Personal Finance

Budget

The pie chart below represents how we spend our family income in Belgium. Both of us are working.

You probably want to know where to start. Right? Every 3 months, I review my recurring expenses, and try to reduce them to a minimum. This makes sure we have a higher discretionary expense budget for doing more fun things.

The rest of it is pretty simple, invest 15%-20% of your net income for retirement, and don’t touch it. We try to save an additional 10% for short outlays such as job loss, vacation etc.

How much should you keep in your checking and savings account? Deduct your retirement or FIRE savings from your average salary, keep that amount in your checking account at all times. Every month you receive your salary, you top off your checking account to match that amount.

Multiply the amount you keep in your checking account by 3 or 6, that is the amount of money you should keep in your savings account.

If you’re into peer to peer lending, some platforms such as Mintos have a secondary market to sell your investments. It would be sufficient to keep just 3 months in your savings account, and just invest the rest in your peer to peer lending account. Since peer to peer lending generally offers stable returns with adequate diversification, you can withdraw it at any time. Make sure to check out all platforms here.

Net Worth

In the chart above you’ll find the following categories:

  • Cash: Checking, saving, credit card
  • Investment: General investment accounts
  • Retirement: Legally locked until legal retirement age.
  • Assets: Vehicles, real estate, …
  • Debt

Tips

Utility bills

Unplug or turn off electric devices when not used. Use the right light bulbs and plan wisely when you run your washing machine and/or dryer. You can easily save 50% on electricity with the right habits.

Rent or buy?

Let’s outline all the expenses for buying a house in Belgium. Overall, our choice for renting was simple. The vast majority of the houses in Belgium are expensive if you’re looking to buy, and typically they require renovations.

If there are so many empty apartments available for rent at half the price of a mortgage (if you were to buy a decent house), what would you choose? Save & invest the difference?

RentBuy
  • Recurring: Renter’s insurance (required by contract?)
  • Recurring: Fire insurance (required by contract?)
  • Recurring: Tax
  • Recurring: Maintenance (1-2% of house value)
  • Recurring: Insurance
  • One-Time: Notary (1.5-2% of purchase price)
  • One-Time: Registration (5-15% of purchase price)

Typically, home-buyers also insure their house better than renters, so you can definitely expect a higher premium.

Cash-back credit cards

Look for a cashback credit card, and automate all your recurring expenses on the card. Make sure to pay off the card at the end of every month. Also evaluate the annual cost for the card.

I strongly recommend not to use the cashback card for any other stuff, as it may create a bad spending behavior that will make you focused on the cashback reward.

Our credit card from BeoBank, has a 200 EUR cashback limit, and only costs 5 EUR per year to own. Typically we get 1% cashback on every purchase.

If you’re a frequent traveler, get a debit card from TransferWise¬†or Revolut. But TransferWise has more currency options, making it a more viable option. I could recommend cashback credit cards or rewards credit cards too, but the European ones generally carry too many fees with them when spending in foreign currencies.