Your income doesn’t make you rich
An important tip from the experts, as recorded on the information portal Arbeits-Abc, is an old wisdom with regard to financial matters: it is not your income that makes you rich, but what is left of it. If all the money is gone at the end of the month, it doesn’t matter whether your income is 500, 2,000 or 20,000 euros. At the end of the day, or rather at the end of the month, you start the new month “rich” again. But if you manage to save an amount of money of 100, 500 or maybe 1,000 euros every month, that amount of money will gradually add up – you just have to give it the necessary time. Your savings grow month by month, and so does your financial security.
The effect of constant saving
However, the experts warn that there is never absolute security. Likewise, it is clear that low-income earners have far less money to spare per month than those on higher incomes. By no means every household can put 500 or even 1,000 euros aside every month, that is quite clear. But if you put 200 euros in your savings account every month, you could theoretically look forward to having 12,000 euros in your account after five years. This is, admittedly, an oversimplification, but it demonstrates the magnitude of the power a continuous, constant rate of savings can have over a period of time. As inconspicuous as the amount may seem.
The accounting department of the family company
To do this, it can be helpful to identify exactly the amount of money that you can put aside each month as a first step. To do this, you should get to know the total income and expenses, for example by listing the two items against each other. This means that you compare all the income you receive each month with all the expenses you make. It doesn’t matter whether it’s rent, mobile phone insurance, monthly car insurance, Spotify or groceries – every single cent that is spent should be reflected here. Therefore, you should first create an awareness of how much and what you spend money on every month.
Corporate strategy: Where does the company want to be in X years?
An essential part of a company is a concrete objective with a realistic formulation of where the company would like to be after a certain period of time. The same can also be applied to the family household. How high should the family fund be in five, ten or 15 years, what costs should the family fund necessarily always be able to cover. It is important that the goals can also be achieved after comparing income and expenses and the determined monthly savings rate.
The controlling department – or: the budget book
To ensure that the ratio of income to expenditure does not get out of control and to keep the level of expenditure under constant control, the family household should always be kept in view. Keeping a household book can be useful for this. It doesn’t matter if it’s an app, a book, a pad/folder or an Excel spreadsheet, the main thing is that you can handle it.
The daily expenditures made on the day are recorded in the budget book. This is to check whether the expenditure made corresponds to the actual budget and whether everything is going according to plan and on target.
As in the example calculated at the beginning, even small amounts can develop into several thousand, even tens of thousands of euros over a longer period of time. Therefore, it may be advisable to run the family household in the form of a business and to start saving early on.
Philipp Beißwanger / Editor finanzen.net
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