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Lessons from actual monthly budgets in Germany

Budgeting!

This November, the Reddit Finanzen group had an explosion of budget threads. Many users shared then own actual monthly budgets in Germany and then there were shitposts… As Budgeting is an important step towards financial independence, it just made sense to write this post.

Even since I moved to Germany from India, I have noticed that Money is not a topic which seems to be actively and openly discussed. This was a great opportunity to see how people spend and save, and learn from them. Of course, survivorship bias exists on these posts, where people struggling with budgets do not share their stories (and I respect that).

I have handpicked three posts with very different life stages and circumstances. There are many more on the sub-reddit.

A 26 year old data scientist in NRW

26 year old Data Scientist, with a saving rate of 14.5%
  • The actual in hand pay for this person is 2400 EUR/month (Abzuege means payments to pension system, taxes etc…)
  • He has a decent saving rate of 14.5% each month, but is not investing at all.
  • Things at odd is that he is paying as much as his rent (550 EUR) on living expenses (including Hello Fresh). He explains this by sharing that he doesn’t like to cook a lot. I guess this is where he could optimize.
  • He is also paying for insurance for his girlfriend, which is a noble thing to do.

A double income, single child family in Bavaria

24.5% savings rate with a house paid off!
  • Love the amount of detail on this chart, but I find it also hard to navigate.
  • So the poster is a 50 year old with a wife and child, and is an engineering manager in Munich.
  • The total household income per month (without kindergeld/child money) is 6058 EURs. This is an amazing monthly income to have, and this includes around 427 EURs of passive income!
  • Their savings rate is 24.5% (1408 EURs). He also invests over 1k EURs in private pension plans and ETF.
  • The child is probably a teenager as there is a car insurance (PKV) for him.(wrong here, PKV is private health insurance)
  • They have a fully paid off apartment, and this is fantastic, because most people in Germany don’t own a home!

Unemployed Scientist and his Medicine student wife in their late 20s

Unemployed and yet saving 26%
  • This is by far my favorite post, this completely breaks the idea that you cannot save when unemployed! Of course, unemployment insurance is helping the Scientist
  • Their monthly income after taxes is 1736 EUR/month and yet they are investing 450 EUR/month (26% savings rate!! towards financial independence).
  • They do not own a car(car sharing) and live like students.

GetFI Takeaways from these monthly budgets in Germany

  • Savings and investing is possible at every income level!*
  • Your house rental or credit is a massive factor in better savings rate. All examples had fairly low rentals or a paid off house. I find it very difficult to find a house at those rents in my town.
  • The lack of credit card debt is obvious and good!
  • The stereotype that Germans are cautious with savings instruments seems to hold, many saved a lot but invest very little.

*I believe this to hold true only when housing costs stay <40% of your take home income.

2 replies on “Lessons from actual monthly budgets in Germany”

Hi there,
thanks for sharing. Indeed, these are interesting charts. Concerning the first one (data scientist), you noticed the 250€ he spends on HelloFresh. True, he pays for his lazyness to look for interesting recepies and shop the ingredients!
I also noticed the 130€ for internet and telephone. I didn’t know it was possible to spend that amount for it! I pay 10€/month for my 2 GB data and telephone package (smartphone) plus a few bucks that I share with my flatmates for wifi internet and landline telephone.
The data scientist also spends 80€/month for “nicotine”, i.e. he regularly pays money for detoriating his health! At FIWE (financial independence week europe), we didn’t have a single smoker among the participants. That’s not surprising, as smoking means literally burning money, and this doesn’t fit with the idea of saving money to live a good (+ healthy) life.

Concerning the Bavarian couple with kid, “PKV” is not the car insurance, but the private health insurance (Private Krankenversicherung). They spend only 120€ for 3 persons on train/car/gasoline but 200€ on restaurants, 150€ (per person!) on clothes and a whopping 550€ per month on holidays. There is room for improvement, even if they don’t want to live like the unemployed couple in the last example.

Thanks for sharing these interesting graphs and your thoughts about it.

Dear Noemi.
You are absolutely spot on with the nicotine and the internet/telephone. I usually refrain on commenting on nicotine, even when I abhor it, I also know people struggle to get rid of it. My internet costs are at 36 EUR/month, but I have seen many people pick mobile contracts where they are also paying for cellphones (did that mistake ourselves once) where the mobile bill was hitting 48 EUR/month because it paid for the phone! Getting out of these contracts is only possible aftre lock on is over.
Thanks for pointing the health insurance, i will fix that asap! Totally wrong conclusion there.
I must say none of them said that they were FIRE aspirants, but more aimed towards better finances.

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