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Finance Check: "Money is very unequally distributed in our society – that worries me"

Published October 11th, 2022

How much money he earns, how he organizes his finances and which principle he follows when saving and investing: Carl reveals all of that and more in the latest instalment of our Finance Check format.

How we organize our finances is usually very individual – and also depends on the financial means we have. The important thing is that we get organized once and for all as it makes everyday life and planning for the future a lot easier.

For this instalment of our Finance Check, we spoke to Carl. He told us how he deals with his money, which principle he follows when saving and the significance that his income has on his life.

What’s your (net) monthly budget?

My employer pays me €2,900 (net) a month. And I also earn a passive income through capital gains (ETF, interest on fixed-term deposits, P2P loans, cooperative shares): last year it added up to around €300.

Are you renting or buying your home?

I live with my girlfriend in a rented, 95 m² apartment. It’s on the outskirts of a city in Lower Saxony. I mainly get around by bike. But I mostly stay in my neighborhood because everything is so close by. For work I need a car. But I try to only use it when I have to travel long distances throughout Lower Saxony.

What’s the breakdown of your monthly outgoings in fixed costs and variable costs?

My fixed costs each month are currently around €1,020, which are broken down as follows: I spend €500 on my rent, €150 on utilities, €350 on my car (insurance and loan) and €20 on my mobile phone tariff.

My variable costs are approx. €580. That includes around €80 for clothes. But that varies a lot, I usually buy a bit more every three to five months and then nothing again for a long time. Plus €25 for mobility (journeys on public transport or train), €50 for birthday or Christmas gifts, €50 for café visits (my passion) and €75 for the rent, lease, plants etc. for my allotment. We buy our groceries from our joint account, which we both pay €200 into each month. I also spend around €100 on food for myself, when I eat out or buy anything on top of our weekly grocery shop.

I plan a monthly fixed savings rate of €400 for an ETF savings plan. And on top of that I save whatever money I have left at the end of the month, which, depending on the month, varies between €100 and €600.

When you see the breakdown of your finances, does it surprise you or do you check your spending and income regularly?

I’m quite surprised by the high share of my fixed costs. The main thing I realized was that how much a car like that actually costs and how much time it spends just sitting around unused. I plan on getting rid of it in the long term.

How do you organize your finances to keep track of everything?

I keep a note of my incomings and outgoings, more or less regularly. I also have one main account and two sub-accounts. My salary is paid into my main account. One sub-account is for my fixed costs, which are deducted from my main account at the beginning of each month. The other sub-account is our joint account, which I pay my share of the rent, utilities and groceries into at the beginning of each month. I can then use whatever money is left over in my main account throughout the month and always know how much I have left. And then at the end of the month I reset the account back to zero and transfer the remaining amount to an instant access savings account for the time being.

As I find it difficult to cover the fixed costs that are only deducted once a year, I have created a kind of liquidity plan. I converted my annual deductions into a monthly amount and every month I put that as much of that amount as possible aside in my fixed costs account. That means I won’t be taken by surprise at the end of the year when larger sums are deducted from my account (for my private supplementary pension insurance, for example).

How are you making provisions for your old age or saving up for bigger dreams for the future?

I follow the overflow principle: in case of an emergency, I have three net monthly rents put aside in an instant access savings account. I only pay money that I have left over into that account. As soon as the account is full, I put aside around €5,000 to spend on vacations or bigger wishes. Anything above that is invested. I have a wild mix and invest, for example, in ETFs, crowdinvesting, P2P, cooperative shares or bitcoins. By diversifying my investments, I hope to keep the risk as low as possible. Very traditionally, I also have two private pension insurances (which my parents took out for me) and company pension provisions from my various employers.

What is particularly important to you when it comes to money?

I think you should always have a good financial basis in your account. After that, you just need to keep topping it up and other aspects, i.e. values, come to the fore. Being rich isn’t important to me. For me, it’s important that I don’t have to think twice whether I can afford little things in everyday life. Like when I’m out food shopping, for example: I don’t want to have to work out whether I can afford to treat myself to a bag of Haribos or not.

I’m not particularly frugal. If I see small items and the need to splurge on them lasts several days, then I’ll buy them. Books, for example. I try to avoid impulse buys. For quite a while now, I’ve been trying to make sustainable purchases, especially when it comes to clothing. I like to make sure that my clothing was fairly produced.

You should always have a good financial basis in your account. After that, you just need to keep topping it up and other aspects, i.e. values, come to the fore.

If you ask me, money is far too overrated in our society, especially in younger years, the first years of work. Personally, I have the feeling that after working three to five years in a job, you have other priorities than being paid as much money as possible at the end of the month. Suddenly values like personal fulfilment, having fun in your job or work-life balance take on much more of an importance.

Money is very unequally distributed in our society. I do worry about that, especially now that the price of everything is increasing.

What do you wish you’d known sooner about money and finances?

How to organize my finances on a daily basis. The idea with the three accounts and transferring money over to them at the beginning or end of the month is something I caught onto much later. I think that gives you a much better overview.

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