“Financial basics” learning path – Module 5

Hardly anyone follows a single, predetermined path in life. No matter how your journey is going, financial decisions are important in every phase of life. That’s why the key points on the path to personal and financial independence should be defined early on.

This applies to your professional development, partner and marriage – but also a possible separation –, family and children, purchasing a home, retirement and the question of what you might want to leave to posterity.

Once the financial foundation has been laid, the focus in the next step is on retirement planning and long-term wealth accumulation.

The challenge for women in this regard is that they receive on average 31.2 percent (PDF, 2 MB) less pension from the retirement system than men: the so-called gender pension gap. The reasons for this are many and varied. Among other factors, women earn an average of 18 percent less than men for similar work. Career breaks and part-time work due to motherhood also lead to wage differences. This gender-specific wage difference is also called the gender pay gap.

Additionally, women live four years longer than men on average. They must therefore make their retirement benefits last longer. That’s why it’s important to take your finances into your own hands and start thinking about long-term financial planning at a young age.

During an evening gathering in her new apartment, Antonia talks to two friends about the future. One friend, Charlotte, says she wants to ask for a promotion and a raise soon. Otherwise, the home she dreams of buying won’t materialize anytime soon ...

The other friend, Emma, is about to move in with her boyfriend. She is thinking about how they can manage their finances well, especially because they may want to have children in the near future.

Antonia remembers a conversation with her aunt, who separated from her husband last year. “I wish I had taken care of my finances myself earlier, instead of always leaving everything to Beat,” she told Antonia at the time. “But better late than never. Just don’t make the same mistake.”

Antonia therefore advises Emma to discuss the topic of joint finances with her boyfriend as early as possible and to take an active interest in it.

Antonia doesn’t have any concrete plans yet. However, she would like to take some time soon to think about her long-term goals.

Step by step, she will continue to grow her financial knowledge as well as her assets in order to manage her future in a self-determined and financially independent manner.

01
Be clear about your financial goals
In the beginning, some reflection is required. Think about what you want to achieve in life, as well as what financial impacts your goals might have.
02
Get an overview of your financial situation
With a clear overview of your income and expenses, it will be easy for you to draw up a budget. This is how you find out where potential savings lie, and how much money you can set aside.
03
Create a structured plan
Work out which of your goals are short-term (approx. 1 to 5 years), medium-term (approx. 5 to 10 years) and long-term (approx. 10 years and more). This will allow you to plan how much money you will need when and for what purpose, and to consider the topic of retirement planning at an early stage.
04
Invest in a targeted fashion
Based on your plan, decide how much money you want to invest and for how long. You can also invest in restricted pension products (pillar 3a) and benefit from a long investment horizon. You can invest available funds according to the plan and your risk profile. Ensure sufficient diversification, i.e., don’t put all your eggs in one basket.
05
Regularly review your financial plan
Regularly review your finances, especially when a significant change is imminent in your life, such as a career change, having children or buying a house. This will ensure that your financial plan and strategy continue to align with your life and goals.