Five things you (really) should be doing with your finances

It has always puzzled me that there is very little education on how to deal with money. I’m not trying to bash our education system, because I have benefited from it hugely. However, I find it surprising that things like law and budgeting are not part of our education. I can hear people think “well surely, that’s the responsibility of the parents right?”, but to be honest: many parents might be struggling with this themselves.

So these five tips are not groundbreaking. They are not new. Neither did I make them up myself. You can probably find them all over the web. You probably heard them all before. In this case, the power is not in the knowledge, but in the application. I know that if you start applying these, in time you’ll find yourself more on top of your own finances. So I trust these tips are helpful.

Know what’s going on

This really is step one. And I know some of you will think of this tip as a no-brainer or even a waste of time, but I also know some of you are ashamed of your lack of awareness of what’s actually happening on your own bank account. 

Checking your account regularly to see what’s happening helps you to become aware of what you are spending on. That will determine what you could be saving on. So many of us spend on things that we don’t need. It reminds of that famous quote that goes:

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like”

Which is so true. Be aware of what’s happening on your account. And with current technology this doesn’t even have to be a manual and strenuous exercise anymore (even though I believe in the power of manually going through your expenses yourself). I use the GRIP app (check the Apple store or Google Play) and find it very useful. I can analyze spending patterns per category. I can also formulate budgets, which leads me to my next tip.

Set a budget

Yes, there we go. I used the b-word. Things are getting real! Making sure you know what is going out and what is going in is the first step. The next step is actually putting in writing what you should be spending – and then sticking to that. Starting a budget is easy on paper (excuse the pun), but might be harder in practice. Start with what you are earning every month and if applicable, add your other streams of income. Then start adding all your monthly expenses. I usually make a distinction between monthly costs and more infrequent costs. Because the latter means I should be saving up for these costs when they come (more on that later). 

Setting a budget will help you to take hold some of your spending patterns as well. We have a monthly budget for groceries for example, which helps us spend within that budget every month. Because we limit our grocery expenses, we can spend more elsewhere. We create room to be more generous. You can do the same for your fashion expenses or your dining out. You will see the difference it will make. When you can stop spending in areas you might want to spend less in, you can spend it otherwise. You can start directing your expenses and that way you take a hold of your financial life.   

Start saving

We touched on saving just before, but there are multiple reasons to start saving: 

  1. The first is because not all your expenses are monthly – some come once or twice a year. But you know when they will come and you know how much they will be in advance. That means you can start saving to cover for them when they come.
  2. Some expenses come unexpectedly. That means you need to create a buffer to be able to carry these costs. This might be your car troubles, maintenance in the house, a dishwasher breaking down (this happened to us recently) or something in that category. You don’t know what expenses are coming, you also don’t know when these expenses are coming and you also don’t know how large they will be. The only certainty you have is that some day, you will have some of these expenses. So it’s best to build a buffer so you can actually deal with these sudden costs.
  3. The third is that you actually might want to spend on something. Maybe a holiday, maybe a new sound system, a new camera or a new guitar or a new car – but it’s a big expense. Start saving monthly and you will have the benefits of not having to lend money, not hurting your budget and the suspense of building up to something you really want. Also, this way you prevent large impulse purchases.
  4. This one might not apply to everyone: you might want to start saving for the next generation. Maybe you have children. Maybe you don’t. Maybe you plan on having them. It’s costly. Raising them is costly and putting them through education is even more costly. If you start saving early, you spread out the monthly costs. 

Saving has never been the most sexy word in society. At least not in the financial sense. I’m also quite sure it will never become that in the future. However, it’s a habit that too few people have. It’s so easy to get used to spending what you have, even if you are in a high-income job. Different sources (e.g. this one) state 20% of your monthly income is a good amount to be saving. But if that’s not attainable, make sure that it is a significant proportion. Maybe the most important thing here is to build a habit of saving.   

Start investing

Investing might sound scary. It might sound like a job for the professionals. But with technology nowadays, it’s very accessible and easy to start investing. And not all types of investments are high-risk and difficult to understand. With many banks it’s now possible to do monthly automatic investments into mutual funds for example – so you can invest the same amount of money, independent of market circumstances. Benjamin Franklin, author of the Finance classic The Intelligent Investor (get it here or here), is famed to say:

“Investors should purchase stocks like they purchase groceries, not like they purchase perfume”

Benjamin Franklin

Another quote I really like concerning investing is:

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Paul Samuelson

My advice would really be: take some first steps, even if they are baby steps. Make them regular and become consistent in investing. Learn from it. Work towards investing a proportion of your income. And don’t feel you are too young or too old to be thinking about starting to invest. I bought my first stock when I was 18. Best to learn when you’re young!

Have some financial goals

Finally, have some financial goals. These might be short term, mid-term or maybe even for retirement. Or most probably, a mix of all of these. Maybe it’s to pay off the student debt or some other type of debt. Having goals and coming up with a strategy is key in growing in the area of finances. 

Formulating financial goals feels a bit like entering the destination in Google Maps. When we went to Austria in December we entered our destination and started driving. Underway, the directions changed from time to time due to accidents. The driving time changed due to road works. But in the end we reached our destination, because we entered it and started driving. Something similar applies to our financial world: we need to decide what our destination is. That determines how we can live towards that destination. Underway things might change that affect the journey, but the most important thing is to keep moving. 

How are you getting along with all of this? Are you working towards your goals or do you need some help? 

12 thoughts on “Five things you (really) should be doing with your finances

  1. Very well written, Loey! Indeed many adults even don’t plan well themselves. How can we educate our kids? I need to wake up.


    1. Thanks for reading and replying Xiaolian! Some of my friends have started helping their children apply these principles with their allowance from a very young age. I think we can help train our children in the way to go by talking about it and helping them do it!


  2. Loey this is extremely helpful. I would like to advertise it for you. I reckon you could drop the opening line though, as it could be interpreted as Christians shouldn’t be talking about money 🙂 (I realise you are trying to do the opposite … could have more punch jumping straight into your 2nd paragraph)


    Steve Warren / Senior Minister

    Every person transformed in Christ and empowered for purpose.

    C3 Church | Amsterdam | Almere + 31 (0) 20 33 123 66 Paasheuvelweg 24 1105 BJ Amsterdam



  3. I’ve questioned this before, why don’t we get educated on how to deal with money and taxes.

    I enjoyed this, I will check out the Grip app. Afraid that it will unveil my shoe problem 😉


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