5 Ways to Build Financial Health
Ever since I was a child and young adult, there was an air of a specific mindset around me that I still work through today. A mentality of my parents and the parents before them, a belief that turned into a small voice of: "We don't have enough, we are not like those other people, we are not the kind to have a lot, and this will never change." It is a very personal topic to talk about, but like some insecurities that take space in our minds, this kind of programming is a common occurrence in the environment where I came from. I didn't grow up poor by an objective standard, yet the feeling of lack and fear around money was very much present at all times. One reason I wanted to study abroad was my enormous wish to create a better life and lifestyle for myself – and perhaps I have not reached all of my goals yet, but I have today almost everything that my 12-year-old heart was daydreaming about on her family trips to Opatija.
But there are, of course, many more things I want to accomplish today still, dreams my 12-year-old self wouldn't quite understand (although she needs to find them cool! :)) and to make some of them a reality, I had to look at my finances, and my attitude towards it bit closer. Money is not always the most comfortable topic of conversation, especially in the arts. Nevertheless, it is one of the most important ones to have, as it directly affects other areas such as physical and mental health, relationships, or overall quality of life. There are a few things that I did to secure this area for myself – some I have already done for years and some I have picked up during my current education in finance. I am no crypto guru or top G, but let me share some steps that help me nurture my financial health and keep me stable and continuously growing already for years. No gate-keeping here!
1. Budget and Living Below Your Means
It is self-explanatory yet challenging. Depending on the personal situation and stage of life, we have different amounts of income and living costs. One of my favorite rules ever is definitely the famous 50/30/20 rule. 50% of your income should be dedicated to needs—essential expenses such as rent or mortgage, utilities, groceries, insurance, and transportation. These are necessary for daily living and should not exceed half of your income. 30% is for Wants: This category covers things like dining out, entertainment, shopping for non-essential items, and other personal preferences. 20% is for Savings: Save 20% of your income for future financial goals and emergencies. Personally, I allocate 10% for the long-term and 10% for short to middle-term goals, which I invest accordingly to the span. An important tip I started doing way too late, but now live by is opening a savings account and transacting a wished % of the first thing after receiving my paycheck, no excuses!
Interested in what the balance looks like for you? You can calculate your 50/30/20 here!
2. Emergency Fund
Spilling some real secrets here – 3-6 monthly net payments should be in your bank account, accessible at all times in case of an emergency. If you own a BMW, you should especially take note (jk). An extra savings section of your bank account can be an especially good option; almost every bank has this option and sometimes even a decent interest. Check it out!
3. Make Sure Your Existence is Secure
There are a few insurances one needs that protect you from threads of financial downfall in moments of bad luck—some that everyone should have to protect their existence. In Austria, having household insurance (Haushaltsversicherung), private liability insurance (private Haftpflichtversicherung – usually included in the package with the household one, but not necessarily applicable if you're, for example, a WG member), legal protection insurance (Rechtschutzversicherung), and private accident insurance (private Unfallversicherung – Did you know: as an employee, your employer pays only for cases of accidents at the workplace and on the direct way to work…well, all good, except most accidents happen in our free time) – are some of the insurances that are strongly advised.
I've been geeking on this topic intensely lately, so trust me when I say that as dry as the topic might be, it is one of the most important ones to hack first on the path to building a better financial future.
4. Investing Wisely and According to a Goal
If I learned anything, there is no one-size-fits-all rule regarding investing. We are all unique individuals with different goals, wishes, and dreams—it is essential to analyze one's situation and expectations before jumping into any investment plan. Depending on the term we pick to reach a goal (short/middle/long-term goal), there will be different investment options to choose from. My personal tip: don't sleep on your long-term retirement plans! The reason why specific private retirement plans enjoy such tax advantages (especially in Austria) is that the government also knows there is no way we can all survive comfortably on the amount of money coming into the state pension pot for the future!
Either way, there are around 32,495,503 finance bros out there at the moment who offer you their "free" courses and a path to success in just 45min – but unless the coach recommends you atrting an OnlyFans, we all have to accept that building actual financial health and securing wealth will unfortunately take some more assessment and time. Of course, one can try to know it all on their own, researching endlessly on YouTube and DuckDuckGo. Still, the reality is that we are bombarded with endless information that is partly incorrect, inappropriate for the area we live in due to tax differences and laws, and, most times, downright confusing the Bejesus out of us. I can only recommend from my heart that you find a competent and professional consultant by your side that you can trust with something so personal as dreams and the money to get you there.
5. Don't Be Afraid to Learn About Money
Seek guidance, research, and ask around, but whatever you do – don't be afraid to talk about finance and search for ways to improve it according to your needs and goals. It is a topic that has made me insecure for years, but I am glad I took the initiative to learn as much as possible and am now actively profiting from it. The biggest argument is always peace of mind. Gathering enough knowledge to be able to make informed decisions means holding trust for the future - and that should be the best investment of them all.
