How to Save Up for Your Old Age While Still Buying These Boots

It seems to be one of the biggest questions in modern life: How can we actually save up for our old age, when there is always this thing to buy, this country to explore or this restaurant to try. Sure, we could just stop spending money on stuff we don’t necessarily need, but this doesn’t really feel like a suitable long-term solution. After all, we’re alive now and we want to feel that way. Even if that means we’re constantly broke.

Right? Well …

Covid-19 is not just a desease, it is also a permanent reminder on how fast the truths of our lives can change. December 2019 was all about christmas and getting the perfect gift for everybody, December 2020 will be about how many people are allowed on the christmas market at the same time – given there won’t be a second wave that locks us all in again. So yeah, everything is ephemeral. Which means, we should really get a go on saving up for our old age, putting money aside for a rainy day (or another Corona shutdown), and maybe spend a bit less on everyday knick-knackery and more on our true wishes and dreams.

But how do we do this? How can we put money aside for later and still feel alive today?

A Good Budget Plan Is Based on Our Lives and Not the Other Way Round

The answer is a budget plan. But not one of those „I promise myself I won’t buy shoes for the next three months“ plans, but a real one. A good one. One that actually works.

STEP 1: We need to know what we want

First of all we need to know what we want in life. Is it the house in the countryside, the camper van or the flat in a vibrant city? Is it a bunch of children or none at all? Do we want to change jobs every second year, stay where we are or even start our own business? If we know what we want, we can estimate how much money we need to accomplish this goal. This is step 1.

woman before green camper van

Is it the house in the countryside or the camper van? We need to know what we want. | Photo by Jakob Owens on Unsplash

STEP 2: What are my earnings and spendings?

Step 2 is to set sail in the direction of our dream life. This includes our private life as well as our professional life. Step two will bring us back from our glorious future to the here and now: How much money do I earn every month (this can be tricky, if you’re self-employed) and what are my fixed costs? It is amazing what we learn about ourselves, when we know how much we spent on what. It’s also the first step of cutting our expenses without missing anything, because we just cut those spendings we never really needed anyways, like the gym we haven’t been to for how long already or the magazine we don’t read.

Tip: Fixed costs are costs you can’t (or don’t want to) cut. For example, if you have to go to business lunch a lot, these spendings belong to your fixed costs.

woman doing calculation with straw hat on table

A good budget plan respects both our wishes and our actual budget. | Photo by STIL on Unsplash

STEP 3: What is left to work with?

Now let’s do the math! What is left over at the end of each month, if we reduce our earnings by our fixed costs? This number is the magic number! This is what we can work with.

Tip: If your earnings vary each month, take the worst month of the year, e.g. when all your one-time subscriptions hit.

STEP 4: Let’s start spending money!

In step 4 we start spending our money. The first bubble we want to fill is our nest egg. We have to ask ourselves this: What do we need for a rainy day? A good rule of thumb is that we have at least three months worth of overall spendings in our eggs nest. You have that already? Nice, more money for your other bubbles. You’re not there yet? No worries. Just dedicate a specific amount every month for your eggs nest and have it transferred automatically. As soon as you have your feel-good-amount of savings, you can use this money for your other bubbles.

Now we already know we can survive on our own for a specific number of months, if everything goes south. Even if it’s just a new washing machine and a scratch on your car in the same week, you got it covered.

STEP 5: Having fun is important!

Step 5 is filling up the fun bubble. Yep, there is a fun bubble! And it is included in our budget plan, because: YOLO, sis 😉 So whether it’s the new pair of boots, the concerts that’s way too expensive when we come to think about it or the glass of wine every second night, this bubble is where we get our money from.

people having fun on spinning chairoplane

Including fun in our spendings is a major part of a functioning budget plan. | Photo by Grace Ho on Unsplash

The good thing about including our spendings on fun in our budget plan is simple: We feel alive, but we know where to stop. If the money we allow ourselves on fun every month is spent, it’s spent. No more losing ourselves in big shopping malls and no more wondering at night, if we have a spending problem!

STEP 6: Take care of the future

Last but not least: step 6, a.k.a. saving up. This bubble is about the future. Would you love to do a world trip in three years time, save up for your own flat or take care of retirement? Or all three of them? How much we can afford to put aside for our dreams and long-term goals is determined by our leftovers every month and what we put in the other bubbles. We have the eggs nest covered, the fun part, so now we know exactly what is left for our future.

If this number isn’t big enough for all our dreams, we can go back to steps 4 and 5. Maybe our eggs nest is already full? Then we have more money every month to put aside for our future. I fit is a fun goal, e.g. a vacation you’ve spoken about for the whole last year, you can also cut back on your spendings in your fun bubble, because you will reward yourself for this discipline with the vacation of a life-time.

Tipp: Don’t cut back the fun spendings for too long. If you do, it will be like you don’t have a fun bubble after all, and this will lead to you lashing out sooner or later.

With this simple method, we have a budget plan that is based on our life instead of the other way round. It just feels great to have everything under control, because this means we‘re on our way to a wonderful future and still lead the life we want right now.

old woman wearing red and yellow straw hat

The way to a wonderful future starts with our very own budget plan. | Photo by Alex Harvey 🤙🏻 on Unsplash

Have fun creating your very own budget plan today!




P.S. Your salary doesn’t match your dreams? Don’t panic: We’re hiring 😉

Main photo by Arnel Hasanovic on Unsplash

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