The 13 Steps of My Monthly Personal Finance Routine

Financial Independence

Having a personal finance routine can help save time and money! For a lot of people, having a strict routine will help them remember essential things. It is the case for me. Each month, I am following the same personal finance routine for my budget. In this article, I am going to describe the steps I am doing every month.

It is great to have a routine. It helps you get more efficient, and like this, you do not forget to do anything. And once you start doing it routinely, it becomes automatic, and you will save time. And time is your most important resource. And following a personal finance routine will help you avoid mistakes and maybe save money in the process!

Of course, you do not need to follow the same steps as me. You should probably not have the same steps. Every people can have different things to do based on the way they are investing or based on their situation.

But I would encourage you to define least a monthly routine clearly. You can use mine as a base template if you want. And why not even a weekly routine?

So, here are the 13 steps of my monthly personal finance routine.

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Can you withdraw 4% of your current portfolio?

Financial Independence

A widespread misconception about the Trinity Study is that people believe that they will withdraw 4% of the current portfolio. If the portfolio is worth 1’000’000 USD this year, they can withdraw 4% of it, 40’000 USD.

But in reality, the withdrawal is based on the initial portfolio at the time of retirement. If you start with 800’000 USD, you can withdraw 32’000 USD of it. And then, you adjust the withdrawal every year for inflation. During the first year, this is the same thing, but these two methods are widely different in the following years.

But what would happen if you were to withdraw based on your current portfolio and not the initial portfolio? Let’s find out!

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How often should you withdraw money from your portfolio?

Financial Independence

I have recently done simulations of how often you should invest to maximize your gains. And I thought that it would also be interesting to simulate how often we should withdraw money from the portfolio while in retirement.

If you are retired and living from your portfolio, you will have to withdraw money from the portfolio to pay for your expenses. For this, you have to sell shares and use the proceeds to live.

But how often should you do that? Does it even matter (hint: it does!)? This is what we are going to see in this article. I am going to use historical to simulate different withdrawal frequencies for different Safe Withdrawal Rates.

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Your FI Number – How much do you need to retire?

Financial Independence

We have already covered a lot on the subject of Financial Independence (FI). However, we need to go into more detail about the FI Number. Your FI Number is an essential Personal Finance Metric.

Your FI number will tell you how much money you need to be financially independent or retire. It is essential to know this number precisely if you want to see where you stand in your journey towards Financial Freedom. It sounds straightforward. But it is not as simple as it looks.

If you want an accurate view of your FI number, you need to estimate how your expenses will be once you are financially independent. And you also need to consider your future income. There is also a second more straightforward strategy where you only consider your current expenses. We are going to see all of that and more!

This article will cover in detail how to calculate your Financial Independence (FI) number.

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The Three Axes of Personal Finance

Earn, Financial Independence, Investing

There are three main axes of personal finance: your expenses, your income, and investing. These axes are the ones on which you can work to improve your personal finance.

In the end, you want to improve your wealth or improve your state of living. Whether you want to retire early or afford an expensive vacation to Hawaii, you can work on these three axes.

In this article, we will see what you can do to improve your financial situation by using the three axes of personal finance.

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Should You Contribute to Your Second Pillar in 2021?

Investing, Financial Independence, Retirement, Switzerland

In Switzerland, you can make a voluntary contribution to your second pillar. These contributions come with some tax advantages since you can deduct that from your income. Therefore, you have a return equal to your marginal tax rate. And this return is almost instant.

However, the money is then blocked into the second pillar. And the returns on that blocked money have been very low in recent years. Finally, you can only withdraw the money from your second pillar if you retire, buy a house, or start a company.

Many people ask whether they should contribute money to their second pillar or continue investing in stocks.

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Emergency Fund – Do you Really Need One in 2021?

Financial Independence, Save

If you are interested in personal finance, you probably have come across the concept of emergency funds. An emergency fund is simply some money available directly that you can use for emergencies. Most people will advise you to get such an account. And they will insist heavily on this subject.

It is an interesting subject since not everybody agrees on the importance of the emergency fund. Some people have an emergency fund that can cover one year of expenses. And some people think you do not need one.

An emergency fund is a good thing. But you should be aware of its cost. It also has disadvantages. And you may not need an emergency fund as big as some people tell you. Too many people put too much emphasis on their emergency funds.

In this article, we are going to see both sides of the story. We are going to see in detail what an emergency fund is and whether you should have one or not.

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How to manage your finances as a couple?

Financial Independence

Today’s post is a guest post by Yasi Zhang from Fast Track, talking about the very important subject of how to manage your finances as a couple. I am very happy to have her as a guest writer today.

Money is a topic most people avoid talking about, so do newlywed couples. It is awkward to discuss money with your partner, but it is an essential exercise to do together as a couple because you are building a financial future together!

Some people have asked me about how to manage finances as a couple, and I find it might be a common struggle for many if you avoid talking about it with your partner.

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Our 2021 Goals – Let’s do even better!

Financial Independence

Each year, we set ourselves goals for the entire year. These goals are varied and cover different aspects of our lives. Many of them are financial since this is, after all, a financial blog. But we do have personal goals as well.

Since we are now well inside January, it is time to set up our 2021 goals. In this post, I will go over our goals for the year 2021. Some of them are very similar to our 2020 goals, but we try to do better every year with our goals.

So, without further ado, let’s take a look at our 2021 goals.

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2020 Goals Review – How did we do?

Financial Independence

It is now time to review of 2020 Goals. At the beginning of each year, we set ourselves some goals. And during the entire year, we track them month after month. Then, at the end of the year, we review how well (or how poorly) we did!

2020 was definitely a weird year, but it is not a reason to give up on our goals or review. COVID-19 definitely had an impact on some of our goals. But not enough to make us change them.

So, let’s see our review for 2020!

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