Inflation: How to save and provide for it
Do you keep asking yourself why is there so much month left at the end of the money? And you don’t even dare to think about the next ten, twenty, thirty years in view of inflation and all the rest of it? We have found tips on how you can save, invest and make provisions in times of crisis.
When a carton of milk in the supermarket suddenly costs more than a third more and coffee beans become a luxury item, we get queasy in our decaf stomachs. War-related inflation hits us right in the middle of the stock exchange after two severe years of Covid and suddenly there is much less left than usual at the end of the month.
If you are asking yourself more often how you can make ends meet better and maybe even put a little something aside: We feel you. And that’s why we asked one of the leading specialists for pension and financial solutions, Swiss Life Select Austria, for practical and simple tips that you can use to save, make provisions and invest even in difficult times.
First of all: We know that the tips are unfortunately not feasible for everyone. In Austria, more than 17 percent of all people living in the country are currently affected by poverty. If you feel financially at risk, there are welfare and minimum income benefits available to you to claim. Current events can also have a strong impact on mental health.
Save smart with the 50-30-20 principle
Are you familiar with the saying? “Don’t save what’s left after spending, but spend what’s left after saving.” It came from Warren Buffett, one of the most successful investors in the world – and he should know. What’s the best way to do this? For example, you can use the rule of thumb that you set aside at least 10 percent of your salary or wages. Ideally, you go straight to the 50-30-20 rule and do a little more with it.
50 percent of your income is used up for essentials such as rent, electricity, gas, mobile phone tariffs, insurance premiums and the like. Another 30 percent is left over for so-called non-essentials: your free time. These include gym and streaming subscriptions, restaurant visits and the sociable after-work beer. But beware: Often, people take out subscriptions in the heat of the moment and end up as passive permanent members aka deadbeats in the register.
Identify and eliminate cash guzzlers
Compare your bank statement with your actual everyday life: What do you really use and what would be advisable to maybe cancel? And feel free to put your hand on your heart and check the calendar to see when you actually attended the last piloxing class and which streaming services you use regularly. And the last 20 percent? You guessed it: They have savings potential and can be placed in a second account, in a private pension scheme or, or, or.
Do you find it difficult to keep track of the money transactions in your account? In order to be able to balance your income and expenses better, Swiss Life Select Austria recommends household book apps such as MoneyControl, MoneyManager and Wallet by BudgetBakers. And one last tip: If you can, put half of that in your savings account for every salary raise. A penny saved is a penny got, and over time it accumulates to a solid sum.
Take a look at your life goals – from the dreams to more realistic
How can you avoid being hit in the neck by reality in the coming years and decades? Correct: By turning around beforehand and staking out the facts a little. Saving for the sake of saving is only really motivating for a few anyway. At best, you will end up with your own fixed roof over your head, a healthy pension or a pony. After all, life goals look different for all of us and sitting down for a few hours and really thinking about how you want to live later works wonders for the future. Draw a vision board by hand or digitally using Miro or Mural and then check in the second step whether the goals you have set are smart.
In this case, Smart stands for: specific, measurable, achievable, relevant and time-bound. Ask yourself: Do I want to own property? House or apartment, and where? How much will this cost me and (how) can I afford it? Am I willing to save for it? And when do I want to have achieved these goals? These are your first steps towards financial independence. Incidentally, you can also get help from professional financial experts without any obligation. Simply make an appointment with Swiss Life Select Austria and let the professionals calculate your wishes. Better now than never!
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Invest: Inflation as an opportunity
It seems a bit contradictory and almost cynical to talk about investing and even the “usefulness” of inflation in an economic crisis, also given the economic policy background of the current crisis. And yet it is important to make provisions, especially in difficult phases, and to think about your future. Because of inflation, the money in your account loses value over the years. So what’s the point of saving, you ask?
Because savings are important as a short–term reserve. So it’s best to have about three times your net wages saved up. This way you can prevent stumbling blocks in life throwing you off track. Anything beyond that you can invest. In the medium and long term, a portfolio of funds, ETFs (= exchange-traded funds), bonds and equities counteracts the depreciation of money. With good advice, the risk is manageable and you can invest from as little as 50 euros per month.
Preparation better than Losing out
Especially in times of crisis, we sometimes find it difficult to be optimistic about the future. Everything seems more difficult, expensive and complicated. However, an honest, realistic look at the status quo can help you put some peace of mind to rest, and come to terms with it early if you want to maintain your standard of living later on. A first step is to pull your pension account statement. You can do this with a mobile phone signature or citizen card via the social security portal.
Then type the numbers and data into the pension calculator of the Chamber of Labor (Arbeiterkammer) or Wiener Städtische and you already have an initial overview of your current pension scheme. If this is looking a little thin, you might want to consider private pension insurance and start putting a little extra money aside each month for later.
By the way: The topic of pensions is particularly important for women, because statistically speaking, they still receive significantly less pension than their colleagues due to the gender pay gap. But other supplementary insurance could also be important for you to reduce future worries, such as accident or disability insurance. It is best to get advice without obligation and find out how you can later finance your standard of living without any problems.
Do you now know how to keep your finances under control and want to do something fun in Vienna? Perfect! We wish you happy budgeting!