Today, it's Linda's turn (a blog reader) to share her story with us on how she relates to the FIRE movement and personal finance in Switzerland. Enjoy!
Hey there, I'm Linda, 36, two kids (9 and 4), not married but living in concubinage with the father of my children in Zurich city.
I grew up in a proletarian family in Romandie.
My father worked in the industry sector while my mother was housewife with three children.
We had no pocket money, no vacation, no expensive hobbies or activities. But I still had a nice childhood.
Hard work education
We had to work if we wanted to earn any money.
So, when I was 14, I worked 2 hours per day (during the school vacation) in a pharmacy which gave me CHF 4.50 per hour.
After one week, I earned CHF 45.00, I was so happy!
I bought a silver ring that I wanted for so long :) I kept it as a memory of my first paycheck!
When I was 16, I could work as a cashier at Carrefour and worked every Wednesday's afternoon, Thursdays after school (it was the "nocturnes" till 8 p.m.) and Saturdays.
I was making CHF 16.45 per hour and was financially independent from my parents.
I could afford new clothes, a mobile abo, and even vacation with my friends.
Then, during my studies I always had students' job to be able to finance my expenses:
- Cashier in Carrefour
- Vendor in various types of company (at a clothes boutique, a bakery, a gas station, a shoe shop, etc.)
- Waitress in a café-restaurant
- Receptionist in a health insurance company
The most important thing was to be financially independent which meant to me at that time: be able to finance my expenses myself (because my parents couldn't).
No money education...
The younger me didn't save money unfortunately.
I always spent it all, after paying all the bills first.
I wish my parents had given me some advice like "Save some money every month for special occasion".
But I think they hadn't had a financial education at all themselves...
It's luck who steered me to investigate money management and personal finance topics.
Indeed, I started to educate myself about personal finance when I started to work in managing several pension funds.
That's when I understood the typical Swiss 3 pillars' system, and how retirement money is calculated.
My parents didn't plan anything for their retirement (no pillar 3a, nor voluntary contribution to the 2nd pillar).
They will get the absolute minimum.
My father lost his job when he was 60, although he was never ill, and did a spotless job — he was even the one who trained the newcomers.
My mother was a housewife her whole life.
She thinks I am too anxious about the future, and I should take it easy.
They are lucky because they are confident about the future, and take life as it comes.
My dream goal
I want to be a multimillionaire.
I want to quit my corporate job.
I want to let my money work for me, while I can spend time appreciating my environment.
Then, I would spend time reading books (my reading list is so long!), going to film festivals, walking along the seaside and in the forest. Swimming once a week. Take the train during weekdays to nowhere, and visit a village randomly. Visit more often the Swiss French part of Switzerland.
"Slow Life", that is!
My more realistic goal is to have enough money to live a decent life (like now), and not have to worry about money when I am retired.
Living on a budget with two kids
I have two kids.
This make it quite difficult to save money, but there is always potential to optimize.
Below is how we managed to reduce our expenses, and have a minimalist lifestyle:
- Terminate all unneeded insurance contracts
- Get the lowest mobile abo
- Take my meals from home at work
- Buy secondhand items
- Dye my hair myself, and go to the hairdresser once a year only
- Go to the library instead of buying books
- Not getting any leasing nor credits (we bought our first car — an Audi A100 — for CHF 361.00 on Ricardo, and went to Corsica in vacation with this car!)
This gives this actual monthly budget:
|Internet / mobile||85|
|Insurances (liability, car)||80|
|Monthly total budget||5'970|
Currently I am saving a "nest egg" in order to reach 1 year of salary equivalent on our saving account.
I already saved 11 paychecks so far :)
It was not easy. It took me 3 years!
This money is only for urgent survival matters. Which means it is NOT for vacation, NOT for a new car, NOR whatever.
It is for unpredictable costs like a high dentist bill, an urgent reparation, or in case of incapacity to work.
As for kids, we have a saving account for each one. And the goal is to give them CHF 15'000 when they are 18 years old.
I didn't have a saving account as a kid, but I wanted to build one for the kids and hope they will use it wisely.
My investments and retirement money
When my one-year salary saving goal is reached (normally by the end of 2022), then I will start investing.
My investment strategy will be:
- Pour it all into a World ETF
- Rinse and repeat with monthly investments into it
With regard to pillar 3a, I've one third pillar account at VIAC, and one at Frankly.
Unfortunately, I have a mixed pillar 3a account at a life insurance (since 2016) which is invested in a fund. I didn't terminate it yet because I will lose money. I am waiting until I reach the breakeven point to stop it. Until then, I must pay monthly CHF 400 into it...
Then, as soon as I am 40, I will make yearly purchase in my pension fund plan.
This in order to increase my retirement income and save taxes. I already increased the pension saving on the maximum by switching on the higher pension plan of my company.
A word on female and work
As a female person, I think woman should never stop working!
I'm working 80% since I finished my studies.
And although I've kids, I still think every woman should work minimum 60% (unless you are already financial free).
The reason is that senior poverty is a female matter.
Trust me, I see how much woman and man get as retirement pay, and the gender gap (precisely part time gap) is huge!
The risk of poverty is even bigger when you are a single parent.
Every person who works part time has a gap in his retirement income.
It is nice to spend more time with your kids, but childcare should be divided between both parents. And to be honest, do you want your kids to have to support you financially when you are a senior?
Advice to your female readers
And finally, let me answer the follow-up question that MP asked me:
When you meet a female friend who isn't aware of retirement nor personal finance topics, what do you advise or urge them to do? (and do they act upon it?)
To be clear: my female friends are often overstained with pension/finnacial topics.
Either their husband/partner is taking the lead of finances, or they are single and are a bit confused.
When they realize that I understand the topic, they bring me the financial statement of their pension fund (aka "certificat de prévoyance"), and I explain them how to interpret all those numbers and we check what their contract is stipulating.
For instance, some of my friends had several employers and did not transfer their vested benefit amount to the new pension fund, because they assumed it would function automatically.
So we first write at all the previous pension funds, and finally, to be sure, we ask at the 2nd pillar central office if there is anything left for that person.
Then we transfer everything at the current pension fund of my friend.
Also, I tell the ones who are living in a partnership (i.e. not married) to announce their partner so it is registered in the pension fund system, and in case of death the partner would get a widow rent.
It's very important to do it while you are still alive (otherwise it can be very complicated).
So that's for the second pillar.
Then I usually tackle with them the pillar 3a topic.
I always advise them to put the maximum amount on their pillar 3a (bank product and not insurance!!!). I therefore insist on a VIAC Global 100 solution.
Finally, some of my friends are good in saving monthly.
But, like many people (not only my female friends), they don't invest the money... it stays on a normal bank account.
Often they doesn't know where to start... and there is also a lack of interest.
For the ones who want to invest without doing it by themselves, I recommend the app "Findipendent" as it's clear to understand, and easy to setup.
But they are still very skeptikal.
And most stick to their conservative saving account...
My notes about Linda's story
I like such stories a lot.
I find them inspiring for readers who didn't yet start their personal finance journey.
What I also particularly like about it is the reality check of where people get stuck: psychology — whereas too often I focus on the functional how-tos here on the blog.
But most blockers are in one's brain, not in how to do things...
Note taken for myself to dive more on this spectrum of personal finances in the future!
On being hungry
I was lucky enough to have a strong money education. Not that much on the how-tos, but on the mindset: save money, don't splurge, plan for the future, work during summer if you want to have money, and all this kind of things.
And although my parents were handling their money well, they raised us within money limits.
This technique was the most effective when I transited from high school to university out of my home town.
My father did compute a monthly allocation that I would get. And that would be it.
It was paying the rent and basic food. No extra nor nothing...
It sucked back in the days 😅
But that was the most crucial part of my financial education.
It made me hungry.
That hunger made me look for student jobs that paid not very well... as this sucked, it led me to be creative and start my first freelance gigs.
The path wasn't easy, but it was very instructive.
That's why I relate a lot with Linda' story.
And that's also her kind of story that keeps motivate me to write on the blog every single week: to avoid other Swiss to rely on luck (to be in a job in finance like Linda) to get their personal finance in order and in control.
When I read what Linda does for her female friends about their 2nd pillars, i.e. to look for all their vested benefits to bring them back in one place, I was like:
Don't you know about kala.ch?!
Indeed, this service — which is still free for private users as of this writing — does exactly the same thing as what Linda did with her friends...
Except that it takes only 3 minutes ^^
If you're in a similar situation, I recommend you to check my detailed Kala review here.
Oh boy, I love this topic :D
First thing first, the first thing I'd tell Linda would be: you can optimize your setup even more in terms of fees of your pillars 3a.
Just swap frankly with finpension, and you will be all good with the two best third pillars out of there, namely finpension and VIAC. If you need to be convinced by numbers, just check my pillar 3a comparison article here (includes bonus welcome codes).
Then, one of my ongoing fights on the blog: those damn mixed pillars 3a!
I STRONGLY advise Linda to go through her calculations again, as I'm convinced her mixed 3a pillar isn't different than mine, and that there is nothing such as a breakeven point with those scams...
Use my detailed article on the topic of mixed pillar 3a termination to triple-check this point, as the money implied in there is usually consequent.
I thank Linda for sharing her experience with her female friends who are stuck with investing.
First, it showed me that Linda wasn't aware that my "Swiss Investor Program" for beginners was existing in German (on top of English and French). Now she knows — and you too :)
Second, it confirmed me that not everyone is ready to go with DIY investing from day 1 (that was actually also my case years ago), and that I should write more about the initial stages of any aspiring investor's journey.
Because, indeed, solutions like findependent.ch make total sense if you compare them to a savings account or even a checking account. Moreover when you're really good at saving money!
Female and money
That's a topic I don't address much here, being a male myself.
But I find the angle taken by Linda very worthwhile, when you think at how the gap in retirement income can be huge. And even though not all female workers end up divorced at retirement, I also think like Linda that each and every Swiss female should have total control and peace of mind about their personal finances.
This in order to be independant, and live a life where they don't have to work neverendlessly due to bad life planning and just relying on some luck that may never come.
And you, how does Linda's story inspire you?