My Journey to Financial Empowerment
Practical Tips for Maximizing Your Savings
In the past year, especially due to my education and work as a financial advisor and insurance agent, I've been really obsessed with optimizing my own financial situation. A huge part of this has been tracking my savings! It has always been a dream of mine to be That Girl who can afford stuff. You know, that one friend who just always has it together. Wanna go for a trip to Barcelona this weekend? Sure, let’s go. Wanna join that new Pilates class and get brunch afterward? Totally, let’s do it. I'm pretty sure not many of us have been that person most of the time, or ever. Honestly, it’s not that easy to be that way while still acting responsibly with your money in the current times or still figuring out your position in the working market. But there are some ways I have managed to improve significantly in that area, and now I feel happy and secure with the way it is progressing. I want to share my personal journey with you so it inspires you to do the same, maybe!
Firstly, I have analyzed my financial situation by tracking my expenses. How much was I earning regularly? How much was actually coming in, fixed, every month? Hmm, is there a way I can also increase that number? Everyone’s situation is different. Then, I looked at my expenses. What exactly are my unavoidable monthly expenses? Perfect. I tested it out for a month, tracked it in my budgeting app, and used those results for reference. Then, it was time for the 50/30/20 rule. In case this is the first time you’re hearing about it, the 50/30/20 rule is a financial guideline for budgeting that suggests allocating your income into three categories:
50% for necessities (essential expenses such as housing, utilities, groceries, and transportation)
30% for discretionary spending (non-essential expenses like entertainment, dining out, and hobbies)
20% for savings and debt repayment (savings accounts, investments, and paying off debts)
I think this helps a ton because I suddenly realized – damn…my 50% is a bit higher than it should be, and my 20% is not very stable and consistent. Great! Now that I have this down on paper, I have started thinking about whether I can reduce some of my monthly costs. I assessed certain subscriptions and habits and compared some of my utility and insurance contracts. I realized I could save quite a bit by making more strategic decisions and controlling my spending better.
Now, let me note at this point that I in no way like to feel like I can’t afford an iced latte whenever the heck I want. Or be too obsessed with money to buy a good gift for a friend if I want to. There are just some things I would hate to get “stingy” about because I believe money is also energy – but more on that later. What I’m trying to say is that one has to analyze what is important and keep some will to live while saving by perhaps cutting expenses that are not so important for one’s peace of mind :). I, for example, am much more comfortable spending more on my apartment and living on my own than traveling nine times a year with nothing but a Ryanair-approved backpack. That would also mean my housing expenses would cut into the travel budget. But everyone has their own preferences, and it is just important to know them and have overall control of the situation (a budget planning app is a great choice here!).
I pay myself first! I have an automated transfer that sends an intended part of my payment directly into my savings account. That way, it is surely there, and I am “forced” to work with what is left for the rest of the month. Great, that is done; now what?
As I was lucky enough to have no debt, the first thing I wanted to take care of as an adult was my emergency fund. The general recommendation is to have 3 to 6 months' worth of net pay always available if something happens, such as losing your job or having unexpected expenses. I would urge anyone to take care of that before even thinking of investing! I know – BORINGGG, but it’s necessary. Once that is out of the way – and hopefully stored in a savings account with a good fixed interest rate and full availability (check your bank options or consider an online bank with a nice interest rate) – I started to think about protecting the money further by also investing it and potentially increasing its value.
The rule of thumb is to know why you are doing it and what your goal is. Buying a new car? House? Planning your next travel? A baby? Okay, then you can see if those goals are short-term, middle-term (10-15 years), or long-term (20+ years). I have written about this before, and I know waiting years for some interest return is not very exciting – but long-term goals and your retirement plan should come first. There are many ways one can prepare for retirement, but the most popular and safe options, in my opinion, are probably options like the funds-linked savings plan (ger: Fondsparplan) or an ETF plan, as well as something like, for example, a unit-linked life insurance policy (ger: Fondgebundenelebensversicherung) – basically the same thing as the first investing option, but with (depending on where you are) some considerable tax advantages when planning long term. One should generally consult a professional for the individual decision on which options fit best for you, but the recommended allocation for beginners should be 10% of your long-term investment with possible tax benefits and 10% middle-term investment. If that explanation is still leaving you a bit confused, stay tuned for more of my content on all my platforms or reach out to me personally - I gladly also take time to expand on the possible options and what they intake, no strings attached :)
Check out if your employer provides you with some of the benefits, such as a corporate retirement plan – some companies around here are very cool in that sense! *Please, Redbull sponsor me, haha
So, now we’ve got this down; we are protecting our money from inflation, and we have also dipped our toes into investing. :) Yeah!
What else? I have tried to reduce my electrical bills. Not only did I reassess my old electricity contract and find a cheaper provider for the same service, but I also watched out for unnecessary usage. Unplugging devices we don’t need, drying clothes outside, washing the dishes manually – I know, this sounds drier than the clothes I was talking about, but it makes a difference!
Listen, I love my shopping; everyone who knows me knows me. But I think many would be shocked to hear how much I spend on clothes in a year without buying from cheap brands such as Temu and Shein. Again, like in investing, what makes a difference is patience. I take advantage of my favorite shopping sites' wishlist options, regularly stock my favorite items there, and then wait. When a sale comes, and the item hits the discount I’ve set (I don’t buy things unless they are 60% off or more), boom, ordered, and bäm. Does that mean I stay controlled when seeing a cute snake print set in Zara's new collection? Yes, because I know the hype will pass, and those clothes are not worth 10% of what they’re sold for. I literally never buy clothes at the starting price. Another thing: second-hand shopping. I will not give out my secret of where I get most of my favorite pieces because…well, get in touch, and maybe I will spill that tea to you personally. But another great online option would be Vinted & Co. Not only is it great for environmental and moral reasons, but it also saves a lot of money.
Oh, and one of the very important ways to get some money back that I didn’t know for waaaay too long as a foreigner…tax returns. Guys, girls, do the tax report and get some money back from the state. I would advise doing it with a tax consultant; the cost of that consultation can also be included in the report and, therefore, isn’t at all unaffordable. For everyone who works in Austria – do not miss out on that. If you are a foreigner like me, I warmly advise sorting out your tax residency status, speaking from personal experience.
And lastly, I hate when some Instagram ‘coaches&such’ always start with this one, like it’s the cure to everything, but really, I just want to get the hard facts…but it’s the Mindset. Of course, having a good mindset around money is important, but saying “I am abundant” in the mirror will not be able to fight my extreme “I deserve a delicious iced coconut coffee-to-go for 6€ every day” addiction. So, this only works when combined with taking action. Nevertheless, I try to avoid saying things like “I don’t have money” or “I cannot afford this” anymore. I prefer to replace them with “I will get this at a later time” or “I am saving up for this.” And, as hard as it is, it is important to fight the guilt when we spend money. It helps a little when you know you will not be lacking afterward despite a bigger purchase, but if you struggle with a lack mentality like me, you will still have to reprogram your mind with more positive thoughts actively. Remember: as long as you are acting smart and responsible, you deserve good things in life, and you are allowed to experience them. With love.
There you have it; this is what I do! My best decision was to consult a trusted advisor and start deeply analyzing and optimizing my financial situation. I can only recommend you do the same and feel empowered on your financial journey! :)
