Creating an ideal life:
1. What are the financial goals of Gen Z?
Concerning(born 1997-2012) is the first step to an ideal life in which setting financial goals is the first step. This generation grew up in the digital age and has its own values and consumption habits, so their economic goals are also different from previous generations.
1.1 Short-term goals: emergency reserves, travel expenses, research expenses
Short-term goals are usually achievable within 1-3 years.The general emphasis on life experience makes the "travel fund" a popular choice. According to data from the Hong Kong Census Bureau, about 65% of Gen Z youth spend 10% to 20% of their income on travel savings. In addition, the "emergency reserve" is also an important goal, and it is recommended to set aside at least 3-6 months of living expenses to deal with emergencies. The learning fund reflects the importance of Gen Z to self-improvement, such as continuing education courses and obtaining professional certifications.
1.2 Medium-term goals: down payment on car purchases, marriages, and houses
Medium-term targets are typically set for 3 to 10 years. In Hong Kong, there are many things to buy a houseHowever, due to high housing prices, the "down payment" is the main challenge. According to Hong Kong's house price data in 2023, the average down payment is around HK$120 to HK$200. The cost of the wedding is also an important consideration, with the average expenditure being around HK$30 to HK$50. Hong Kong has a low demand for car purchases due to convenient public transportation, but some people still target cars.
1.3 Long-term goals: retirement plan, children's education fund
It can take more than 10 years to achieve long-term goals. althoughAlthough still young, retirement planning has become a concern for some people. While the Hong Kong Mandatory Provident Fund (MPF) provides basic protection, it is not sufficient to support an ideal retirement life, so additional savings or investments are essential. A child's education fund is a priority option for future parents, especially when it comes to international schools and studying abroad.
2. How do Gen Z set financial goals?
Setting financial goals requires a systematic approach.The following steps can help ensure the feasibility and effectiveness of your goals:
2.1 SMART Principles: Specific, Measurable, Achievable, Relevant, Time-bound
The SMART principle is the golden standard for setting goals. For example, instead of saying "I want to save money", it is recommended to set up a travel fund that saves HK$5,000 a month and saves HK$6 for one year. These goals include:
- Specificity: Clarification of amount and purpose
- Measurability: Monthly progress tracking
- Achievability: Adjusted based on revenue
- relevance: Aligns with personal values
- Time-limited: Completed within 1 year
2.2 Analyzing the Current Situation: Understanding Income, Expenses, Assets, and Liabilities
Before setting a goal,You need to have a comprehensive view of your financial situation. We recommend that you create a "personal financial statement" that lists the following:
| item | Amount (HK$) |
|---|---|
| monthly income | 20,000 |
| Monthly Expenditures | 15,000 |
| Existing savings | 50,000 |
| Debt (e.g., student loans) | 100,000 |
Through analytics, you can clearly see how much money you can allocate to your goals each month.
2.3 Budgeting: Allocating Funds and Managing Expenses
Budgeting is an important tool for achieving your goals.Generation ZYou can use the "50/30/20 rule".
- 50%用於必要開支（房租、飲食）
- 30%For non-essential consumption (entertainment, travel)
- 20%For Savings and Investments
If your goals are large (like buying a house), you can adjust the ratio, for example, by increasing your savings to 30%.
3. How Gen Z is Achieving Their Financial Goals
After setting goals,Generation ZTo achieve them, you need a specific course of action.
3.1 Savings: Regular savings, automatic transfer
Savings are the foundation for accumulating wealth propose.Generation ZSet up a dedicated savings account and set up an "auto-pay" feature that automatically transfers the amount you specify on payday. For instance:
- HK$5,000 will be automatically credited to the travel fund every month
- Automatically deposit HK$3,000 into your emergency reserve every month
This "pay yourself first" method effectively avoids unnecessary expenses.
3.2 Investment: Choose the investment target that suits you
Investing is essential because saving alone is difficult to combat inflation.Generation ZYou can choose according to your risk tolerance.
- Conservative type: High-rated bonds, money funds
- Stationary type: Index funds (TraHK, etc.), REITs
- aggressive: Individual stocks, virtual currencies (caution required)
The Hong Kong market offers a variety of options, allowing beginners to start with a monthly investment fund, lowering the barrier to entry.
3.3 Income Growth: Part-time Jobs, Project Undertakings, and Entrepreneurship
By increasing revenue, you can accelerate the achievement of your goals.Generation ZLeverage your digital skills to earn extra income by:
- Free case reception: Design, Writing, Programming (platforms like Upwork, Fiverr, etc.)
- Social Media:經營部落格、YouTube頻道賺取廣告費
- entrepreneurship: Small e-commerce, personal brand
According to the survey, about 40% of Hong Kong's Gen Z have part-time experience, and their income has increased by an average of HK$3,000 to HK$8,000 per month.
4. Challenges and Responses to Gen Z's Financial Goals
In pursuing financial goals,Generation ZYou may face challenges such as, and you need to prepare your strategy in advance.
4.1 Inflation: Investing in Inflation-Resilient Assets
Inflation undermines the purchasing power of savings. In recent years, Hong Kong's inflation rate has been around 2% to 3%, soGeneration ZInvest in inflation-resistant assets such as:
- real estate: house prices and rents usually rise with inflation
- stock: High-quality companies can pass on costs through price increases
- gold: Traditional hedging tools
In the long run, the return on investment must be higher than the inflation rate to achieve wealth growth.
4.2 Market Volatility: Long-Term Investment and Risk Diversification
Financial market volatility can impact investment outcomes.Generation ZYou should adopt a "long-term investment" strategy to avoid frequent trading due to short-term fluctuations. At the same time, it reduces risk through "diversification".
- Diversification of asset classes: Stocks, bonds, cash portfolios
- Regional dispersion: Hong Kong, USA, emerging markets
- Industry Fragmentation: Technology, Finance, Consumer Goods
For example, funds can be allocated as 60% stocks, 30% bonds, and 10% cash.
4.3 Unexpected Expenses: Setting Up an Emergency Reserve
Unexpected events (e.g., healthcare bills, job loss) can disrupt financial planning.Generation ZPriority should be given to setting up an emergency reserve fund equivalent to 3-6 months of living expenses and depositing it into a highly liquid account (such as a demand deposit). For instance:
- If your monthly spending is HK$15,000, you need to prepare between HK$45,000 and HK$90,000
- You can achieve it in installments, including HK$5,000 per month, saving HK$45,000 in 9 months
This funding provides a safety net against unexpected long-term investments and high-interest debts.
5. How Gen Z can be incentivized to achieve their financial goals
Staying motivated is key to long-term financial success.Generation ZHere's how to motivate yourself to keep moving forward towards your goals:
5.1 Visualize your goals: Create wishlists, financial statements
Being specific about your goals can help you increase your motivation. For instance:
- Wishlist: Paste photos of travel destinations and model rooms of your ideal home
- Financial Schedule: Updates your savings and investment amounts every month and uses graphs to show your growth
Studies show that people who visualize their goals achieve 42% more than others.
5.2 Share with friends: encourage each other and grow together
Generation ZBy valuing your connection with the community, you can form a "financial goals team" and share your progress and experiences regularly. For instance:
- Monthly gatherings to discuss investment strategies
- Sharing discount information (e.g., credit card rebates)
- Supervise each other on savings challenges
Peer support reduces loneliness and provides practical advice.
5.3 Treat Yourself Regularly: Celebrate Milestone Achievements
Once you reach milestones, you can stay motivated with the right rewards. For instance:
- Save your first HK$10 and enjoy a Michelin dinner
- When the annual return of the portfolio reaches the standard, arrange a short trip
Rewards should be tailored to the target value so that overdoing does not affect progress.