Pattensen.
The salary is often spent faster than you think and there is little left at the end of the month – saving seems impossible for many people at the moment. There are very simple methods that can help you make lasting changes to your spending habits. The pot model, for example.
This budgeting model is an effective strategy for maintaining your own finances and sensibly dividing your money across all important areas of your life. In addition to the positive side effect of suddenly using money more consciously, it is also easier to save in a targeted manner. Below you will find out how you can use the pot model and change your spending behavior.
Bring more structure to finances
As a rule, the salary is transferred to the account at the beginning of the month. However, it is often the case that more than half of this income has already been spent by the middle of the month. Most of the time there is hardly anything left to save or even invest. This repeating pattern is primarily due to confusing finances. The so-called pot model offers a solution to break this. This approach makes it easier to manage your own money.
The pot model is implemented through income budgeting. This means that the money is distributed across different pots of money, each of which is allocated to a specific purpose. These are (1) fixed costs, expenses for (2) leisure and entertainment, (3) savings and (4) investments.
By allocating a fixed amount to each of these areas, it is always transparent how much financial resources are available for certain expenses. The division takes place in advance and should be planned as realistically and consciously as possible.
Structuring the individual pots
The pot model makes the distribution of expenses clearer. If all the money is in one account, this quickly affects your financial overview. This encourages impulse purchases and often prevents savings goals from being achieved. It becomes easier if the income is divided into individual budgets – i.e. individual pots. What this distribution actually looks like depends on the individual situation, as there is no general solution for this. However, a variant that has proven itself in practice and is realistic for most types of income is the following:
Fixed costs (50 to 60 percent): This pot includes all unavoidable, recurring expenses, such as rent, insurance, food, telephone, cell phone and internet costs, mobility and the like. Since all fixed costs are usually debited monthly and make up the majority of the budget, 50 to 60 percent of your income is earmarked for this. It is also advisable to use your normal checking account.
Leisure expenses (10 to 20 percent): Around 10 to 20 percent of your regular income should be earmarked to finance those things that are considered amenities and are fun. These include, for example, hobbies, visits to restaurants and events such as concerts or theater. A separate account is recommended for this pot. Alternatively, you can even put the corresponding amount aside in the form of cash. That sounds old-fashioned, but it has a decisive advantage: you can see exactly how much money is left for leisure expenses.
Savings (20 percent): For the savings pot, 20 percent of your income should be transferred to a separate savings account immediately after your salary is received. This means it is immediately protected and out of sight.
Investments (10 percent): Investments include everything that is intended to build wealth in the long term. These include stocks or real estate. At least 10 percent of your income should be earmarked for this purpose. Ideally, you should set up a depository to which, ideally, an automatic transfer will be made at the beginning of the month.
In order to implement the model optimally in the long term, the pots should be checked again and again and adjusted to the financial situation. If the salary increases or life circumstances change, the amounts in the budget plan and its automated transfers should be adjusted. Moderate consumer behavior without excessive debt helps ensure that the budget is distributed as best as possible and grows as quickly as possible. This makes it possible to build up reserves permanently and effortlessly.
About Emilia Bolda:
Emilia Bolda is an entrepreneur and founder of the Investiere.Dich.Frei coaching program. She supports women in acquiring the necessary knowledge about stock market trading in order to become financially independent. In her online coaching, she imparts comprehensive knowledge about individual stocks, ETFs and other financial instruments so that her participants can manage their finances independently and are no longer afraid of the stock market. Further information at:
Press contact: Investiere.Dich.Frei Represented by: Emilia and Christian Bolda Email: [email protected] Website: Press contact: Ruben Schäfer Email: [email protected]
Additional material: www.presseportal.de Source: Invest.Yourself.Free
