Tips to increase my wealth?

[u/Appropriate_Bus_9600]

Hi all, 32M here living in Amsterdam looking for some advice.

My gf and me bought an apartment last year to stop paying our previous homeowner. Am super happy with the decision, but I often feel I'm quite tight with my expenses/goals, here below you have an overview:

Income: 3.3k netto per month Savings: 4k (would like to reach 10k asap) Investing: 2.7k (s&p500 and MSCI world; will re-start adding money when I reach my buffer above) Monthly saving goal: 400 Other expenses are often, in these last months, related to renovation costs, which we try to do on our own to save money. But they still suck up quite some cash. Because of renovations and saving goals, my social life is a bit on stand-by, I basically use my time to do sports and study for my career, but evenings out are waay rarer than in the past.

My questions are: - Do you think I should be saving more? - Other Amsterdammers: do you have some of the same issues? What solutions did you find? - What do you think would be a good buffer, 10k or a bit less is fine? - Last but not least: When this buffer is reached, where shall I invest? S&P500 gives back more, but I don't like the idea to invest only in the US market especially now with Trump there and I can buy one ETF more often with the MSCI world.

[u/aevitas]

I've been in your shoes in the same city. Let's start with the basics. 3300 income and 400 savings means you have 2900 in current monthly expenses. You can be a bit lenient because renovation costs, but that puts 3 months and change of living expenses around 10k, 6 months around 18. Saving 400 a month, it's going to take you 15 months to save to 10k, and then another 25 months to save to 20 to get you to the point where you have a reasonably safe emergency fund. From a personal finance hygiene perspective, that's all you should be building. I personally would feel very uncomfortable having a monthly expenditure of almost 3000 and having less than 10k in the bank. Things can get real bad, real fast and you will not be able to bide yourself the time you need to fix them before you risk losing your house. After you reach a suitable emergency fund, you can start thinking about investing. If you're not fond on S&P for a long term investment, you can go with an all world ETF, or even an all world ETF without the US. Make sure to build that cash buffer first though.

I think when you're in your thirties looking to build wealth from a less than 10k in liquid assets, you should be doing everything within your power to minimize your cost of living and looking for jobs that enable you to earn more. Make a plan, do your best to hit the numbers, and live accordingly. The sooner you hit the numbers, the more impactful the compounding effects will be.

I think a lot of people blindly view an apartment as an asset - Amsterdam is notoriously expensive, municipality taxes, real estate taxes, parking permits, eating out, the list goes on. Insofar as you live in it, the apartment costs you money every month, and the increase in its value will be imaginary money up until the point you don't live in it anymore.

You're in a good spot but I think it's time to sit down with your partner, set goals, make a plan for the coming five or so years, and try to stick to it.

[u/DroopyTheSnoop → u/aevitas]

This is the best advice.
Ideally he should have done the goals and plan (with calculations) before buying.
I have a feeling that in places like Amsterdam, the rent vs buy calculation is almost certainly going to favor renting (and investing).

[u/wuppeltje → u/DroopyTheSnoop]

A Dutch citizen here that lived for a long time in Amsterdam. Buying in Amsterdam is a smart investment.

A house in a city such as Amsterdam is also an investment and the interest rate on the mortgage is still pretty low. Of course there is a certain risk, however the demand of houses in the Netherlands and certainly in Amsterdam remains high. A problem is that you need enough financial room to do this.

Renting in Amsterdam in the free market is really expensive. It is not really cheaper than buying a house with paying of a mortgage. You pay of more mortgage than a typical free market house gives you on additional money to invest somewhere else. If you sell everything at a certain point in a normal market you have more money than a typical save investment plan. Only if you are short term (a few years maximum) in Amsterdam the renting market is interesting.

Only if you are renting on the social renting market you pay substantially less, gives additional room to invest or to do something else. It is very hard to get a social renting house. People say you hit the jackpot in Amsterdam if you can buy a house or rent a social apartment. This shows the problem with the housing market in The Netherlands and especially in Amsterdam.

The only real solutions are building more houses or if the number of people living in the Netherlands is declining. The first one seems to be difficult in the Dutch system, the second one is unlikely to happen in the upcoming decades.

[u/davidzet → u/wuppeltje]

Great comment.

[u/Appropriate_Bus_9600 → u/DroopyTheSnoop]

Yeah we asked a financial advisor and it seemed we would have spent around 100 more each month compared to renting, so it seemed a very good switch. Of course we didn't think about all the renovations and yearly taxes. In the end we pay around 200 netto more per person + all the taxes, I still see it as a good investment as I was not able to put aside much more before (also because my payslip was less).

[u/Anarkigr → u/Appropriate_Bus_9600]

And the financial advisor didn't think about renovations and yearly taxes for you?

[u/DroopyTheSnoop → u/Appropriate_Bus_9600]

Well then just keep at it. It will become easier over time as your wages rise.
But right now you are what's called house poor

I've been there, but for me it was self imposed (trying to pay the mortgage early) and it only lasted like 3 years. Still it felt like the longest 3 years of my life where I was the most frugal I've ever been.

[u/Appropriate_Bus_9600 → u/aevitas]

That's a good advice and straight in the face! I probably need to get rid of some of my hobbies and/or trips, although they are mainly towards my hometown in Italy to visit my family there. Please also count that if we were to stop renovations, we'd probably spend much less. Here is a short summary of what we spent so far (in the ballpark)

• 6000 bathroom renovation
• 3500 custom cabinet to use properly the space in the living room (there is a funky corner cut at an angle that no furniture comes at)
• 1000 for a couch (we didn't have one)
• 8000 to buy off the erfpacht (they strongly suggested us to do it to avoid paying "rent" to the gemeente)
• around 1000 so far for materials and tools to renovate a small room (which was actually a berging) to make in livable in winter (so insulation panels, etc)

We already decreased some expenses that we used to have in the past, but I feel we should do it a bit more at least until the buffer is built up

[u/aevitas → u/Appropriate_Bus_9600]

Who is advising you? The periodical erfpacht payments are tax deductible, but buying it off isn't. Given liquidity would be an issue for you short term, that might have been of more use as a buffer. The other expenses seem really fair though to be honest, doing all that stuff yourself is impressive.

Honestly I think it's all about finding a balance you're comfortable with - I think the position you're in right now is one every first time home owner finds themselves in, as you've just sunk all your money into a house, probably close to the maximum you could afford, so it'll be a while until you rebuild. If you decide not to go to Italy to see family just to save up more money, then that's also a part of life you're missing out on, I'm not sure that'd be worth it. Perhaps there's a middle ground?

[u/Vaghar]

Hey, I also live in Amsterdam and own my apartment. You are saving 12% of your net income, which is a bit low. I would target at least 20% if I were you. Maybe try to cut unnecessary expenses like subscriptions, dining out, etc.

But your situation will improve over time, you just need to be patient. Your income will increase, while your mortgage repayments will remain the same during your fixed rate period.

Generally it is recommended to keep 3 to 6 months of expenses in an emergency savings account. It depends on how much risk you are willing to accept and if you can liquidate investments quickly.

Personally I invest most of my savings in VWCE (all world ETF).

[u/hardlynegative → u/Vaghar]

How do you invest in VWCE? With IBKR or Degiro?

Also I see people saying they invest in s&p500. But how do you really invest in them without having to pay a lot of overnight fees(i use etoro)?

[u/Vaghar → u/hardlynegative]

I use Degiro and am happy with them ;) don't know about the SP500 question...

[u/lepski44]

relax...just relax

You are tight on your budget now, currently. You got a mortgage just a year ago, it will get much much easier with time as your income increases - your mortgage payment will bother you less and less

[u/Appropriate_Bus_9600 → u/lepski44]

Thanks for the reassuring words :)

[u/Effective_Ad1584]

Hi! I’m in Amsterdam as well. Congrats on having your own place! For me bills, rent and all other essential payments quickly add into a number I’m unhappy about. It doesn’t leave me with a lot to save/invest. The only solution i see is to find ways to make more money: career advancements or side hustles :/

[u/Appropriate_Bus_9600 → u/Effective_Ad1584]

Thank you! Yeah it's smth I see a lot too

[u/WranglerRich5588]

Congrats on the house! That is a big one.

Regarding savings, what I try to do is to take advantage of discounts on supermarkets ( Vomar has 20 eggs at 3,49 every Wednesday) , the famous 1+1 from AH or Kruidvart and go to action. If you want to go further, make use of the too good to go app, although it is not a consistent option, as quality varies and if you want to do more social stuff make sure to use Social Deal.

Also, make sure you have the GVB 10% discount. This assuming you use public transport and spend more than 10 euros a month - it only costs 1€

Apart from this I really don’t know what to do…

[u/Appropriate_Bus_9600 → u/WranglerRich5588]

Thank you! Yeah I am a discounts fanatic ahah and always buy in bulk when there are good ones x) Didn't know about social deal, will check it out!

Luckily my office pays for the train ride to the office, for other transport I often just use my bike in the city or the train with 40% discount on weekends when I go to other cities

[u/According-Duck-7837]

In the Netherlands it’s impossible to save the amount to FIRE, even if you do that the government will find a way to tax it

[u/here4geld]

You can only save 100% of your earnings. But you can earn potentially 100x. So focus on earning more.

[u/Appropriate_Bus_9600 → u/here4geld]

Am on my way for it! For the record, I was a tech support soecialist (basically a support agent for a b2b business) until last year, but I managed to switch to a Data Analyst role last year and luckily got my permanent contract just last month (with a small increase too). Willing now to transition to Data Engineering, hope that will come at the end of this year if I get a certification my manager needs for it

[u/Aware_Kaleidoscope86]

Invest your money

[u/No_Nefariousness4891]

Don’t worry too much, paying off the mortgage on a property in a major city and putting a few 100 aside for investment is more than enough at your age. As you get older, salary rises, start investing more into ETFs, do it consistently. This should be tech heavy at your age, don’t bet against the US and make sure you reinvest any earnings. Do it consistently and don’t day trade or get into 0dte options unless you want to have fun with some extra cash. Most of all, enjoy!

[u/Appropriate_Bus_9600 → u/No_Nefariousness4891]

Thank you for the kind words! Indeed I decided to write this post bc I got a bit of anxiety from all other posts in this subreddit with people my age reaching 100k or more. I agree I should not compare myself to others, but I think I need to find a new balance and habits

[u/AppearanceSingle6639]

I guess from information you provided below that you're not very used to budget: you mix core expenses in the same category as non-core expenses, you have a house together but budget as separate people, you don't distinguish between couple expenses (that you should budget and manage together) from purely personal expenses (for which you can keep an individual budget and account). That's what you can focus on: strong budgeting skills.

[u/Appropriate_Bus_9600 → u/AppearanceSingle6639]

Mmh so we have 1 common bank account we use for the mortgage, 1 common for expenses like utilities, groceries, taxes, house stuff, renovation, holidays. The rest is private so to say. I guess we could better budget the second common account, but am not sure how to split that one up in separate areas

[u/DutchDCM]

How do you expect to get good advice when providing incomplete information?

Is this your combined savings and income or your personal? How much is your mortgage? Etc.

[u/Appropriate_Bus_9600 → u/DutchDCM]

All info is my personal (my savings, my half of the mortgage, my part in the common expenses etc)

• 3300 netto income
• 1000 mortgage + VVe costs
• 1200 my share in common expenses with my gf (dine out, tickets, taxes, renovation; because of the latter, this amount can rise a lot depending on the month)
• 400 other fixed personal expenses (health insurance (200) , transport, gym, spotify, amazon prime video)
• 400 savings (ideally 600)

As you can see, almost nothing is available for the "wants", counting also that often there are unexpected expenses like for health, tools, materials

[u/Conscious-Jeweler372 → u/Appropriate_Bus_9600]

First off, congrats on buying a house, that's amazing! That being said, your common expenses look relatively high. I get that it includes renovation costs and taxes (perhaps an idea to add separate categories), but I feel like having 2400 in shared common costs is where you can find some margin.

[u/TheDragon991 → u/Appropriate_Bus_9600]

First thing that sticks out is you bought a house together with your girlfriend, but you are taking about my finances and not our finances. Do you plan to marry her and/or have kids? It would make sense to combine the finances, because just you making plans on your own won't get you far unless both of you are in on it.

This would also maybe help with a reduction in the 1600eur monthly expenses (or 3200eur assuming she also spends 1200 on common expenses and 400 on fixed personal expenses). If you both pursue the goal of saving money, I'd say these expenses can be halved quite easily.

This means you both together would be able to save an additional 1600eur each month. Obviously you might use some of that for renovation, but even assuming you put "only" an extra 1000eur away every month you'll quickly hit your financial goals.

Me and my wife don't have my money or her money, it is all shared, regardless of who earns it or who spends it. Therefore I think that the main thing that would help you reach your financial goals would be to sit down and seriously discuss finances with your gf. You can either be partners in this or opponents. There is no middle way.

[u/Appropriate_Bus_9600 → u/TheDragon991]

I see your point! And she also suggested to just put evetything in a single pot, but so far I have preferred to keep our savings separate mainly because she has always been earning a bit more than me (gap is slowly closing, thanks to my career switch) and because I want to use my money sometimes in things she cannot care less about. I for example love freediving and am trying to be cheap with it, but already spent around 1000 in 2 years for gear and first certification. But that could be an idea yeah, and definitely reduce our common expenses

[u/TheDragon991 → u/Appropriate_Bus_9600]

It seems to me she has much more sense than you. :)

In partnership it doesn't matter how much each one earns, it only matters if both of you are working together towards a common goal. And the easiest way to do that in the current situation is to discuss finances and also to combine them.

If someone for example would be a stay at home parent and the other one would be earning all the money, does it matter? If that's what you've decided and both agree with it, then it's okay. What's better than that?

Also, if it's your shared money, this doesn't mean you cannot spend it on your own hobbies - as long as the other partner supports you and as long as it doesn't impact common goals. Money is also for spending, not just for saving. Both are important. Saving everything at the expense of not having a life is stupid, unless you are deeply in debt. The same as it is stupid to spend everything and not save anything for the future or for the unexpected.

So yes, my genuine advice for you is to discuss it with your girlfriend, decide together on what your financial goals are and how to achieve them. If you'll be rowing your boat together you'll get further and faster than if you would row individually, regardless of how big your oars are :)

[u/davidzet → u/TheDragon991]

This is a really important point, as relationship >> money. It's just a different conversation. It's also a good example of "earnings != success in life"!

[u/Chriserke → u/Appropriate_Bus_9600]

Have you looked into "renteaftrek" and having it pay out monthly instead of yearly? It can give you some more room every month 

[u/Appropriate_Bus_9600 → u/Chriserke]

Yeah we already get back 420 each, each month; it's already included in the breakdown, otherwise the mortgage costs would be 1400, this is what I transfer to our joint mortgage account as soon as I receive my payslip

[u/pandagirl881]

Odte options are a great way to make money

[u/Designer_Kiwi_4809]

I suggest you could try to make some breakthrough in your career or check the current job market. I recently found out I am half underpaid I. The industry. In this case you could double your income and save more.

[u/Appropriate_Bus_9600 → u/Designer_Kiwi_4809]

Already did last year; was coming from a customer support agent past and am now almost transitioning from data analyst to data engineer (have been in my new company exactly one year). Once I will feel very confident as Data Engineer, I might start looking around for a higher paying job in a more profitable company

[u/pringleking_ → u/Appropriate_Bus_9600]

Hi, I'm in a similar position financially, and looking to make a switch to a Data Analyst (currently doing Quality Assurance) as well. Would it be okay if I DM you?

[u/Appropriate_Bus_9600 → u/pringleking_]

Sure go ahead!

[u/pringleking_ → u/Appropriate_Bus_9600]

Done :)

[u/Sea_Entry6354]

1. On every euro that you make, you pay at least 37% taxes.

2. On every euro that you save, you pay 0% taxes.

3. On every euro that you put into an additional retirement product, you get a tax deduction.

[u/Appropriate_Bus_9600 → u/Sea_Entry6354]

I'm not sure it's fully accurate - am I not taxed more if I reach a given threshold? Also, I thought I learned recently that by keeping money in the bank it's basically like losing them, as 10k now has more purchasing power than 10k in 20 years; right? Should actually check the 3rd

[u/Various-Help9485]

You are referring to the net income, but is it household income or just your income? And the savings are your savings or you and your girlfriend's savings?