Financial security could be around the corner by keeping your income, costs and savings hidden. Not from your spouse - from yourself!
As a student, I lived on EUR 400 a month. Most of it was spent on schoolbooks, hipster coffees and honey nut cereal. I remember working part-time and not spending my paycheck – my salary was deposited into an account I never touched. When I talked with my dad – 20 years later – about how great I was with money, even with minimal means, he laughed.
The entire time I was a student, he explained, he’d paid my rent, health insurance and phone bill. Public transport was covered by the government and my mom still bought my clothes. "You cost us about EUR 1,000 a month, all in all." Woops – and here I thought I was so financially savvy!
But in a sense, he had set me up for budgeting success. I’d accidentally created a system of invisible costs and invisible savings. Most of my costs were covered, and my pay checks went straight into my savings account. This left me with a small scholarship and tips from my part-time job for school supplies, groceries and socializing.
Photo: Sharon McCutcheon/Unsplash
Budget – and then rebudget
Later, when I started my first job and moved into a house with my future husband, my costs skyrocketed. But I recreated the financial situation I was used to: we both paid into a checking account that covered our rent, groceries and bills. 15% of my paycheck automatically went to savings. What was left was the same few hundred euros. I spent it on socializing and my own purchases: it felt as if nothing had changed.
When we moved our family abroad, our finances did a 180 and we built up some debt. However, I soon enrolled in programs with my (now former) employer that deducted long-term savings from my salary, and I signed up for a stock program, which paid out every six months.
Since it felt like we earned less, we adjusted our monthly spending to reflect the new budget. We leveraged the stock program 'bonus' for school fees and flight tickets. The long-term 'hidden' savings with my employer paid off even more, and after a few years we were left with a tidy sum.
Over the years, I used the following systems, to hide income, costs and savings:
Turning back to my dad. I now recognize how incredibly privileged I was by leaning on him as a student, and how he slowly got me used to a system of invisible finances – which catapulted me into financial security at age 21. I recreated the same system it at every step – even when our income and expenses drastically changed. I not only knew how to build my budget, I leveraged the tools offered by financial service providers, advisors and employers to sustain it.