One of my favorite Sunday night pastimes is to go through my portfolio and decide where I want to invest in the coming week. Monday mornings the stockmarkets open, which means: my money tree grows, and with it: my financial freedom. Some weeks I don’t invest at all, some weeks €100, other times €500+. Investing for me is a hobby, however, it’s also a possibility for me to say ‘Fuck You!’ if I ever encounter a situation where I’d be financially dependent on someone/something.
Having ‘fuck you’ money is incredibly important for women to have. You’ll be able to leave a job you’re not comfortable at, you’ll be able to walk away from a bad relationship, you’ll be able to pack your bags and say: ‘fuck it, I’m out of here’ and travel abroad for 7 months. It’s a safeguard for never having to depend on someone else providing you with financial security. It’s better: it leads to financial freedom.
- Secure a (full-time) job so that you can start to be self-dependent. Studies show, these days, more women than men graduate with a degree, however, the amount of men and women in the workplace still isn’t at 50-50%. Unfortunately, many women decide to work part-time once kids come. This results in women having less disposable income, saving less for their grey-days, and in general: having a very small savings buffer for unforeseeable expenses, let alone the economic stability to choose a life they’d like to pursue. Take the tough discussion with your (ex-)partner that you too would like/need a full-time job. Perhaps you can both work 1 day less/at home or hire a nanny if need be for a day or two. Even though the cost of a nanny for 7 hours might be the same as what you make in 1 day, it’s worth it in the long run. You won’t need a nanny for the rest of your life, but you’ll need a cash influx throughout.
- Pay all your bills, creditcards, insurance, rent. No comment needed I guess.
- Pay off all expensive loans. (more on Project Debt Free by 30 here). Right now my studentloan interest is at 0,0%! And up until 3 weeks ago I had a mortgage at 1,37%. Sometimes I paid off larger chunks of money at once, but my monthly payments are always higher than what I should pay (mortgage costs were €450 per month and studentloans €200). Just like economic wealth, economic debt has an interest-upon-interest effect and can spiral forwards. If you really need a car, can you find one that doesn’t require a loan?!
- Save up for a buffer to cover the unforeseeable. If you own property, have kids, a dog, a car, washingmachines etc, your buffer should be higher than when you for instance rent an apartment and don’t have children. The size of your buffer basically depends on what your life looks like. In general though I try to uphold a 3 month net-need sum. What do I mean with net-need? At the end of the month, I generally need to have a net (after tax) €1600 every month in order to pay off above mentioned debts, mortgage interest, insurances, gasoline, dinners, gifts etc. So that would mean I need to have €4800 on a savings account that I can access anytime, anywhere. Right now, the interest rates for savings are superlow. I have one at 0,7% which is the highest I could find/fix. So not a dime more than those 3 months stays in that savings account.
Note: now that I’ve sold my apartment and am temporarily living in a rental, my downpayment stash is also residing on a steady savings account.
- Start investing in your freedom! The Swedish stockmarket has had an average growth of 8% per year for the last 50 years. The Danish stockmarket is the strongest to return (worldwide!) after the financial crisis of 2008. No savingsaccount at the bank will give you this type of interest rate. Not even housingmarkets have outbeaten the stockmarket on steady returns. The key here is time in the market, not timing in the market. The markets for example had a slight ‘correction’ this January. It is important to keep your head cool and continue on. Keep filling up your fundsavings, hold on to stocks that have growth over time, even if there are dips here an there. If you invest continuously in your portfolio.,you’ll buy at both the peaks and downturns. Overtime your money will grow. As a rule of thumb: start slow with 10% of your income per month. First grow your buffer, and then break out your online broker portfolio.
- Turn down your costs. As much as F-U money is about saving up, it’s also about scaling down. Before I actively started investing, I could shop a random lipstick, bought take away coffee, or went into a zara once every month for the latest jacket. A €4 take away latte every workday adds up to €960 (taken over 46 weeks, rather than 52, vacation periods you know). If you put the initial €960 into an investment account, and continue to fill it up with €80 per month over 20 years, you’ll have a total sum of €51,851 at the end. I figured take away coffee wasn’t that important to me anymore, it get’s cold after 2 minutes either way.
And so, I keep pouring in money into my stock portfolio, week by week, month by month so I can make clear decisions on the type of work I want to do, which type of housing conditions I’d like to live in, the destinations I’d like to see and being able to say: yes, I bought this €800 bag from my earned cash, what are you going to say about that?! In the end, wouldn’t we all like to be able to swing a packet of 20’s to some douchebag asking bullshit questions?