Personal Finance for the 21st Century

Updated: Dec 14, 2019

Credit cards, Online-Payments and Netflix make spending money easier than ever. A definitive guide to mastering your finances in the 21st Century.



Have you ever checked your bank-account mid-month and asked yourself “Where on earth did all my hard-earned money go?” I certainly have – and I feel like more and more people have the same issue. Between a Spotify-subscription and 15 Paypal-Transactions I had lost track of my spendings not only once but multiple times. And those damn Paypal-transactions wouldn’t even show what they were for.


With digital money, we lose sight of our spendings way too quickly.

Once I reviewed my payments during one of the recent months, I knew I had to change something. On the surface, managing one’s finances sounds incredibly easy: Don’t spend more money than you have and regularly save some cash – that’s the advice we all get from our parents. But with digital money, we lose sight of our spendings way too quickly. Or how often do you really know how much you have left in our bank account? And concerning saving: The interest rates on bank-accounts are currently so low that – to put it bluntly – you might as well store the money under your bed.


Personal finance has become different. And it’s only logical that we need a new, more modern approach to managing one's finances in this age of tech and entertainment. I mean, if I wanted to buy a life-size T-Rex statue, I could do that in a few minutes on my phone without even opening my bank account. That’s crazy. So, what can you do to get your finances in order? And how to save money in the long term? A step by step guide.


✏️ 1. Assess

Without any starting point, the first thing you want to do is assessing your current spendings. Trying to change your spending habits from one day to the other will result in more frustration and chaos than you want. Instead, track what you’re spending money on for a week – or even a month if you have the discipline.


Luckily, most modern bank accounts show your purchases quite detailed if you usually pay by card. That’s already great – but just looking at the numbers for a few minutes won’t change a lot. If you really want to learn about your expenses, it’s better to dive deeply into them. Write the numbers out on paper or in a separate document – you will be surprised by what you find.


🧮 2. Do the math

Now that you have all your latest investments laid out, take and add-up all the spendings that are essential in your life. That will include your rent, heat, food, internet and everything else that you need for living your normal day-to-day life.

The resulting number is your baseline – it’s how much money you definitely need in an average week or month. And then, there’s “everything else” which you don’t necessarily need but want.


How much money do you really need in an average week or month?

By doing that, I found that I spent at least 20% of my income on coffee-to-go and online-services (such as Headspace and old domains) which I don’t use anymore. And on the other hand, I spent way less money on food than I expected.


💸 3. Think twice about what you buy

So how to cut back on those excess expenses? Well, first of all, you shouldn’t completely cut back on the things you want – because a big part of those things makes us happier. And isn’t happiness what we all strive for in life?

Money is value – so why not think twice when buying something.

Nonetheless, there are always some expenses that don’t really do anything – they only satisfy some inner need for a few minutes. I mean, did I really need this third coffee to go last Friday? Couldn’t I just make myself cheaper coffee at work?


What we’re chasing here is awareness. If you regularly question if some expenditure really makes you happier, you will automatically become disciplined about money. I’m not telling you to become a minimalist – if a purchase makes you happy, go for it. But just being aware and thinking about why you spend those five Euros on a certain item makes a huge difference in the long run.


⚱️ 4. Build up an emergency fund

About a year ago, my shower broke – and since I was a college student living from one week to the other I didn’t have the cash to repair it. That’s stupid. It was the moment when I realized that I needed an emergency fund.


It’s better to be prepared than not. So before thinking about investing, it’s very advisable to fill up an emergency fund. In terms of size, a general rule is to have enough money in the fund to live off for two to three months. Therefore, it will largely depend on your current essential expenditures. You could also use one of the many calculators around the internet.


Keep the money on a separate account.

A good strategy for this personal safety-bag would be to keep the money on a separate account and to make an automated payment at the beginning of every month until it’s filled up.


📈 5. Start investing

Once you reach the point where you think about whether to invest, you’ve already come far in your personal finance story. You have your expenses in check, your emergency fund is ready to save you at any time – and now it’s time to think about what you want to do with the rest of your money.

Investing isn't that as hard as it sometimes looks.

Most of us have learned to put money into a savings account or savings book as children. However, since interest rates have severely dropped over the last few years, you could as well leave the money under your mattress. It doesn’t make a difference with an interest rate of 0,1 to 0,2% on savings accounts.


A better alternative would be to invest. For many, investing still seems scary. However, it allows for a yearly interest rate of five percent or even more. And it really isn’t that hard. But there’s certainly a lack of education amongst people, especially in Austria.


There are seemingly endless options for investors nowadays, but as a private person, you should know about the three most important ones:

  • Stocks: Individual pieces of a company. If the company’s value goes up, so does your stock and vice versa.

  • ETFs (Exchange Traded Funds): Collective funds that allow you to invest in hundreds of companies at once. Typically, ETFs are safer than stocks – because when one company loses value it does little to the collective value.

  • Bonds: With bonds, you basically give a company or government a loan with a guaranteed interest rate. Typically, bonds are also quite stable.


Before investing, make sure to do your own research.

For most people, investing in a bunch of ETFs will be just fine. It's simple and they have a stable return on investment. Before investing in anything, however, please make sure to do your own research. We also have an article coming up on that topic with investment expert Larissa Kravitz.


🙋🏾‍♀️ 6. Enjoy yourself!

With all those personal finance tips in mind, there’s nothing that can stop you from becoming a financially independent super-self.


But from time to time, it’s also good to take a step back and enjoy yourself. Because hey, life is great! And now that you have your finances in check, you have more to spend on awesome things.


If you now want to advance your finance skills and also yourself even more, visit our limitless experience on November 8th. The main topic will be money – but the experience around it will offer way more. So if you’re ready to level up your life: The registration is open now.


Photos: Unsplash

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