HSBC Living Finance

In life we are constantly dealing with questions. 'Can I afford an overseas education next year?' 'Should I take a loan to buy an apartment?' 'Will I be comfortable when I retire?'

Learning to manage your funds well will help you make smart decisions about important issues that affect your future. Here are some basics to get you started on managing your money.

When you spend less than you earn you are left with money in hand. In financial terms this is referred to as a 'positive cash flow'. If you spend more than you earn you would have a 'negative cash flow'.

What do I gain from saving money?

By saving you can fulfil long-term goals such as obtaining an overseas education, getting married, making a down payment on a new car etc. You are also financially secure because if you are faced with unexpected expenses, like doctors' payments or repair bills, you can use the money you have saved.

If you keep having a negative cash flow your financial security is jeopardised. You could run into debt and find it difficult to meet your basic daily expenses. You could even lose your job. So it is important to manage your money in a smart way.

How do I plan my budget?

A budget will show you how much money you earn and how much you will need or be able to spend. Your income and spending can be classed in this way.

INCOME Fixed income: A regular and stable stream of money inflow Examples regular pocket money in a fixed amount income from a regular part-time job monthly salary Variable income: Money inflow which may vary from time to time Examples "Laisee" money a scholarship a commission

SPENDING Fixed spending: A regular and constant money outflow Examples fees for lunch transportation tuition house rent mortgage instalments water bills electricity bills insurance Variable spending: Money outflow on an irregular basis Examples entertainment costs gifts for friends impulsive buying medical expenses

Can you think of more examples? Include them when working out your budget.