The Key to Financial Peace of Mind: Build Your Emergency Fund

An employer only needs to justify an immediate dismissal without notice, which can only be a case of serious misconduct (theft, violence, trust issues, etc.). Beyond this, an employer can terminate a contract without justification, as long as the legal notice is respected. This is the case both in Germany and Switzerland (and probably in whole Europe), which I can confirm from my own observation and experiences. ?

When a lay off happens, we all employees fall into despair and start thinking about our families to feed, bills and rent to pay for, food to provide and so on... A very traumatic experience for many, when especially you are laid off from your company where you had dedicated decades of your life. ?

Considering how unpredicted each year in this millennial is, I decided to write this blog post to help you build a so-called emergency fund, a financial sanctuary. ?

Let’s start with the tips!?

1. Make an Excel Sheet for Budgeting?

First thing is to view what your monthly net income is after all the insurances and taxes were subtracted and arrived in your bank account. ?

Let’s assume that would be 3.000 € for an employee in Germany. And now let’s put down in the Excel what your fix costs as expenses each month are:?

• Rent for your flat/house?
• Bills (electricity, mobile phone, internet, water etc.)?
• Credits/mortgage payments?
• Subscriptions (Amazon Prime, Netflix, Spotify, YouTube, Disney etc.)?
• Gym fee?
• School fee of the kids?
• Additional insurances ?
• Any other expenses you have to pay monthly. ?

Now let’s have a look what’s left when you calculate

Rest amount = Income - Expenses?

If you see Rest = 0 end of this calculation, that’s very bad news! ?

Well, what can we do about it?

2. Increase your Income?

If you see a BIG ZERO as rest amount in your budget sheet after a whole month of work , there you need to act, immediately. It’s very risky to leave the situation as it is and ignore the consequences. ?

Let’s concentrate on the first thing in the equation: INCOME. And how to increase in the first hand??

• Try to increase your salary by asking your boss for more responsibilities at the workplace. It doesn’t need to be a direct promotion; you can simply ask what else you could add to your duties in order to advance?your salary.?
• If your boss does not agree to giving you a salary raise after you offer taking more responsibilities, search for another job. You will not earn a dime more if you stay there, obviously. The world is full of opportunities, go out fishing. ?
• Start a side hustle (an online business) in the evenings and weekends which brings passive income. It can be something you enjoy and spend gladly your free time on and earn some extra to pay off your credit or help with school fees, or start saving. ?
• Become a financially literate person, do research in your country for investments. When you realize you could earn extra and this by not an active job, your mind will blow away. A?passive income such as dividends, rental income, a social media channel, E-Book sales will make your bank account thrive. ?
• Check your belongings and sell whatever you don’t need among them, be it a couch or electronics, jewellery, old clothes of your kids, basically anything. Each product has a price and a buyer, if you are eager to learn how to make some extra cash.?
• And if you are in Europe, move to a country where you could increase your earnings while the taxes from your gross salary decrease. As a pharma expert, this was one of the reasons why I had moved from Germany to Switzerland. ?

3. Decrease your Expenses?

• You have an online subscription, and you don’t even need it. UNSUBSCRIBE. Write down on the excel sheet all your TV, mobile phone, entertainment subscriptions and consider twice, if you are not better off them.?
• You go to work by car, nevertheless your employer has public transport support, which you could see as a financial benefit to save money. Yes, private cars are obviously more convenient, however more costly. Some families have double cars, my God, it’s throwing your hard-earned money out of window. ?

If you live somewhere in Europe, you could replace a car with a scooter or a bike, E-Scooters & E-Bikes (E-Velos) are also very popular if you wanna spare your energy before and after work. Pretty practical in parking as well. ?

• You have old insurance payments from your bank account, which you have neglected to take care of. If you have never claimed insurance for years now, do you really need it? Use your money wisely. ?
• You are living in an expensive neighbourhood just to the sake of it, prestige maybe? Rental costs are mostly 1/3 of our salaries, and it’s the biggest expense probably in our budget sheet. Try to optimise this cost, could you move somewhere else? Closer to work to reduce transport/car costs or another neighbourhood or Kanton with lower taxes? (This is very relevant for Switzerland) Just give some thoughts around it too. ?
• You might use your mobile call & internet provider for ages, but the rate is outdated. We are in 2023, check for a lower priced rate with higher internet packages and lower call fees.?
• You have a fitness studio membership, where you never make it to go before or after work. These memberships are sometimes for our conscience as we think “Well, I can still go to the gym, when I ate too much.” What about considering a cardio treadmill or portable home cardio equipment? While you wish to watch the news or your favourite program on TV, you could still do some activities for your body in the comfort of your home. And repurpose the money, instead of wasting it with memberships. ?

And how does your excel sheet look now? Is it more promising and more hopeful? Do you see your savings increase after all these changes??

Well, it should, because I have applied these tips already in my life and math proves that it works!

THAT IS HOW YOU COULD BUILD AN EMERGENGY FUND!?

It is one thing we feel desperate due to financial issues, on the other thing we have responsibilities for our families and loved ones. We can therefore not lean back and wait for someone else to save us from our financial situation. ?

Hope this blog post has helped you to see how you could make some changes in your life leading to a financial peace of mind!?

What is your tip to build your emergency fund? How much money do you think is necessary in your country to survive at least 6 months? ?

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Yours truly,

G?k?ehan Pürs?ken