Hello everyone!

Today I am going to talk about money. We all know it, we all need it (in one way or another) and we probably all would like to have more than we already have. We can talk about how having a certain amount of money facilitates life but on the other hand money doesn't make happy neither. I am going to write about how I spend my monthly wage. As there are a couple of rules I have implemented to myself to be sure I stay on track. I don't have active plans in terms of FIRE or other principles, but I definitely want to make my money work for me as a nice extra besides my wage.

My division: 40:20:20:20

Maybe you know it or maybe you don't but there are several tactics imposed by literature and different persons saying that one or another way of dividing your income is better. I've read a couple of these theories in the past, which definitely helped me to shape my own strategy but in the end I think everyone has to choose himself which strategy he or she will use.

A bit of context, I recently made a big purchase so my funds are kind of depleted at the moment. It's the reason as wel why I have so many divisions in which I put money. Let's talk about the different divisions now.

The biggest one are my living expenses which are about 40% of my wage, these include food, house, clothes, healthcare, leisure activity, etc. Not completely sure if this is seen high or not but I have to admit I don't count my money that much before I spend it. Although I want to have my money work for me on the one hand, I still want to live as well. And yes going to a restaurant once in a while is part of living for me as well. Could I save on these payments? Yes, definitely! Do I want to? No! Although as we recently made a big purchase, we are saving on such expenses to be able to add some more money to the emergency fund.

Speaking about the emergency fund, it's one of the 20% funds. In general I want to have +- 4 to 6 times my net wage as an emergency fund. Nowadays it's depleted so I have to rebuild it once again. Nothing too bad, it will just need some time to recover. At the moment, I am adding more money to it as I would feel more comfortable when I come closer to 4x my wage in this fund.

The other 20% is for investing. At first I tried stockpicking, I started right after the corona pandemic boom and guess what, lost some money. Luckily I quit fast enough and changed my strategy to go for etfs which are spread amongst the world. As I am not educated enough to read balances in detail, I thought it's a better strategy. I enjoy it being more passive as well compared to after every quarter having to wait for the financial reports of the firms I followed. As I want to grow my emergency fund faster towards the 4x my wage, I am nowadays utilizing the money which I would normally invest to build up the emergency fund faster. A couple of months until I feel comfortable enough to start investing once again.

The latest 20% is a personal loan I received, which I have to pay back in the coming months. Nothing too devastating as I only need to keep paying back for the coming 9months. Afterwards I'll utilize this spare 20% to add to my investments as I have added less than I wanted to them lately.

Conclusion

The above dividing is because of recent irl events. In about a year, I hope to move back towards 40/20/40. 40% living expenses, 20% emergency and 40% investing. Remember that you shouldn't invest more than you can afford to lose but on the other hand, inflation will eat your savings ;)

Thanks for reading! Feel free to ask questions, I would be more than glad to elaborate.