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I then take a look at my family's annual spending in mint from the previous year to help out together a new budget. It can be hard to predict some big things like home repairs, but overall I find using actual expenses keeps me honest about our spending.
I'm in my mid 30s, from the Netherlands, and work remote as a software engineer for a company in the USA. My net income is about 4500 a month, rent in Amsterdam (NL) costs me about 1400 a month, then another 1000 a month for all other costs (insurances, food, electricity, car maintenance, parking, water, phone, etc.)
That sounds like I should save about 1600 Euros a month. In reality I also purchase things that aren't part of my fixed expenses. A brand new PC set me back 2000 Euros, a new floor in my home office set me back 600, finally getting a kick ass new wifi router will set me back 400, and I'd like Apple Car Play in my car that will set me back 400 as well.
My car is my own, though. No payments on those except the depreciation in value every second it gets older and every kilometer I drive it.
My biggest issue is my apartment. It's 100 square meters (1076 square foot), 2 bedrooms, an absolutely amazing view, and when I started living here 8 years ago I could rent it with a far lower income because of a financial crisis.
Now, the housing prices have caught up. I'm living in an apartment that I couldn't even rent anymore these days (they exact my net income to be 5x the rent). The value on the buyer's market would be around 500,000 Euros.
So, to get something in the same league of quality and comfort, I'd need to be able to purchase a house at around the 500k mark. I can't afford that and I don't really want to take a big step down when it comes to location, view, comfort, luxury, etc.
I don't buy new cars ever. My own car is a VW Golf from 2017 so the biggest blow of losing its value (e.g. driving it off the lot the first time) has been taken by the first buyer.
When I want something new I wait a minimum of 2 weeks before I decide. I've been wanting a VR Headset for a few weeks now, and just decided that, while I can afford it, I'd rather not.
I've been traveling a LOT in the past year and that ate up about 20k of my savings. Worth every cent. But I'm only left with about 20k in savings now. And I'm not sure what to do with it at all.
Of course I'd love to go into stock trading. I'd buy Apple, Microsoft, Amazon, Tesla, and just... I don't know, then what? They rise and... I sell? They lower in value and I buy? Is that it?
There's so much terminology going about in that industry. What's a "short" exactly? Yeah I can Google it but honestly, I don't understand it. Should I instead simply give my money to an Index Fund trading company? Sounds safe(r) at least.
Should I buy a house at half my max in a more rural area and live even cheaper for the next few years and save up about 200k?
Should I instead spend it all on traveling and experiencing life?
Honestly, I've known people in their prime who got the news: "You have cancer, you'll die in a year". Sucks to be rich then, doesn't it? (Note: Health care is fully taken care of here, you don't need money.)
Or what if I get hit by a car tomorrow? I've been in one major accident already that nearly killed me. I don't feel like planning ahead that much. I'm young and strong now and I might not be alive next year. Or in ten years. Or in 30 years.
I'll just apply sensibility in the sense that I don't want to waste all my money. I need a solid savings account. And if it doesn't make life boring, I should spend money working towards a more lucrative future.
But I have no clue as to how.
I live well enough within my means that I don't have to bother with any kind of accounting. On a typical tech salary living in a relatively cheap COL area, I bought a house about half of the price I could afford. I exclusively purchase used vehicles (partly because I am am enthusiast and enjoy working on them, but even a 10 year old low mileage modern vehicle is pretty reliable and cheap to maintain), and I don't sho…
You forgot bitcoin. Lots of bitcoin on the side. That way you can retire in peace.
If anyone is interested, I'd love to get feedback, hit us up on LearnLux.com
i’m 28, i make 36k per year, i have a masters degree and two bachelors degrees, all in hard science. i pay $800/month for rent, i ride public transportation, i try to cook at home, i don’t socialize. i can save about $5k per year. i’m comfortable and could live for a lifetime on less than $40k per year.
> i don’t socialize I'm curious why you've made this choice.
There are plenty of other social things you can do in life, but I've noticed that there is a crowd where none of them count. Either you sit in your favorite bar and talk, or you don't socialize. My time spent camping with friends is interesting, but it doesn't count even though we spent plenty of time around the campfire (just to name one activity I do)
In terms of where I store money, I:
* keep an emergency fund in a checking account with 6x my monthly spending
* keep the rest in broad market index funds, currently 10% bonds, 35% international funds, 65% us funds. I put the maximum amount allowed into tax advantaged accounts (401k and roth ira), and the rest into a taxable account
I live well enough within my means that I don't have to bother with any kind of accounting. On a typical tech salary living in a relatively cheap COL area, I bought a house about half of the price I could afford. I exclusively purchase used vehicles (partly because I am am enthusiast and enjoy working on them, but even a 10 year old low mileage modern vehicle is pretty reliable and cheap to maintain), and I don't sho…
I started keeping track of my budget so I can comfortably spend without the stress.
Past that, I use a great credit union for liquid cash and mostly liquid emergency fund. The later we have pegged at 6 months of burn. Investments are across a couple institutions and consist of Roth IRAs and 401k stuff - that all goes in index funds.
1) We don't do debt. Certainly not for consumption purposes; we avoid it for capital purposes. We have a mortgage, but we saved and paid cash for the last car we bought; we might take a loan for a car... but even then we know the return we expect to get on the car would far out-weight the cost of the loan for the kind of car we'd entertain buying. A loan for education? Not unless a conservative expected rate of return justifies the debt: and I don't mean over a lifetime... but more like a decade.
2) A follow on to 1... We will avoid savings/investing (except for a very liquid, minimal emergency fund) if there is debt we can pay off early. Retirement savings are an exception because of tax law considerations. Our mortgage is low interest, and we might do better investing that money... but we might not and I know how much we save if we kill the mortgage early.
3) Don't spend what you don't have. Do your damnedest to not spend what you do have. Much of this goes back to 1. Many people create a budget as a means to give themself permission for otherwise unregulated spending on consumption goods... they'll budget a bit for savings and a bit for necessities... you know what's fair and "rational". But everything else is fair game and their budget, if they keep it, removes the guilt of what to me would look like over-spending. The default should be don't spend and justify each purchase. Yes, sometimes leisure is a worthwhile investment into yourself/family: but think through those decisions and alternatives that achieve the goal of leisure, but not at the cost.
Aside from that we use off the shelf software for tracking; but tools really are a minor consideration compared to having a healthy attitude to money and spending. We don't produce budgets because our default thinking is healthy. We do plan, but chiefly we just don't spend so that when crap does crop up we have the resources... or don't have the threats (debt)... as a default position rather than let-lose-spending with a minimum planned savings.
Note that none of this is investment advice. We're terrible at that side of the equation so I wouldn't offer it: but the first step is don't spend first what you might invest.... then you can worry what to do with your capital.
Finally... none of this comes from an philosophical anti-materialism or anything of the sort. It's all just being responsible for ourselves and our financial health.
I use Google Sheets and my banking app to keep track of expenses. I'm in my mid 30s, from the Netherlands, and work remote as a software engineer for a company in the USA. My net income is about 4500 a month, rent in Amsterdam (NL) costs me about 1400 a month, then another 1000 a month for all other costs (insurances, food, electricity, car maintenance, parking, water, phone, etc.) That sounds like I should save abou…