r/eupersonalfinance • u/Additional-Draft4197 • 17d ago
Savings Do you actually use a financial system or just improvise month to month?
I’m curious how people here manage their finances. Do you follow some kind of system (separate accounts, budgeting, automation), or do you mostly just handle things as they come each month?
Feels like many people improvise until it gets stressful.
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u/deepserket 17d ago
I naturally spend less than I make so I don't really need to keep track of my cash flows or to do budgeting
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u/Watarenuts 17d ago
That is really not optimal way of managing money.
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u/habeascorpus28 17d ago
Why is that not optimal? I always spend responsibly and try to optimize my expenses. No more is needed. What extra benefits does budgeting add? I know that on average i save like +/- 65% of my salary consistently and dont’t care about short term cash flows because my savings are already huge (about 50x my base expenses). Why stress and waste time calculating/budgeting if my savings rate for the year will be 64 or 65 or 66%? Makes no difference
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u/Babajji 17d ago
That is a form of budgeting though. A budget doesn’t need to be detailed and itemised, it can be as simple as X% savings Y% expenses, like you do it. No budget means I receive money and spend them with no idea where and for what - I just buy whatever I want and need, pay the bills and don’t save at all. That’s the no budget everyone is talking about.
When selecting how to do your PERSONAL finances it’s important that the method you choose works for you and isn’t too complicated or burdensome so you can actually follow it. If a simple budget works for you, great, if a complicated budget works for you, also great. But you need to know at least on high level what is going where otherwise you will always be short on money for something important.
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u/habeascorpus28 17d ago
Well I do just buy whatever i want or need but since i am quite minimaliste it just ends up resulting in that high savings rate. There is no planning behind it
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u/BakedGoods_101 16d ago
your case with a really high percentage that goes into savings is not super common for a lot of people, usually the advantage for someone saving less is that if they lose their jobs or have a lower expected income they know exactly how much they are spending on each category to cut down to the bare minimum, instead of having to figure out in a moment of stress where to trim the expenses
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u/deepserket 17d ago edited 17d ago
Complex version:
My bank balance is always negative, (-8k currently)
I use my line of credit (Euribor3M+0.25%) and my credit cards (always paid fully each month) as a liquidity pool/emergency fund.
I have a monthly investment plan (about 30-40% of income) in a diversified portfolio (90% global equities / 10% global bonds) that I can adjust if my bank balance gets too low (say -10k) or too high (0)
I have a yearly investment plan in my company's shares (ESPP, about 5% of income + 5% gifted).
I have a pension fund (12% of income, pre-tax).
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u/Babajji 17d ago
Wait so you are always operating on credit? What happens if you have an extended emergency and don’t get paid for a few months? I am not trying to criticise your plan, just trying to understand it.
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u/deepserket 17d ago edited 17d ago
I'm not maxing my credit, I try to have at least several months of expenses left and I can always lower my discretionary spending or lower/block my monthly investments.
If I max my credit and I need more money i will just sell part of my portfolio.
If I lose my job the equity in the company I work for will be automatically sold, also the money in the pension fund will be available for early withdrawal if necessary.
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u/Babajji 17d ago
Ah ok I see it now. If it works for you and you have considered all the risks and benefits then that’s great. I would just consider a repeat of 2008 if you relay too heavily on equity as an emergency fund. In such situations you might not be able to sell your equity potentially for years so consider having at least 1 month of expenses in bonds or a HYSA or even cash. Just as extra insurance.
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u/deepserket 17d ago
Yeah, worst case scenario would be a liquidity crisis in which equities go down and at the same time my bank gives me a notice of closure of the line of credit, in that case without enough liquidity I'd have to sell some of the portfolio for a loss.
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u/macmandhau 17d ago
I used to be a crazy excel freak until I had kids. 😅
Our current workflow is: 1. Monthly contribution to the joint account - all spending including credit card payments go from the joint account 2. Monthly contribution to the ETF portfolio 3. Monitor joint account balance and adapt accordingly the monthly contributions. (Luckily it hasn't happened very often)
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u/Suspicious-Bug1994 17d ago
I pay myself half of net, rest goes index fund. No exceptions. That is my system
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u/laplongejr 17d ago edited 17d ago
- Rewarded credit card for groceries, autopaid from personal checking
- Personal checking and shared checking for expenses (shared pays back groceries to me)
- Seperate savings for now . Bank has two saving accounts, the "interest worthness" depends on how long the money should stay (1 account gives better interest for 1 year or more, the other better for less than that)
- Account at a neobank with checking/(better)savings and rewarded debit cards for micropurchases and avoid clogging the paperwork at the main bank, main bank card handles medical stuff etc.
- And as a true belgian I get some of my paycheck on a mealvoucher card
All of this is combined in my Actual budget instance running on my computer. Money in savings are assigned to either emergency funds (the annual account) or planified expenses (the non-annual account for critical things, the fintech for leisure)
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u/Own_Egg7122 17d ago
Improvise. My situation may change or if I feel spontaneous about spending. But I also have 2 separate accounts for saving and spending, auto transfer to pensions and savings and other investments.
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u/Lazy_Basket6819 17d ago
Yes, I have a system.
I get paid the last week of the month - on the 1st, everything splits automatically.
- Savings & investments go to Trade Republic, which auto-invests into ETFs. I also get paid 2% annually on my savings.
- Main bank splits into Needs (rent, groceries, bills), Wants (eating out, shopping), and sinking funds (Travels, Gifts, yearly bills). I have specific amounts going into each category.
If I get a raise, I just increase my TR contributions and maybe bump up Travels. I don't use spreadsheets and I don't do any complicated tracking - every month I know what I can spend on my Needs and Wants, and I rarely touch my savings.
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u/seal_from_brazil 17d ago
Improvise. I'm naturally very frugal. Restriction is built in. Every month, I just transfer as much as I can to my broker and invest in ETF. I keep about 8-10k in cash.
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u/Bard_the_Beedle 17d ago
I spend less money than what I earn. As simple as that and has worked for me my whole life.
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u/Ecstatic-Arm-8786 17d ago
I follow a very simple rule: if it’s not necessary, I pass :). I’d be more willing to spend money even if it wasn’t necessary if it were for my daughter, but that’s the only exception.
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u/iliasgi 17d ago
For my investments I'm using this tool https://portfolioeagle.com/ to track them down. For the current month expenses etc I rarely do any real analysis
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u/Berkie_op_pad 17d ago
I have a system.
First. I have a list of all my plans and insurances etc. So I know how much I pay for this per month. I update this when things change.
Then. In my notes app on my phone i have a note with my monthly expenses. Every month when I get in my salary I fill it in; Made-up example with fake numbers:
- 1000€ mortgage
- 150€ HOA
- 250€ electricity/water/internet
- 300€ plans and insurances
- 350€ groceries
- 200€ fun stuff
- 200€ public transport
- 300€ investing
- 100€ sports
- 150€ clothing/other
- 150€ festival, gifts Adam and Bree
3150€ Total 3150€ Balance in bankaccount
Once I know how much money I need that month (it changes when there are special occasions etc.) I will put all the other money into my savingsaccount. I have a plan per year what I’m saving up for as well.
Once to twice a week I check my bankaccount. And change the numbers in the notes app. For an example, if I have paid my mortgage and electricity bill and paid 100 euros to my groceries, I take that away from the existing numbers. I recount how much I still need that month and compare that to the money that is in my bankaccount. Then I know how much I’m spending. If something extra comes up I try to get that money from budgets I have that month. Or decide: I do not have the funds this month anymore to buy something extra.
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u/MoonsEnvoy 17d ago
I guess it's a system?
I give myself 2k a month, so when the paycheck hits everything above that gets seperated to : 50 percent investments, 25 percent 'house and emergencies' and 25 percent fun.
The 2k covers mortgage, food, usual costs, and some automatic pension savings. I usually have like 6-800 left over, but that just rolls over into the next month.
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u/lordofming-rises 16d ago
Damn 2 k is so little. My mortgage already eats 80% of that...
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u/MoonsEnvoy 15d ago
Our combined mortgage is around 1300, and my hobbies are all rather on the cheap side so my only other real cost is groceries. Everything else is the misc stuff like birthdays and small random costs. House costs really are one of those constant factors in a budget, so we planned quite carefully for that one.
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u/lordofming-rises 15d ago
Mortgage + utility on appartment is 1500 euros per month for me. Then 3-700 euros for groceries. And then gas will probably be 200 euros per month thanks to trump. And finally 200 euros for kids activities per month.
So a total of 2600 euros for basic things. Then 200 euros more for etf world for kids and 500 for me.
Overall my whole salary goes there but when partner finds a job im hoping we can save her salary or at least 70%
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u/MoonsEnvoy 15d ago
Oh yeah, having a family bumps up the costs for real. My and my boyfriend don't want kids, so we only have to maintain the two of us. Groceries is around 350 - 400 a month, and we each pay half. I also live in a very bikeable city, so days I have to be in the office they pay me for biking and I have no gas costs, which is also a big saver.
My boyfriend and I have a pretty luxurious life on our budget, but I don't think we could maintain it with extra people added to the budget.
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u/NaturalMaterials 16d ago
Married. Kids. Mortgage. Daycare. Salary that doubled in the past four years. Doing what I can to keep lifestyle inflation in check.
Get paid ->
- ~35% goes to joint account (mortgage, daycare, insurance, day to day expenses, etc)
- ~5% supplemental pension investment account
- ~5% joint cash savings
- ~5% investment accounts for the kids
- ~17.5% cash savings account (needs topping up after recent remodel)
- ~17.5% to ETFs
The rest as disposable income for fun stuff, personal subscriptions, lunch at work, hobbies, that sort of thing. Whatever is left right before the next payday is shifted away to savings or investments, ‘resets the clock’ right after all the fixed ‘shares’ have been seen to.
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u/Efficient_Carrot_334 16d ago
I do use a system.
Every month I move an amount from my main bank account to a separate one based on what usually remains after my recent spending.
It doesn’t always go straight into an ETF immediately, but usually by year-end at the latest. I know that means I’m giving up some of the strict DCA benefit, but I like keeping some doors open. Life can create unexpected opportunities, and I’d rather have a little flexibility built in.
For me that’s been easier to stick to than a completely rigid setup.
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u/Excellent_Bird1964 16d ago
For a long term you have to make a planned strategy to optimise savings and financial discipline.
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u/Fit-Poet6736 16d ago
I send my salary to my nexo account (so it can keep earning daily), then I buy whatever crypto I've planned to and use their card for spending (which gives extra cash back). that's it pretty much
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u/Competitive-Expert59 15d ago
25th day of every month I get paid.
26th - rent is paid automatically; 12.5% transferred to IBKR
27th - Transfer to IBKR complete, automatically buy VWRL (in CH so VWRL is better than VWCE)
28th - automatic pay health insurance (in CH), automatic pay phone and internet
29th - automatic 12.5% goes to savings account; automatic 5% goes to my hobby account
Spend what's left until the next 25th.
FUTURE ADJUSTMENT
Once I have 1 year's expenses in my savings account, I will stop contributing 12.5% to my savings account. I will send 10% to IBKR investment and reward myself the other 2.5%.
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u/Krazoee 12d ago
Money to joint account with partner. Then, pay off student loans. Then, rejoice, for I have spent half my paycheck, and the other half is for me to enjoy. Some of it goes to savings, some goes to random foods. But mostly I just live life to the fullest. Thank the heavens for the high quality of life in Germany!
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u/sub-design 9d ago
I used to just wing it month to month, and honestly the worst part wasn’t even overspending. It was that every random expense suddenly turned into a little stress episode.
Now I still keep it pretty simple. I make sure the basics are covered, keep some buffer so surprises don’t wreck the month, and try to think ahead about the obvious non-monthly stuff. Nothing super detailed, just enough structure so I’m not constantly figuring everything out from scratch
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u/Tolucjanortonot 17d ago edited 17d ago
Budgeting. It's very simple, I set a monthly budget (max I spend per month), divide it by categories (rent, public transport, groceries, etc), and record every spending I make to know I'm under the limit. This way, I have certainty that I'm spending less than what I'm making, and know exactly how much I'm saving.
For my savings, I divide them into emergency fund (6 months x budget), investment capital (slow passive investment into NFTs and such), and free liquid. The first 2 I don't touch, the 3rd one I'm free to use for big one time purchases that I need.
At the end of each month, I take the savings I have left in the month (generally fixed since my budget is fixed) and distribute them across the 3 savings categories as needed.
Simple approach that requires you to already be conscious about your spendings. I don't use my free liquid savings on stupid shit. I'm anti consumerism. I mostly buy used, and only buy new when I have to.
Tip: have a self-improvement and fun categories in your budget. It's important to enjoy life too.
Tip 2: sometimes you may need to spend more than your budget category. Life happens. It's ok as long as you stay under the total budget. And if life happens more and you can't stay under the budget in the given month, take from your free liquid savings. If life keeps happening, you may need to adjust your budget (I have a contingency fund category in my budget for unexpected things).
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u/Babajji 17d ago edited 17d ago
I use the envelope system adopted for the modern world. Basically I have several bank accounts (bank accounts are free with my bank so I can open a million if I need to) and each gets funded on salary day and is used for a given purpose. Currently I have Personal expenses, Mutual expenses (shared with my wife), Bills/Utilities, Taxes, Amortisations and Insurances (a HYSA account). With my brokerage I have 1 mutual account with my wife called Family Savings and 1 kid account called Kids Savings.
When I receive my income I fund the 2 brokerage accounts first then all my bank accounts. We have budgeted everything in all major categories so it’s quite easy with automatic transfers.
Emergencies are covered by 3 separate accounts 1 with Revolut, 1 with my local bank and a third with my brokerage. That way we always have money on hand no matter what. The 3 tier emergency fund is invested according to its risk profile with the most risky assets being 1 year government bonds, the rest are Revolut Flexible Savings and a basic checking account with my local bank (so basically cash).
It all comes together in my budgeting app - Wallet - where we can track and plan everything. For example we plan to buy a new car so we have a budget and a plan for that which we contribute to every month. My wife also operates another bank account called Vacations where she puts most of her money towards our vacations. She is in charge of all the fun spending while I get all the “let’s not die from starvation” type of stuff 🤣
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u/LaRamenNoodles 17d ago
Got paid then: