Start today!

Hi all

While I know from myself that it is often tempting to get all information before starting on a new journey there is so much information available that you might never get around to starting. Like I pointed out in my previous post your savings rate is by far the most important metric in determining your time to FIRE. So, in this post I will focus on getting started saving and then my next post will specify what to do with the money you save.

Set up a savings account

First of all, I think you should set up a dedicated account for your savings. You can either contact your current bank and ask them to set up a savings account (they should do this for free but make sure to ask first) or you can go ahead and create an account at Nordnet. You will probably need a Nordnet account anyway at some point since they offer some of the cheapest investment fees on the Danish market. An account is free and easy to set up so if you later decide to do your savings elsewhere you won’t have lost anything.

Get an overview of your current spending

The best way to start cutting expenses is to get an accurate overview of your current spending. You can do this in many ways. In my net banking solution (Danske Bank) I can go through all my transactions and categorize them easily:

The image shows how you can categorize expenses in your Danske Bank netbanking solution to get an overview of where your money is going.
An example of categorizing in Danske Banks netbank.

Another option is Spiir.dk. It’s free and easy to use:

Similar categorizing of expenses as above but using spiir.dk
An example of categorizing in Spiir.dk.

Once you know what you are spending you can decide for every category whether or not the expenses are justified by the increase in happiness, comfort or the fulfilment they give you.

What to cut?

Pay special attention to recuring costs. That 30 kr lunch or 20 kr coffee you get daily will pull 4-6000 kr right out of your investment accounts each year. TV-packages, fitness subscriptions etc. are other things you might want to at least consider.

Then there are the subscriptions that might just be too expensive. When did you last check if you could get your cellphone or internet subscriptions cheaper? And what about insurance – there might be a lot to save there. Can you cut any insurance like “accident” or can you switch some or all your insurance to a different provider?. IDA forsikring and Lærernes Brandforsikring are among the cheapest I’ve seen but both have certain requirements to join – just be sure to shop around.

The most drastic but also the most significant ones are probably your car and your home. Those decisions are not to be taking lightly but if you figure you could live in a smaller place or go carless those are probably some of the biggest impacts you can make to your spending.

This was just a short post for today since I really think most people should look this over themselves and try to optimize. There are no optimal general guidelines other than only spend on what you value.

To give a bit of motivation though I threw together a quick spreadsheet to illustrate what you may get by delaying gratification and investing the 5000 kr you were about to use for a TV-upgrade or the 500 kr a month you might be spending eating out:

Image of the spreadsheet below on the time value of money
Use the spreadsheet linked below to see what delayed gratification could be worth to you!

Link to spreadsheet

 

3 thoughts on “Start today!”

  1. Hi,

    Thanks for writing this great post. I would like to know more about spiir.dk. Can you by any chance make a detailed review of the app and share with us what are goods and bads for it and what are the limitations?

    Thanks!

    1. Thanks for the attention. I’d love to do that as soon as I get time. I have some other posts planned but will try to get it done this Saturday if I can find the time 🙂

      For now, I can say that I really enjoyed to use it to review the past 2 years spending. It’s very simple and can auto categorize a lot of stuff. I use it across 2 of my own accounts and my girlfriends and it automatically finds account transfers and excludes them. The reports are not that customizable but gives a good overview of where your money is going and how different categories of spending change over time. I don’t use it daily but once every 2-3 months I open it and categorize the expenses it couldn’t automatically assign and check if anything is out of whack or needs my attention. The best benefit has been that it helped my girlfriend realize the extent of renovations on the house 😉

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