In our infographic, we’d like to share 7 practical tips for managing money that we’ve come across along the journey. After all, money is a mirror, it only takes on your personality. Therefore, money is a key to bring good into this world. Give – so you will be given is therefore the motto.
When it comes to finances, you need to know what your income and expenses are each month. For this you need an overview of contracts or subscriptions that you have concluded in the past time. But also costs for e.g. social security, apartment rent or copies of important documents like birth or marriage certificates can influence your cash flow in the long run. We would therefore like to encourage you to declare war on paper and cluttered documents. The easiest way to do this is by creating folders and a simple table of contents.
2. Tax return
For many, the tax return comes with many question marks and something to be avoided if it’s not mandatory because of your circumstances. Numbers show that an average tax return comes with a refund from the tax authorities. In addition to that, your tax return also helps to give a basic understanding of your own finances.
3. Emergency reserve
Especially young people who are just starting out in the working world are often not yet financially prepared for life. This is primarily because their own environment, as well as the school system, does not pass on financial education. One of the first steps in dealing with money should be to build an emergency reserve, which is about three months of your income. (As long as there are no debts) This emergency reserve lets one plan ahead more relaxed. So if your washing machine dies, you know that the new one is covered. Besides these unexpected spendings, an average job search takes three months in case of an unforeseen job loss.
For dealing with money available on a monthly basis, paying by cash at the checkout might be helpful. In times where cryptocurrencies are said to replace our known currencies, the advice to use cash sounds surprising for one or the other at first. However, this advice shows you visually if you are within the budgets that have been planned. Those who nevertheless like to pay and travel digitally can adopt the next tipp.
5. Multi-account system
Knowing how much income and expenses you can expect per month is an important basis. However, it is sometimes difficult to implement the planned reserves or expenses correctly in the hustle and bustle of everyday life. Thus one might use up the money that was actually set aside for a planned vacation if not clearly indicated as such. Our recommendation is therefore to create a separate bank account for different financial areas, if necessary also with different banks.
6. Basic insurances
Unforeseen things can happen. But some surprises, which could have a strong impact on you, can be covered by insurance. Nowadays, there is insurance for just about anything. Our advice is therefore to deal with the necessity of the most important insurances. For us, at least the following insurances are important next to the mandatory insurances (health and social insurance):
- Liability insurance
- Household insurance
- Professional disability insurance
Of course the insurance topic is a very individual one. Therefore everyone should deal with it themselves. If you live in a possible flooding area, for example, a flood insurance can make sense.
7. Stay tuned
Our advice is, that once you have started to deal with your finances, you should stay on it and also regularly educate yourself in the field of finances. The easiest way to do this is to mark a regular date in your calendar to take a closer look at your finances. Because achieving goals needs continuity in the small things from day to day.