Finance Principles

Here are some thoughts on how you might structure your finances. Your mileage and possiblities may vary. The basic ideas here are what you find as advice in several finance books. You’re welcome :smile:

Keep your finances simple

I thought quite a lot about how to handle money and came up with a – you guessed it – simple system. It involves some bank accounts and automated payments.

My main account takes care of things like rent, insurance payments and so on. The basic monthly costs are covered there. From that account, I transfer investment, backup and my “monthly allowance” into other accounts. I donate some money per month automatically to The Ocean Cleanup. From my investment savings, I buy one ETF monthly on a savings plan.

Whatever is left over at the end of the month goes into the savings account. That’s it. Set up once, I don’t even think about it anymore. I can use my monthly allowance, the rest is automated away. Simple.

Keep your saving simple

I try to cut down recurring costs for different things.

I replaced a recurring gym membership with two kettlebells. They were pretty much the price of three gym months. And they will be with my for all my life, it’s rather hard to break them, you know?

I standardized my breakfast, see above. It clocks in at about 30€ when I shop for all items. But that’s all whole foods, great quality and I have breakfast for three to four weeks from that.

I cut out unnecessary insurances. I ended subscriptions I did not need or take full advantage of.

Keep your investing simple

That’s an interesting topic. I guess the “managing options” idea from sports & diet applies here as well. Everyone has ideas. Everyone has shortcuts or “safe” investments they think will do the trick. Me too. I tried individual stocks. Too stressful. I thought about trading options. Too much hassle. I dabbled with some cryptocurrencies. That’s playing, not investing.

I cut out retirement plans where I was either just parking the money because the costs ate the possible gains. Or in worse cases even would have lost money across the years due to the costs. Calculate the costs of your investments. It does not take a lot of time, but future you (that one again…) will be very thankful years from now that you took that one hour on that one Sunday.

What I stick with is investing in some ETFs. It has the savings plan for the main ETF. I rebalance the rest from time to time. That’s it. A whole lot of mental capacity freed up by… well, actually by not doing a lot.

For a very straightforward introduction to investing in ETFs, check this (german) blogpost from Finanzwesir.

Books I can recommend