About 1 Belgian full-time employee in 5 earns 2,500 euros net or more per month. Families with two of these employees can therefore count on (at least) 5,000 euros net per month. How to organize your life with such income? And what are the tricks for the – many – people who have to settle for a lot less every month? Jan Vanoverbeke, former private banker and author of the book “Learning from the Rich”, gives you some tips.
Earning 5,000 euros net per month is a lot? Jan Vanoverbeke does not know how to answer this question. As a private banker, he guided wealthy families for years, who earned a lot more every month. “Ask someone who has to make do with 2,000 euros and they will nod enthusiastically. Ask someone who earns 20,000 euros a month, and he pales at the thought of earning this sum,” he says. The median net salary of the working population in Wallonia in the first quarter of 2022 is 1,896 euros per month. Many dual-income families therefore reach or even exceed 5,000 euros in net monthly income.
Plan familial
“In any case, 5,000 euros is enough to lead a financially comfortable life, provided, of course, that you don’t splurge”, thinks Jan Vanoverbeke. He swears by a family and support financial plan to cleverly distribute these 60,000 euros per year. “List your expenses and income as accurately as possible. Indicate a date for each of them: thus, you will know when you can save and when you will have to tap into these reserves. Above all, keep a cool head and respect your financial limits. Do not go into debt unnecessarily”, he warns.
In his book, Mr. Vanoverbeke takes the example of a 45-year-old man who earns 5,000 euros per month in a family of four. This family still has ten years of home loans to repay and, in the next ten years, they plan to pay for the children’s studies. But she doesn’t have a lot of savings. The breakdown of its annual expenses is as follows:
– Reimbursement of the house: 20,000 euros (33.33%)
– Courses: 15.000 euros (25 %)
– Clothing: 1,500 euros (2.5%)
– Water and energy: 3,500 euros (5.83%)
– Tuition fees: 2,000 euros (3.33%)
– Summer travel and sports camps: 3,500 euros (5.83%)
– Winter trip: 2,500 euros (4.17%)
– Leisure, hobbies, sport: 1,000 euros (1.67%)
– Maintenance and furnishing of the accommodation: 2,500 euros (4.17%)
– Variable costs of the car: 2,500 euros (4.17%)
– Assurances, municipal and provincial taxes: 2,000 euros (3.33%)
– Electronics: 1,500 euros (2.5%)
– Household appliances: 1,000 euros (1.67%)
– Medical expenses: 500 euros (0.83%)
– Savings and investments: 1,000 euros (1.67%)
To borrow
According to Mr. Vanoverbeke, for many families, the mortgage is the most important factor in building capital. “If you borrow for the long term, for example over 30 years, you will not be caught in serious shortages of liquidity and you will thus create the financial oxygen which you need so badly. You also risk repaying less and less, year following year, in proportion to what you earn. Moreover, it is – certainly at present – the only expense that is not subject to inflation. You can even go a step further and extend an existing loan, to create even more financial space for an additional loan. With this loan, you can buy a building plot, for example. Within ten years, you might sell it with a nice capital gain. Building land increases in value, bricks age and are often less and less valuable,” says Vanoverbeke.
According to the former private banker, many people no longer know how much they spend. “They feel that the money is slipping away from them, without them knowing where it is going. This is why a structure is so important”, he believes. “After you have established your financial plan, it is interesting to do what is called ‘mental accounting’, that is to say to make financial boxes in your head. A lot of rich people do that. Open regarding four checking accounts through your banking app. Draw up a map of your fixed expenses: insurance and charges, retirement capital, daily expenses, your loan. Try to fund them with sufficient balances as soon as possible, in order to finance the current year and the year to come. You will then know what is covered and develop your peace of mind. It will also move you forward visibly. It’s very crazy, but that’s the way it is.”
Armed once morest setbacks
“You will quickly see what you can still spend. But don’t overdo it. Ten accounts are also not necessary. If something gets too complex, people give up. You can do this follow-up per year, or also per semester. This way you can properly control your money. It makes you strong for those times when your back is once morest the wall. If you’re not organized, you can’t face a setback, no matter how much you earn,” Vanoverbeke says from experience with past clients.
A fifth of full-time employees earn less than 1,700 euros net per month. Among them there are many single people. “It’s always advisable to have your own house,” he says. “A person who works regarding seven hours a day as an employee and has no other (professional) obligations can spend part of his free time renovating his own house. Don’t buy a house that is too big, by the way, because the bigger the house, the higher the fixed costs. And for a single person, the costs are much higher. You can’t do magic if there’s not a lot of money. Do more mental accounting and keep an extra eye on your fixed and variable costs. Singles need to structure these fixed expenses. In the extreme, this may mean that it is better to rent than to buy”, concludes Mr Vanoverbeke.
Free unlimited access to Showbytes? Which can!
Log in or create an account and never miss a thing from the stars.
