Money: What is enough?

The funny thing with money is that it often seems like you never have quite enough. When I was 18, and went to college, I could make ends meet with 400 gulden a month. When I was 21 I got married, I was still at college, but it was hard to make ends meet with 700 gulden a month (which – by the way – really was rather little). Then I started to work as an architect and suddenly I had 1500 mark (since I worked in Germany) to spend each month. That went well for some months. But our spending had changed too. So, within a year we seemed to be barely making ends meet with 1500 mark a month. When I was 40 I earned a whole lot more, but (you probably know where this is heading) again it seemed it was barely enough. Obviously changing circumstances, like awesome kids, a house etc, play an important part in such stories. Fact remains, money seems to be always slipping away. And if you are not aware of your income and expenses it might look like you are being robbed all the time.

Therefore it is a good idea to start with some disillusionment. How much money goes where? For instance, try to keep a cashbook for some time. It is brilliant little tool that enables you to make better and clearer choices as to where your money is going.

This brings us to nr. 1: What is enough?

To get closer to an answer lets start with the following:

1. Start with putting down each € in a cashbook. Create an overview of all your fixed costs (rent, insurance, pension, tax, subscriptions, and other stuff). Then, write down all your variable costs (food, cloths, entertainment, presents, sporting, hobbies, etc).
2. Create a quarterly balance-sheet, and find ways to spend less money on a structural basis. Especially try and look at the variable costs!
3. Create an overview of your consumptive debt (the stuff that you have bought a loan, like cars, huge TV’s etc). Develop a plan how to get rid of these loans as smart and as fast as you can. All the interest is money thrown away!
4. Make a half-yearly balance-sheet. Find ways to simplify up even more, to structurally get rid of those consumptive debts.
5. Find the support of a skilled ('moneywise') friend, who can give you advice, and feedback.

Doing so you will find out more and more just what is enough. And if you do, you will be able to get to work with the following 3 steps. With which we continue in the next blogs.

Until then, good luck figuring it all out!

Paul