Extreme savers are well off by the time they’re 40

Frugalists save up to 70 percent of their income to be financially independent at an early age. You don’t want to have to work after 40. The abstemious life-style becomes also in this country the trend, is however nothing for epicures.

"I don’t want to have to work at 40," says Marie U. In her YouTube videos. For this, the 27-year-old saves – and extremely. She actually does without almost everything. 900 euros a month pays for rent, food, cell phone, Internet and Netflix. She puts aside the rest of her 2,500-euro net salary and money from small side incomes. So last year grew a financial cushion of 20.000 euros approach. He says this has saved them 70 percent of their income. This year it wants even 25.save 000 euros.

Some go even further. Valentina D. Wants to achieve financial independence even earlier "I want to retire at 35," says the Tyrolean to the "Presse". The 22-year-old student has many small part-time jobs and invests 1000 euros every month in ETFs, i.e. index funds. She gets by with only 700 euros a month. Initially, she wanted to save for a car, but then that became moot. Saving became their lifestyle and goal in life. She discovered frugalism.

If one still said Schmutzian or Habfest in former times, Valentina calls itself today Frugalistin. The trend toward frugality comes from the U.S. and is derived from the English word "frugal. The followers of frugalism want to save as much as possible and invest the money to quit their jobs early and live only off their assets. They organize themselves on the Internet and meet regularly to exchange investment and savings tips. Now the trend seems to be taking root in Austria as well.

During the financial crisis Lars Hattwig lived extremely economically and bought shares.

Austrians save less. Not surprisingly? Austria is a nation of savers anyway? Really only a few people tighten their belts so tightly. In 2019, the savings rate was 7.4 percent. That is, Marie U. puts aside ten times more than the average Austrian. In the past decade, the savings rate has actually declined. This is mainly due to the fact that Austrians’ consumption is rising faster than their income. The savings rate was highest before the financial crisis.

At that time, Lars Hattwig also wanted to make more of his money and invested in the stock market. But then the financial crisis hit him hard. "The deposits were blood red," says the former meteorologist to the "press". Nevertheless, he did not sell his shares, but bought more of them. "I had to tighten my belt to do this." He indulged himself nothing. "You can only do that for a short time," warns Hattwig. "When it comes to food, always buying the cheapest is not nice."
His plan worked. He has managed. In 2015 he quit his job. He has been living off his passive income ever since. "With 2,000 euros a month, I can get by just fine," says the fun-loving Berliner. He has written several books on the subject and gives financial seminars. However, he doesn’t do that because he has to financially, he just enjoys it.

But how does it actually work? Many frugalists follow the four percent rule: If you only have to use up four percent of your savings each year, you’ve made it. He can live off his assets for at least 30 years – thanks to interest and compound interest, even until the end of his life.

Another rule of thumb is: you need about 25 times your annual expenses. Can you get by with 1000 euros a month (12.000 euros per year), you have to save 25 x 12.000 euros, i.e. 300.000 euros in savings and investments. In principle, the more you save, the longer you save and the higher the return, the sooner the day of financial independence will come. Then you are no longer dependent on a job.
Investment strategies are different. Most, like Marie U. and Valentina, invest in ETFs, funds that track a stock market index. After two years of frugalism alone, Marie U’s passive income amounts to. already 45 euros a month. Immediately after receiving her paycheck, she transfers 1500 euros to her ETF account. Christoph Sachs, for four years already financially independent, set first on a real estate purchase. "My starting capital at the time was a building savings contract," says the Lower Austrian to the "Presse". "At that time, interest rates were not so low, but the apartment was very cheap. There is no advantage without a disadvantage," jokes the leisure enthusiast and blogger. Lars Hattwig invests mainly in stocks.

Marie U. spends only five euros a month on eating out and alcohol.

Hardly anyone shows so much enthusiasm for investment. Only five percent of Austrians are shareholders and less than one tenth of the population holds investment certificates. And although a savings account is no longer a winning investment in the low-interest environment, it remains the number one investment option. That’s what people buy for. The Wifo predicts a 1.6 percent increase in private consumption this year.

Frugalists keep a lid on this. The less money they need to live on, the more they can put aside. In addition, with a frugal lifestyle, they also have to save less money. Job starters in particular can save a lot, because they are still used to their life as a student or pupil. If one gets by on half of one’s income, it takes about 17 years to live a leisure life. If you save two-thirds of your income, you only have to work for ten years, according to the Frugalists’ rule of thumb.
Lars Hattwig would even receive a pension. "But I’ve calculated in such a way that I don’t need it," says the 49-year-old. Christoph Sachs has also worked for 36 years. But what about Marie and Valentina? If both of them actually work only 15 years, there won’t be much in the way of pension. Especially at the beginning of a career, earnings are lower at first. Under certain circumstances, you may be entitled to a compensatory allowance in retirement if your income is less than EUR 933.06. But this is likely to fall away for the frugalists. Finally, dividends, rental income, interest and ETF distributions count as income. You also have to pay taxes on everything. So you are unlikely to get caught with a suitcase of money at the Swiss border.

"I have never registered as unemployed or scrounged through at the expense of others."

Lars Hattwig. Financially independent and financial blogger. Hattwig was able to quit his job in 2015 because he has been living off his passive income since then.

And what about inflation? In 2001, the average pension was just over 10.000 shillings. At the time they thought it was a lot of money. Today, everyone sees it differently. Because money is losing value – by 1.5 percent in Austria in 2019.

So there’s a lot to consider and the returns are not certain. There are risks. Hattwig is not afraid of a financial crisis. "This time I know better what to do."

He has never registered as unemployed. This speaks against his concept. Because then he would have to register for jobs and accept them if necessary. Freedom is more important to him.

Not only frugalists think this way. If the car was still considered the ultimate status symbol in the 1990s, it is now time. Many want to spend their life more with their family or their hobbies. Valentina likes to go hiking. Christoph Sachs takes care of his garden. Marie goes on vacation and even donates to charity. They all seem very happy, despite abstinence. They want to get off the daily hamster wheel. Young people in particular often no longer rely on consumption. On the other hand, they want to live more consciously, not waste resources.

There’s no point in trying to convince others of her lifestyle, says Valentina.

For "sustainability reasons" alone, Marie doesn’t want to keep buying new things. For a new wardrobe, she relies on clothing swap parties or thrift stores. The research assistant has had her laptop for six years now. The lunch for work she cooks in advance. If she only needs two carrots for a dish, she only buys two. Marie also stays in the wallet for fabric softener, hairdresser and coffee. She drinks mostly tap water. She gets a lot of food from stores that give away leftovers or expired products.

Cheeky tips for saving money. There are a variety of blogs and YouTube channels on the topic of frugalism, including those of U. and Valentina. Most sound very reasonable. In relevant forums, however, you can sometimes read brazen tips on how to save money. So someone suggested peeling the banana before weighing it in the supermarket. After all, you don’t weigh the greens of carrots either. You certainly don’t make friends with this kind of behavior. "Scrounging through at the expense of others, I’ve never done that," Hattwig affirms. Marie U. Spends only five euros a month on going out and alcohol. You can’t even get two squirts of that. "Sometimes I felt so cramped," admits Hattwig. Sachs also advises against living so sparsely for too long. "You have to enjoy your youth," says the 54-year-old. Valentina does not see it so narrowly either.

"I’m not counting on getting a pension at 70."

Valentina. The student saves 1000 euros a month.

The topic polarizes. It’s no use trying to convince others of this lifestyle, explains Valentina. The Tyrolean has often received negative reactions, she says. This could lead quite quickly to a quarrel.

Especially in a partnership it depends on an open communication. Valentina recommends separate accounts and a joint account for fixed expenses. You have to make compromises when shopping. If someone wants to buy the more expensive detergent, she thinks it’s fair that the person who wants the expensive one also pays a bit more than the person who prefers the cheaper one. No one should feel disadvantaged, she said.

Valentina D. know that not everyone can set aside 1000 euros a month. "But everyone can benefit from getting to grips with their finances."In any case, she does not rely on the pension.


7.4 percent Is the savings rate in Austria.

5 percent of Austrians are shareholders.



Frugalists saving for retirement. They live a minimalist life and invest every euro they can spare. Frugalism followers want to build up a fortune in a hurry, big enough so they can quit their jobs as early as possible. The trend from the USA is also taking root in Austria.

Four percent rule: If you only have to use up four percent of your assets every year, you’ve made it. He can live on his savings for at least 30 years – thanks to interest and compound interest, even until the end of his life. The size of the return, however, plays a significant role.

25 Rule of thumb: According to this, you need about 25 times your annual expenses for financial independence. Is 1000 euros a month enough (12.000 euros per year), you need 25 x 12.000 euros, that is 300.Set aside 000 euros and invest. A residual risk always remains.

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