If you want to get smart with money, it’s handy to make a personal financial plan. A plan that includes budgeting: this much money comes in every month, this is how much I spend on subjects A, B and C, this much I save and this much I invest. But sometimes budgeting too rigidly doesn’t work, because a tight budget doesn’t always take into account the unexpected turns that life has in store. So here’s our ode to: f*ck budgeting! Being financially independent, or becoming so, can easily be done in a relaxed way, without being too tense about money. Read more about 4 Easy Steps For Managing Your Money.
Becoming financially independent, can it simply be done?
Messing around in Excel every month, moving money from one column to another. Sound familiar? Could be it’s not working because life doesn’t work that way. Life isn’t an Excel sheet. Life doesn’t stick to the plans that you make. A budgeting plan doesn’t always take into account when two of your friends have their birthday in the same month, your cat or dog has to go to the vet multiple times or when you have to pay the entire deductible amount of your health insurance all at once. Luckily though, there’s a method that can actually work. A method that both lets you be smart about your money and keep the space to stay financially flexible.
Easy does it
We want comfort. We want automatization. We want to be smart. So how are you going to start making sure to both save and invest each month, while at the same time leading a comfortably relaxed life without having to think about money all the time?
- Make sure you know exactly what your fixed expenses are and have this sum available each month.
- Next, determine how much you would like to save and/or invest each month. Want to save 20% of your income? Great. Investing 10% of your income? You go!
- Automatically put these amounts into your savings and/or investment account. Automate this and consider it part of your fixed expenses.
- So you’ve managed your fixed expenses + your savings and investment money. Now what? Relax and do what you want the rest of the month with the money that’s left!
Some math
Imagine you make 2000 euros after taxes. 1000 of these are your fixed expenses. Each month you save 150 euros and put 150 euros into your investment account. You now have 700 euros left. With these 700 euros you can do as you please. A new wardrobe each month? Nice! Eating out at a new trendy restaurant every week? Enjoy! Getting mani-pedis every other week? Noone’s stopping you.
Your money
This is your ‘f*ck you money’. It’s for you to do whatever YOU want with. Your money. Which is left after sensible actions, such as saving and investing.
Extra tip: Put this ‘f*ck you money’ amount into a second account: a current account. It helps to have 1 credit card with an amount that you can spend on anything each month, until you run out.
