs, where establishing an effective savings plan enables young people to lay a stable financial foundation for the future. Savings insurance not only offers opportunities for capital growth but also ensures long-term protection of quality of life, laying the foundation for the future financial security and stability of young families.
AXA Limited Offer – WealthAhead Savings Plan key features^:
- 2-year premium payment term – projected total cash value equals 315% of the total premiums paid at the end of the 20th policy year1
- Enjoy 6.8% p.a. guaranteed preferential interest rate for the first year on prepaid premiums2
- Divide your policy into multiple separate policies for added flexibility
- Accelerate wealth building with high potential returns and exceptional liquidity
- Lock-in gains without an aggregate limit
- Change the insured as many times as needed for effective wealth succession
- Continue your legacy planning with contingent policy ownership
- Name a contingent insured for life protection and wealth planning
- Flexible death benefit options for better family protection
#Census and Statistics Department: Average Monthly Household Expenditure (from October 2019 to September 2020)
*The Hong Kong Council of Social Service ‘Research on Expenditure Patterns of Grassroots Household’ (August 2024)
^Terms and conditions apply. For full details on product terms, conditions, and exclusions, please refer to the product brochure and policy contract.
1. It refers to the projected total cash value equals 315% of the total premiums paid at the end of the 20th policy year (which translates into a projected total Internal Rate of Return of 6.06% p.a.). The projected values are for reference only and based on certain assumptions, including but not limited to USD is selected as the policy currency, annual premium payment mode is chosen, all premiums are paid in full when due, no benefits have been paid, and no withdrawals or other policy options have been exercised. These projected values are not guaranteed and is projected based on AXA's current assumed bonus scale. The actual values may be higher or lower than these projected values.
2. The policy currency must be USD and a lump sum payment equal to twice the initial annual premium of the basic plan must be made upon policy application. Terms and conditions apply. For details and exclusions, please refer to the related promotion leaflet.
The above content is reviewed by Mr Daniel Lau - Head of Wealth Management Training of AXA Hong Kong and Macau.
WealthAhead Savings Plan is underwritten by AXA China Region Insurance Company (Bermuda) Limited (Incorporated in Bermuda with limited liability) (“AXA”).
No warranty or responsibility is assumed by AXA Hong Kong and our related or holding companies regarding non-infringement, security, accuracy, completeness, adequacy, reasonableness, fitness for a purpose or free from computer viruses in connection with the information and materials provided. AXA Hong Kong and our related companies and holding companies do not accept any liability for any loss, damage, cost or other expense, whether wholly or partially, directly or indirectly, arising from any error, inaccuracy or omission of the information and materials to the extent that such liability is not excluded by law.
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