How much money do you need monthly

How to find the right balance between income and expenses? Exactly how high are your fixed costs and where is there still potential for savings?? Calculating your monthly expenses is actually quite simple and will help you a lot with your financial planning. Read here how much life costs per month and how easy it is to set up a budget plan. Ready for financial insight?

Calculate household expenses

It’s easy to lose track of household expenses, so you should regularly take stock of your cash or draw up a good budget plan. We show you how.

  • How much does it cost to live a month?
  • What role does a budget play in financial planning?
  • How to draw up a budget?
  • What is the 50-30-20 rule?
  • How much does it cost to live each month?
  • What is the role of a budget in financial planning??
  • How to draw up a budget?
  • What is the 50-30-20 rule?

How much does life cost per month?

To make a cash budget and know how much money you can spend or set aside, you should break down your monthly expenses in detail. In the beginning, it is advisable to first get an overview of the fixed costs, i.e. the living expenses and other fixed expenditure items. This will take some time if you are doing this for the first time. In order to get as accurate a result as possible, you should also base your calculations on exact amounts. That is, look at your bills and break down the amount for each month. However, you can also use rounded estimates or lump sums for an initial, rough overview.

Tip: We recommend you use an Excel spreadsheet where you enter all the items vertically on the left and write down all the months horizontally, at the top. Of course, you can also take a DIN A3 sheet and manually record this table.

The following fixed expenses occur in most German households:

  • Rent costs or loan installment for home ownership
  • Water and electricity (possibly gas if you cook with a gas stove)
  • Heating (gas, oil, pellets, wood – the easiest way is to divide the yearly total by twelve months)
  • Insurances
  • Taxes and fees (for example, garbage)
  • Mobility costs: bus or train ticket, car or bicycle insurance, parking space rental, gasoline, car tax, leasing costs, motorcycle costs
  • Media: internet and phone connection, cell phone, GEZ costs, streaming services, pay TV
  • Food
  • Drugstore items and cleaning products
  • Clothing and shoes
  • Pets (don’t forget dog liability)
  • Contributions: Unions, clubs, associations, gym, library card, daycare center
  • Leisure activities: cinema, restaurant visits, cultural subscriptions, magazines
  • Pay off credit for installment purchases

Costs of a family

The cost of living for a family increases year after year, and often more than the income.

Add items that do not belong to the classic monthly expenses, but are also incurred:

  • Medication or co-payments for medical bills
  • Travel expenses for vacations
  • Gifts
  • Furniture and electrical appliances
  • Decorative items for the home
  • Hairdresser, beauty salon, barber shop
  • Donate
  • Costs for work in the garden
  • School equipment: school books, new pencil case, notebooks, pens, new school bag
  • Craftsman bills

You can either divide these sums by twelve months and allocate a partial amount to each month, or you can only allocate them to the months in which you actually spent the money.

What role does a budget play in financial planning??

Keeping a budget or a budget book lets you keep track of your monthly income and expenses. This will help you discover items that you may not have thought were that large or substantial. This is where savings potential lurks: money that you can save with little effort and a little discipline and add to your financial planning. For example, to build up equity for building a house more quickly, to create a nest egg, to save for your dream kitchen or to increase the savings rate for your home loan and savings contract. If you want to apply for a loan, the bank will subject you to a credit check. Also to be prepared, it is worthwhile to take a look at your cash before talking to the bank advisor. Because so you know in advance the amount that you could pay off monthly without having to tighten the belt too tightly. In this case, however, it is very important that you are honest. Otherwise, sooner or later you will be threatened with personal insolvency.

How to make a budget?

You do not need to be trained in economics or business administration to prepare a budget plan. The first important decision here is: How do I keep my budget book?? Oldschool on paper, for example in a vocabulary notebook? In an Excel spreadsheet on the computer? With the help of an app? Or by means of a tool on the online banking site of your house bank? It must be easy to use and quickly accessible for yourself. For those who quickly forget spending items, an app on the smartphone or a vocabulary notebook is more the way to go, because you can enter the amount spent there immediately after purchase. If you still remember the coffee to go you got with your colleagues in the afternoon after work, you can also keep a budget book on your computer from home.

And here we go: Enter your income at the beginning of the month and assign an item name to the various monthly expenses. Here, too, it depends somewhat on your personal taste. Is "warm rent" enough for you as an expense item? Or, you may want to be able to check whether recently implemented electricity conservation measures have helped? Then you should break down rent and utilities separately.
Now enter the exact amount of money spent in each column. At the end of the table, your income is compared with your monthly expenses.

Father and daughter count money

Pocket money is also a monthly expense – and you can learn to save at a young age.

Some budget calculators on the Internet, where you can get a first overview, use flat rates. However, these are only reliable to a limited extent. In Germany, rental prices vary so much from state to state that an average price does not have to match your reality. On the other hand, these household calculators give you a first rough estimate of how you stand financially. And if the calculator shows you that you theoretically still have 300 euros left each month, but you are left with two euros at the end of the month, then you know that you need to tweak your financial planning and urgently need a budget book to control your monthly spending.

What percentage of salary should car, rent and food make up each month?

In most households, rent, car, or mobility, and food will be the three biggest items on the list of monthly expenses. But what should be the maximum percentage so that there is enough money left over for everything else in life??

Housing, food and clothing accounted for around 51 percent of private consumer spending by a household in Germany in 2018, according to the German Federal Statistical Office. On average, that was 1.390 euros per month. Accordingly, the total consumer spending was 2.704 euros, which is 10.5 percent higher than in 2013, and 31.2 percent higher than in 1998, respectively. The second part of the monthly expenditure of families in Germany is made up of non-consumption expenditure, i.e. insurance and interest on loans – these averaged 484 euros per month.

On average, monthly expenses break down as follows:

  • Housing: 34 percent of consumer spending
  • Food: 13 percent of consumer spending
  • Mobility: 14 percent of consumer spending
  • Clothing: 5 percent of consumer spending
  • Leisure, entertainment and culture: 11 percent of consumer spending

The rest of the monthly consumer spending is divided between communication, education, interior decoration, restaurant visits, health, goods and services.

On average, households in Germany spend 61 percent of their consumer spending on cars, rent and food – but this is not 61 percent of income, because non-consumer spending is also deducted from income. By the way, on average, an employee in Germany in 2018 has 24.077 euros net earned. That makes 2.006 Euro net monthly. So if you are a single earner or live in a single household, the input figures are not correct for you, but statistically the percentage of your income is.

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