At Elfin, we are quite – ahem, understatement – advocates of taking good care of yourself financially. Taking control when it comes to our finances is the No. 1 booster for your state of mind. Don’t make this up, this comes from many studies. So stop spending money on expensive facials (okay ahead, occasionally ;-), yoga classes and meditation courses: your finances fix thriumphs it all.
We earn 14% less salary per hour than men in the same professions, we miss out on €300,000 in salary in our lifetime, we have a wealth gap that can reach up to a million and finally, we also build up 40% less pension. And, of course, this is all linked together.
When men retire, they have an average pension income of €34,000 in the Netherlands, and women only €20,000. All the while, we age on average 6 years older than men! Ladies, work to be done.
Where should you start?
These are quite a few numbers, which we mention here. And you may get overwhelmed and discouraged, which means this may be a long way to go. But that’s no big deal. We’re going to fix that together for you.
Taking control of your finances starts with creating insight: what comes in, what goes out. What are the annual one-time expenses and income, how much do you want and need to save, and if there is money left over to invest: how much and in what? Having your numbers in black and white already gives a lot of clarity. This provides grip.
Tip: Included in the Elfin membership is a comprehensive file where we have already done all the work for you, and all you have to do is fill in the numbers.
So it starts with insight. In the membership, we also explain how you can see how much pension you have already accrued, and what the gap is.
Save, invest or earn more?
Then you will look at your current financial situation and put your desired financial plan next to it. Maybe you will:
- saving for a trip around the world;
- plans for a sabbatical;
- working less;
- Starting your own business (that yoga school in Bali, anyone?!);
- fill in the blank!
These dreams and desires cost money. You need a savings buffer for that, an asset from which you get returns or simply passive income. What you need financially depends on your needs. Once you know what your dreams cost and have insight, it’s time to turn the money knobs. Are you going to invest? Or are you still saving heavily? Do you choose to accelerate your mortgage repayment? Or are you going to start your own business and want to generate passive income with it?
Whatever it may be, it needs action.
Don’t know where to start taking action? Get started right away with the free personalized roadmap we create for you. All you have to do is fill out these questions, and we’ll do the rest. Sit back, and let Elfin take you.
Building a pension
Regardless of all these desires and linked actions, it is wise to build retirement. And yes, this still sounds so far away. And it’s so uncertain. We get it! But do it anyway. Do you know the quote, “live everyday like it’s your last, but use a condom and pay your taxes in case it isn’t”? And so it is. Building additional retirement is smart for 2 reasons:
- you are taking advantage of tax benefits NOW;
- you will also have a generous income later, after retirement age.
Because despite living NOW, it’s shit to suddenly have to skimp after age 67.
Pension in brief
When it comes to your retirement, the Netherlands has 3 pillars:
- AOW pension. This is our beautiful social system, and we all get AOW.
- Collective Retirement. This is the pension you accrue when you are employed.
- Supplementary pension. Here’s what you can do yourself that will help you close your retirement gap.
So to close that 40% pension gap compared to our beloved men, we need to get to work in pillar 3. And in the meantime, we are fighting for more income so that Pillar 2 also becomes more successful for us, of course.
How can you close your pension gap?
To supplement your pension, so as not to experience such a harsh drop in income in the future, you can deposit a maximum amount in pillar 3 each year. Yes, there is a cap on this, and this has to do with our friends at the Internal Revenue Service. This is like this: when you start investing for retirement, the government helps you by making it very attractive fiscally. Much of the money you deposit into your retirement account will be returned to you by the Internal Revenue Service. It works pretty much the same as with mortgage rates. On the retirement income later, you pay (hopefully a substantially lower) income tax.
Every year you can use an easy tool (many parties have such a tool, think Brand New Day or Bright) to calculate how much extra annual margin you have, how much money you can put into your retirement account, and where you can thus get a nice tax break.
