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Tips for your financial decisions

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You make a wide range of financial decisions every day — consciously or unconsciously — across many different topics and areas of life! From grabbing a coffee to go on your way to work, to the way you choose to pay, all the way to buying your own home. Each of these decisions has small and large effects on your (financial) present and future.

On this page, we’ve gathered a few tips and tricks that can help you make better financial decisions across different topics and stages of life.

Overview

Your role in the economy
Money and Payments
Keeping an overview
Thinking ahead
Making ends meet
Assess potential risks correctly
Seek the right support

Your role in the economy

Tip 1

  • Set clear financial goals! By setting clear financial goals, you can better prepare for the future. Ideally, set aside about three months’ net income for unexpected expenses. Try to stick to the goals you’ve set for yourself.

Tip 2

  • Compare alternative offers! Before making a purchase, compare different offers to get a better sense of prices. Especially in the service sector, you often have the chance to negotiate terms. Regularly check your existing contracts – switching providers may save money.

Tip 3

  • The 24-hour rule: The 24-hour rule can help to avoid impulsive purchases. For bigger purchases (e.g. above €50), it’s a good idea to wait 24 hours before deciding.

Tip 4

  • Understand the impact of your choices! As a consumer, your decisions influence which goods and services are offered and under which conditions they are produced. Try to think about your buying decisions in this way.

Money and Payments

Tip 1

  • Choose the payment method that suits you best! The way you pay is your personal decision. Be mindful of the advantages and disadvantages of each option. Many payment providers allow you to buy something now and pay later (such as with a credit card or Buy Now, Pay Later services). What matters most is that you always keep track of your spendings.

Tip 2

  • Pay attention to interest rates! When making financial decisions, keep an eye on current interest rates and how they might develop. For savings and investments, returns should ideally be higher than inflation — pay attention to real interest rates. If you're financing a purchase with a loan, it’s important to compare offers and make sure that the repayment terms remain affordable.

Tip 3

  • Currencies can fluctuate considerably, especially foreign ones, which are often even more difficult to assess than your own currency. Keep an eye on this risk.

Keeping an overview

Tip 1

  • Get an overview of your finances! A (digital) household budget planner can help you keep to track of your income and expenses. You can simply write everything down on paper or use your online banking app.

Tip 2

  • Keep track of your expenses! It’s not always easy to have money left at the end of the month. Still, try to keep track of your expenses. In the long term, you should, if possible, set aside a small amount each month for future needs.

Tip 3

  • Hold back on impulse purchases! Buying something the moment you feel the urge or desire isn’t always a smart move. Ideally, you should only buy things once you’ve saved up enough money for them. If that’s not possible, it’s important to keep an eye on your repayment obligations.

Thinking ahead

Tip 1

  • Set aside a financial buffer! Always try to have a financial cushion for unexpected expenses that you can access at any time. Ideally, you should save about three to six months’ net income to cover things like unforeseen repairs or medical costs.

Tip 2

  • Start thinking about your retirement early! In addition to the state pension system, it’s important to start planning for your retirement as early as possible and set aside money for it regularly. The same applies to larger purchases you intend to finance with a loan.

Tip 3

  • Explore your investment options! In addition to a savings account, there are many other ways to invest your money — take the time to learn about them as well. Investing in the capital market is possible even with small amounts. What matters most is that you only invest in things you understand and that you stay aware of the risks.

Tip 4

  • Make conscious investment decisions! Be deliberate about who you lend your money to through your investments. You are directly contributing to how businesses operate. Environmental protection and sustainability are important factors you can consider — alongside risk and potential returns.

Making ends meet

Tip 1

  • Stay on top of your bills! Keep track of ongoing payments and bills that need to be paid. If you can no longer pay them on time, there’s a risk of becoming over-indebted. Support services like debt counseling can help you get back on track.

Tip 2

  • Pay attention to the costs of a credit! For larger purchases you can plan to finance with a loan, but make sure to thoroughly inform yourself about all costs and conditions. Pay special attention to interest rates (e.g. variable vs. fixed rates) and always compare multiple offers.

Tip 3

  • Keep an eye on the lifespan of products you finance through a loan! When taking out a loan, make sure that the product you're financing will last longer than the repayment period — for example, avoid financing a car over 20 years. Otherwise, there's a real risk that repayment installments could become overwhelming.

Assess potential risks correctly

Tip 1

  • Be aware of your financial risks! Think about the financial risks you might face in your life. The risk matrix can help you with this. It gives you a solid basis for deciding which risks you want to reduce, avoid entirely, or consciously take on — and helps ensure you're aware of the consequences.

Tip 2

  • Get several insurance offers and compare them! Use the risk matrix to decide which financial risks you want to cover with insurance. Talk to experts to learn about possible insurance options — and make sure to compare different offers before making a decision.

Tip 3

  • Don’t put all your eggs in one basket when investing! Investing in the capital market is one way to prepare financially for the future. But don’t put everything into a single investment — try to spread your risk across different financial products.

Seek the right support

Tip 1

  • Decisions can have a big impact! Financial decisions greatly influence the kind of lifestyle you can afford — both now and in the future. Talk to people you trust about money and make sure you gather enough information before making any decisions. Only invest in products you truly understand.

Tip 2

  • Stay critical and pay attention to interests! Be aware that the people or companies you get information from often have their own interests If an offer sounds too good to be true, particular caution is advised. Be especially cautious with recommendations on social media — for example, from influencers. Some may be trustworthy, but others may not.

Tip 3

  • Watch out for phishing! Especially when shopping online or using e-banking services, it’s important to use secure passwords. Don’t just click on links in emails or text messages — if something seems suspicious, contact your bank directly. Your bank will never ask for your personal information via email, phone call, or SMS.
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