A financial plan covers all aspects of personal finance management, whether for an individual or a household. Its components include budgeting and cash flow management, debt planning and management, saving and investing, retirement planning, insurance protection, tax and estate planning.
Generally, the financial planning process involves setting financial goals, determining their financial and time parameters, and selecting appropriate means and tools to achieve them.

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•         Financial Planning – Key Stages page, Financial Planning section, I want to learn category.

•         My Household section, Life Events category.

There are different types of budgets – for a specific event or purchase, a monthly budget to track to track incoming and outgoing cash flows, an annual budget, and so on. However, there are several key steps that should be followed to manage your money more effectively.

The first step is to track all sources of income – salary, freelance payments, rent, benefits, allowances, and others. Next, make a list of all monthly expenses. This should cover mandatory payments such as rent or mortgage, food, utilities, phone, internet, subscription services, transportation, and entertainment. Based on this list, allocate a specific amount of your monthly income to each category. Prioritise essential needs and make sure to include savings. A good practice is to set aside between 10% and 20% of your income for savings. Also, take into account your personal financial goals or larger future purchases, as these may require allocating larger amounts each month. How you keep your budget is a matter of personal preference – it can be on paper, through a mobile app, or in a spreadsheet. Remember, a budget is not fixed. Review it periodically and adjust it whenever your financial situation changes or new priorities arise.

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•         Budget page, Financial Planning section, I Want to Learn category.

One of the most frequently given pieces of advice when budgeting is to apply the “pay yourself first” rule. This means setting aside a portion of your income for savings or investments before allocating the remaining funds to your everyday expenses. This approach not only encourages the accumulation of savings but also helps prevent unnecessary spending and ensures that your financial goals remain a priority in your daily decisions.

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•         Budget page, Financial Planning section, I Want to Learn category.

How you keep your budget is a matter of personal preference – it can be on paper, through a mobile app, or using a spreadsheet. Beyond the technical aspect, there is another common question: how detailed the budget should be, and whether even small expenses should be tracked. This is also a matter of individual choice and personal style. Some people prefer to be aware of every detail of their financial life, so they opt for a more detailed budgeting framework. Others use variations of the 50/30/20 approach, in which household funds are allocated in the corresponding proportions to three main categories: necessary expenses, discretionary spending, and savings or investments.

Regardless of the method chosen, it is important to review your budget regularly and adjust it as needed to reflect changes in income, expenses, or financial goals. This will give you a clearer picture of your financial health and make it easier to navigate financial challenges.

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•         Budget page, Financial Planning section, I Want to Learn category.

•         My Household Finances page, My Household section, Life Events category.

This is a popular phrase used to describe a situation in which expenses consistently exceed income, resulting in a negative financial balance. The reasons for this can vary: excessive spending on daily necessities or luxury items, unexpected expenses, or a sudden drop in income due to job loss or other professional changes. Often, the additional funds needed to cover expenses come from taking on debt – loans or borrowing from relatives – which can further deepen financial problems.

To address this situation, the first step is to analyse carefully your expenses. Allocate funds for essential needs such as food, housing, and transportation, and temporarily limit or eliminate less essential expenses like entertainment and hobbies. Review all your debts and look for ways to optimize payments without stopping them. Explore options to increase your income, whether through additional work, monetizing a hobby, or retraining for a better-paid position.

Finally, it is extremely important to build and maintain an emergency fund, which can help prevent future financial crises and provide long-term stability.

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•         Budget page, Financial Planning section, I Want to Learn category.

•         My Household Finances page, My Household section, Life Events category.

 

Of course, there are life situations in which income is so low that it barely covers the most basic living needs. However, in most cases, the difficulty in saving arises from unplanned spending and poor financial planning. Our advice is to review your budget and see which expenses you can eliminate or reduce. Set clear savings goals – decide what you want to save for and how much – this will help motivate you. Adjust your budget so that you regularly set aside a part of your income. Automate the process – for example, have a set amount deducted from your salary and transferred to a savings or investment account. This way, saving becomes a routine, and you are less tempted to spend instead.

You can also use various mobile apps that help you save – for example, rounding up the change from each purchase and automatically allocating it to savings. Set aside savings when you receive larger sums at once, such as bonuses, property sales, or other one-time income.

One of the best ways to save is to shop smart and carefully. Look for deals, use coupons or discount codes, compare prices at different stores, and wait for sales whenever possible. Most importantly, consider whether you truly want or need a particular purchase, how often you will use it, and how long it will serve you.

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•         Saving and Financial Planning – Key Stages pages, Financial Planning section, I Want to Learn category.

•         My Household Finances page, My Household section, Life Events category.

 

Emergency situations can take many forms – a car breakdown, a malfunctioning stove or boiler, an unexpectedly high electricity bill, or a sudden loss of income. What they have in common is that they put your budget to the test, requiring money to address the problem.

There are several ways to handle unexpected expenses if you don’t have an emergency fund:

•         Use money from other areas of your household budget, which can disrupt your usual standard of living.

•         Borrow from a relative or taking out a loan, which can increase your debt to an unhealthy level.

•         Withdraw from your long-term savings, which may result in lost returns and set you back from achieving your financial goals.

Each of these options potentially threatens your financial stability, and that’s why an emergency fund is considered an essential element of sound personal finances. A common recommendation is to save enough to cover at least 3 to 6 months of your basic living expenses. Ideally, this amount should be set aside at once (if possible) or over the shortest possible period, even if it means seriously cutting costs for a while.

It is important to have quick access to this money, as you don’t know when you’ll need it, but don’t be tempted to use it for everyday needs. You can keep the money in cash or in a checking account. It is not recommended to keep it in a checking account linked to a debit card that you use regularly for purchases, as it is easy to spend money saved for emergencies. Your emergency savings should serve solely as a reserve. Finally, an emergency can also be an unexpectedly good opportunity, and having saved money will give you the ability to take advantage of it.

For more information visit:

•         Saving page, Financial Planning section, I Want to Learn category.

•         Risks in Our Lives page, Insurance section, I Want to Learn category.

•         My Household Finances page, My Household section, Life Events category.

There are various savings products you can use, depending on your goals, preferences, and need for access to funds. The safest and most traditional option is through bank deposits – current, savings, or term deposits – each offering different levels of accessibility and returns. Bank deposits of a single depositor are guaranteed up to a total of EUR 100,000. Current accounts are suitable for short-term storage, while savings accounts and term deposits offer higher interest rates but with more limited liquidity. You can also choose a structured deposit, which combines the security of a traditional deposit with the potential for higher returns linked to the performance of financial markets.

It is important to note that only products with a guaranteed principal are considered true savings – investment alternatives carry the risk of loss and should not be treated as such. The best approach is often a combination of several products, balancing easy access to funds with the potential for better returns.

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•         Saving page, Financial Planning section, I Want to Learn category.

The decision to save or invest depends on your financial goals, time horizon, and risk tolerance. Here are some steps to help you make that decision:

·         Define your financial goals: For shorter-term goals, such as saving for a car down payment, it is generally best to use savings instruments like deposits or savings accounts. For long-term goals, such as retirement, investing may provide higher returns that can outpace inflation.

·         Assess your risk tolerance: Not everyone can handle market fluctuations and potential losses calmly, so it is important to understand your personal attitude toward risk.

·         Build an emergency fund: Before investing, it is advisable to have an emergency fund that can cover 3 to 6 months of expenses. This provides financial security and prevents the need to sell investments in unfavourable market conditions.

·         Explore different investment options: If you decide to invest, research various options such as stocks, bonds, mutual funds, or index funds. Choose investment tools that align with your goals and risk profile.

·         Use diversification: Spreading investments across different assets can help reduce risk and achieve more stable long-term returns.

Depending on your personal and financial circumstances, you may choose to combine both strategies – saving for security and investing for growth.

For more information visit:

·         Saving page, Financial Planning section, I Want to Learn category.

·         Why Should I Invest page, Investing section, I Want to Learn category.