20s
Have enough in your account to cover six to 12 months' basic expenses
At this age, you should be ready for change and uncertainty. There may be job moves, marriage plans, and hopes of buying a first home, so the main thing is not to commit too much of your income to something too long-term or illiquid. After college, there is probably not a lot sitting in your bank account. Therefore, take a close look at where your monthly income goes. Too many people know their cash flow, but don't analyse it. Giving your parents something towards household expenses may be an obligation, but if HK$2,000 to HK$3,000 a month is going on drinks, karaoke nights and taxis, ask yourself why and be realistic. Of course, it is a very subjective thing, but even if you have a relatively high income it is a mistake to think that what you spend today can simply be earned again tomorrow. A good rule of thumb is to build up enough in your bank account to cover six to 12 months of basic living expenses. The economy may be good now, but young people are still vulnerable to changes in the job market. The idea of running up credit card debt should be a big 'no'. You can never beat the system, and the risk of relying on this is just far too great. If contemplating an MBA, remember that many schools accept payment in instalments. And if planning a wedding - this may be hard - but be practical and know what you can afford.
Put in place the building blocks for the long term
Recent graduates and people with a couple of years' work experience characteristically see themselves as risk takers. They see the appeal of high-risk investments and want to 'explore' financially by looking at different markets. In one sense they can afford the risk because, theoretically, they have many years to keep earning if something goes wrong. However, they should really look at traditional areas - cash, bonds and equities - not sophisticated investment vehicles. In building up an equity portfolio over five to 10 years, it is possible to learn how capital markets work, and make reasonably good returns. Most important is to commit to a regular savings scheme. It is something of a mantra that the earlier you start to save, the less you need to save every month, but the figures prove it is true. Younger people tend to focus on shorter-term goals - a car, an apartment, marriage. But the overall aim should be to put in place building blocks for the long term, and not to think simply in terms of 'saving for my first car'. Assuming you join an employer's MPF scheme, there is no harm in choosing the most aggressive funds on offer. If the markets decline, they will have time to bounce back, and there will be the benefit of buying at lower prices.
A good target is to put aside 30 per cent of your monthly salary