Key lessons
- Financial advisors recommend the 50/30/20 rule for budgeting. 50% of your net income goes to fixed expenses. 30% goes to fun things. And that leaves 20% to work toward your financial goals.
- The trick is to first reduce the fun expenses to 30% and then see how you can get your fixed expenses under 50%. This automatically leaves 20%.
- This 20% goes into the savings ladder. First, you use this to fill your emergency fund. For most people, the BufferCalculator comes out to between five and ten thousand euros.
- Your emergency fund is really only to be used for emergencies. Only when this fund is completely filled you will start saving and investing for your financial goals. You will thank yourself tremendously for this fund in case you have a setback.