Inflation is breaking new records, so savings held in deposits are losing value faster and faster. Will inflation-indexed treasury bonds save your money? Which bonds are worth buying? Which ones will give you the best returns? There's no point in guessing! Download our calculator and make an informed, numbers-based decision.
UPDATE – OCTOBER 2024
Before you read the rest of the article, know that I published this article in 2021 in response to questions from readers about whether bonds protect against inflation, whether they are still worth investing in, and if so, which bonds to choose?
Since then, the Ministry of Finance has raised bond interest rates several times and introduced new anti-inflationary treasury bonds, i.e. three-year treasury bonds (TOS ).
The last change – published on September 24, 2024 – shows the bond terms for OCTOBER 2024 and they are the same as the September bonds. For all inflation-indexed bonds, the interest rate method and margin amount do not change .
I have updated the CALCULATOR with the changes introduced from October 2024.
Now you can calculate which bond is more profitable for you and whether bonds will protect you from inflation. You can download the updated Excel calculator here:
I have been regularly blogging about inflation-linked bonds since 2014. I will not repeat information about them in this post. If you want to learn more, I refer you to my previous articles:
I also discussed the topic of bonds in depth in Chapter 8 of my book,"Finansowa Fortca", to which I also refer you. If you want to understand the mechanism of this asset, my book will definitely help you with that.
And in this article I will provide you with an advanced Treasury bond calculator that will help you calculate the profitability of bonds in various inflation scenarios. I will also share my conclusions about whether they are still worth investing in and which ones I choose.
This is a good time for a quick reminder: Please remember that all materials presented on the blog are for educational and informational purposes only and are an expression of the authors' private opinions. Please read the detailed legal information at the end of this article.
I recommend it, even though I'm not paid for it
I have been talking about inflation-indexed treasury bonds on my blog since 2014.Back then, I wrotethat these bonds are a great alternative to bank deposits. Although 7 years have passed since then, I am still writing about it consistently.Why?
As you probably know, my mission is to reach 15 million Poles with financial knowledge. And one of the elements of my mission is to share here, on the blog, what works for me. I recommend products that I use myself and that I would recommend to my closest family and friends. And that's exactly what happens with inflation-indexed treasury bonds.
Treasury bonds – can you make money on them?
If you follow the series:"Financial Fortress" in practice, you know perfectly well that about half of the market part of my investment portfolio is invested in inflation-indexed treasury bonds:
Some people look at this portfolio composition with skepticism and I often hear voices that it is not worth investing in inflation-indexed treasury bonds. That is why today I will show you the result of my bonds "on a living organism". Below you will find a screenshot of my account status:
For the sake of completeness, I am also adding the balance of Kasia’s – my wife’s – IKE Bonds account:
Out of pure curiosity, I checked the interest rates on the securities I bought just last year. See what it looks like:
As you can see, the ROD family bonds will pay 14.4% interest for the next year, and the 10-year EDO bonds will pay 13.4%. If you have recently viewed interest rates on available bank deposits, you probably guess that none of them would give me such a result:
But as it is now – does investing in bonds still make sense?
At current inflation rates, are bonds a “sure loss”?
In Chapter 8 of “Financial Fortress” I wrote the following sentence:
Does this mean that – since we currently haveinflation at 12.4%– all is lost (as of May 26, 2022)? Although you may come across voices on the Internet that argue that investing in treasury bonds is a “certain loss” given the current inflation rate, I personally frown upon such statements. Why? Please take a look at the chart below:
The inflation we call “today” is actually the reading for the last 12 months. That is, the latest result presented by the Central Statistical Office in May 2022 – 12.4% – covered the period from April 2021 to April 2022. Therefore, when we consider investing in bonds, “today’s” inflation does not really tell us much. We would need the level of inflation that will be in the future – but since none of us has a crystal ball, we cannot predict what inflation will be in the coming years. Therefore, we cannot say with certainty that buying bonds is a certain loss.
So how can you make a decision? Well, if you follow this blog, you probably know that I am a proponent of making decisions based on calculations and specific scenarios. I don't like to read cards, I don't trust assumptions - I rely on facts. That's why, together with my team, I have prepared an advanced calculator that will help you simulate different scenarios.
Inflation-Indexed Bonds Calculator – How to Use It?
We have spent many hours preparing this calculator to make it a truly functional tool that will help you make a decision about buying bonds.Marcin Kluczek helped a lot in creating the calculator, and together with my wife Kasia, he made sure that all the calculations and simulations worked properly.
What assumptions can you make in our calculator?
You can enter the number of bonds you wish to purchase.
You can assume a different level of inflation for each year.
You can assume a different level of WIBOR 6M or the NBP reference rate each year.
You can assume different interest rates on deposits and savings accounts , with which you will compare the profitability of bonds. In the calculator, I assumed that this rate will also be the interest rate on bonds if a given bond (e.g. ROR, DOR, TOZ, COI) pays interest earlier than on the redemption date.
The calculator compares whether it will be more profitable for you, given your assumptions, to buy one-year, two-year, three-year, four-year, six-year, ten-year or twelve-year bonds,
The calculator also checks how the profitability of a bond investment is affected by its packaging in IKE; I wrote more about IKE in PKO here .
Just enter your assumptions in the fields marked in yellow and the calculator will show you which bond will give you more money.
The Treasury bond yield calculator takes into account many variables, such as:
capital gains tax,
a fee for ending your savings early,
preferential prices for exchanging bonds for new issue bonds, /IN THE CALCULATOR UPDATE I HAVE INCLUDED MORE FAVORABLE EXCHANGE CONDITIONS OFFERED FROM JUNE 2023/
the fact that some bonds pay interest, e.g. monthly or annually, while others pay interest only at the end of the savings period, etc.
That's why I really encourage you to play with this machine - we've done our best to make it a practical, intuitive and user-friendly tool.
Profitability of treasury bonds – specific calculations
To answer the question of whether it is still worth investing in Treasury bonds, I performed several such calculation simulations.
Scenario 1: Average annual inflation over the entire period is 10%
In the first scenario, I assumed that the average annual inflation over the entire holding period of the bonds would be 10%, WIBOR 6M would be 6.7% and the NBP reference rate would be 5.25%. I have to make so many assumptions because:
one-year (ROR) and two-year (DOR) bonds are indexed to the NBP reference rate ,
three-year bonds (TOS) are indexed to WIBOR 6M,
and four-year (COI), six-year (ROS), ten-year (EDO) and twelve-year (ROD) bonds are indexed to inflation .
With this inflation, I also assumed that the average interest rate on deposits and savings accounts would be 6.0%. Looking at what banks are doing today, this is a fairly optimistic assumption, but let's leave it for the purposes of our simulation. And how does it look?
Bond profitability at 10% inflation.
On the above chart, I marked the inflation level with a red line. And for this level, if we invested PLN 1,000, then to break even after 10 years, we would have to receive PLN 2,593.74. And the calculator shows that in this specific scenario, no bonds will give such a result. The closest to beating inflation are 12-year ROD bonds (PLN 2,507.36 after 10 years) and 10-year EDO bonds (PLN 2,425.97).
Below you will find another chart from our calculator, which will allow you to track what the nominal, cumulative rate of return looks like for each type of bond at the end of each year. The red line is, of course, inflation:
Please note that shorter-term bonds, i.e. up to four years, offering lower interest rates (ROR, DOR, TOZ and COI) do not even come close to the results of 6-, 10- and 12-year bonds.
Take a look at the green line representing the 4-year COI and the green-yellow line representing the performance of savings accounts. As you can see, while 4-year bonds won’t beat inflation, they’re still a better option than traditional bank accounts and deposits. You’ll simply earn more on them.
If deposits continue to offer interest rates of around 5.0% (as at the time of writing this article), then basically any bond will give us a better result.
Scenario 2: Inflation declines towards target
The next scenario I put into the calculator is inflation starting at 12.4%, which over the course of 10 years decreases towards the NBP inflation target – i.e. 2.5%. Similarly, I assume that the NBP reference rate, WIBOR 6M and the interest rate on the savings account also decrease. The assumptions I entered in the Treasury Bond Calculator can be seen here:
What happens in such a scenario? Even with high inflation in the first year, if it falls to the inflation target level along the way, 10-year EDO bonds continue to safely protect our assets. After 10 years, our PLN 1,000 increased by inflation will be worth PLN 1,789.70. At that time, our EDO bonds have a nominal value of PLN 1,851.49 – so you see that they have safely protected our assets from loss:
Bond profitability with inflation heading towards the NBP target.
Six-year bonds (ROS will rise to: PLN 1,836.43) and twelve-year bonds (ROD: PLN 1,910.18) will also protect against inflation, while four-year bonds (COI: PLN 1,675.38) will come quite close to beating inflation.
In the case of six-year and twelve-year bonds, however, you must remember that you can invest limited funds in them. These bonds are intended for people who receive benefits from the 500 plus program and you can only pay into them as much as you received from 500 plus.
On the other hand, the "new" one-year ROR bonds, two-year DOR bonds and three-year TOZ bonds will earn much less than inflation and quite similar to what a savings account will give us. However, they have the advantage over a savings account that it is easier to invest significant amounts in them and you do not have to transfer funds between different banks every few months in search of an account with a good interest rate.
Scenario 3: Inflation declines towards 5%
Another, slightly less optimistic scenario that I have considered assumes that inflation in the first year will amount to 12.4%, and in the following years it will decrease to the level of 5%, where it will stop until the end of the investment period:
In this scenario, 10-year bonds (EDO) and 12-year bonds (ROD) will beat inflation, while six-year bonds (ROS) and four-year bonds (COI) will be quite close to this target.
Our new one-year bonds (ROR) and two-year bonds (DOR) will not even come close to inflation.
The cumulative return graph looks even more interesting. See that to beat inflation (red line below) you have to hold bonds for 7-8 years. No bonds will protect against inflation in the first 7 years.
But before you decide that in this scenario it is not worth investing in bonds, please look at what alternatives you have. The light green line, representing money invested in a high-interest savings account, loses to inflation by as much as PLN 439.95 after 10 years. The answer is obvious.
Scenario 4: Inflation rises towards 15%
And how will our bonds behave in a very negative scenario, in which inflation in the first year is 12.4% and then increases to 15%, where it remains until the end of the investment period:
Unfortunately, in this scenario, when there is a fairly large disproportion between high inflation and low interest in the first year, the bonds will not make up for this loss until the 10th year of investment. Although the interest rate on the bonds was significantly raised in May 2022 in the first year, it is still much lower than inflation.
The 12-year ROD or EDO bonds will not make up for this loss either.
The situation will change when we wrap our investment in IKE – then we will not pay Belka tax when withdrawing funds. In such a scenario, ordinary 10-year EDO bonds will be enough to protect the value of the investment against inflation:
Bond calculator – key conclusions
Below you will find the most important conclusions that I drew from my "playing" with the bond calculator.
No investment is guaranteed to beat inflation 100% of the time.
In scenarios likehyperinflationor the collapse of our currency, even these types of bonds won't work. Keep that in mind when building your portfolio.
What alternatives do you have to the stable part of your portfolio?
With the first conclusion in mind, ask yourself – what is your alternative? If it is keeping your money in low-interest deposits, consider whether it makes sense.
Compare investments with similar risk.
This is a very important point – I often hear voices: why invest in bonds, it is better to keep 100% of your assets in stocks . And there is probably some truth in this – investing in stocks over the course of, for example, 30 years will probably bring higher profits. The question is, however, will you survive all the painful lows that will certainly happen over these years? That is why I always encourage you to look at bonds as a stable part of your portfolio.
Some bonds perform better than others
According to my calculations, the best performing indexed bonds will be :
(1) EDO wrapped in IKE Bonds – if you are not yet using IKE , it is worth considering opening IKE Bonds to avoid paying the "Belka" tax and increase the profitability of bonds purchased in this way.
(2) Family bonds ROD and ROS are a very good solution . These bonds guarantee the highest interest rates but... they are available only to people who receive benefits from 500plus and only up to the amount of funds we have received. I use the limit of PLN 1,000 per month that I am entitled to and every quarter I buy ROD for PLN 3,000 (3 months x PLN 1,000 monthly limit for my two daughters).
3) It is better to buy twelve-year bonds (ROD) than six-year bonds (ROS). Why? Because buying ROS and ROD uses the deposit limit to the same extent and twelve-year bonds have much better interest rates. The difference in interest rates is significant enough that even ending the investment earlier and paying a fee for the return (PLN 2 for each twelve-year bond or 70 groszy for each six-year bond) does not change the fact that in most scenarios you will earn more on ROD. For example, look at the cumulative rate of return on these bonds in Scenario 3, which I described above:
For the first 6 years, ROD and ROS give almost the same amount of earnings, but after the 7th year, 12-year bonds are unrivaled.
4) It is better to buy EDO than COI. Ten-year bonds have higher interest rates, and this means that even when we take into account the fee for early termination of the investment - this fee is 70 groszy in COI and 2 PLN in EDO - in most scenarios and years EDO performs better or at least as well as COI.
This is clearly visible in the graph below (assumptions as in Scenario 3, which I described above):
Don't bet on one horse - build a portfolio of different assets tailored to your needs.
You can read more about how to do this in my book –“Finansowa Forteca”.The entire first part of the book (over 250 pages) is devoted to building your own investment strategy. In the second part (over 400 pages) – I discuss in detail the assets that can be in your portfolio. After reading the book, you will be able to compose a portfolio that will suit your strategy and your appetite for risk, and will help effectively protect your assets from inflation.
Download the CALCULATOR and calculate it yourself!
Don't base your decision to invest in bonds solely on this article and my conclusions. Be sure to download our calculator and calculate different scenarios.
Finally, I have an answer for you to one more question that often appears in my email box:
Is it worth waiting to buy bonds? Is there a chance they will be cheaper?
There is always a chance – unfortunately none of us knows the future, nor do we have any leaks from the Ministry of Finance on how they plan to pay interest on bonds in the coming months. Much depends on how inflation will develop in the coming months, whether the government has the ability to obtain cheaper debt, etc. In 2022, through May, we had three changes in interest rates, and the update (May 2022) really caused a lot of confusion. If you feel uncertain about the possibility that interest rates will increase in the coming months, you can buy bonds in several installments.
That's all for today, I really hope that this article, but most of all - the calculator available here will be useful for you and help you make a good decision for you. And since my team and I really worked hard to prepare this material, I would be very happy if you left your comment and shared this article with your friends. Please let me know what you think about investing in bonds and how you like working with our calculator.
After more than 2 years since the publication of the previous edition of this ranking, it is time for a major update, or rather a completely new entry with the current ranking of ETFs for shares from around the world. The very good news for all passive investors who value the possibility of investing in shares from around the world using a single ETF is that ETF providers have started to compete very strongly with each other in the last year. And as we know, the more competition, the better for individual investors, so without further ado, let me show you the offer of ETF funds for the global stock market and present the current ranking of the best ETF funds of this type.
Podcast
YouTube
In short
In this article you will learn:
Which global stock market ETF is currently (2024) the best?
Which global ETF is the cheapest?
Which global ETF has the best performance?
How the ETF offering for global shares has changed over the past 2 years.
The offer of European providers, i.e. the offer of ETF UCITS funds, currently includes 8 accumulating global stock ETFs and 3 distributing ETFs. Since most readers are only interested in accumulating versions and there are only 3 paying versions, the next few paragraphs will only concern accumulating global stock funds , and later in the entry I will present two distributing funds.
When I presented the offer of funds for the global stock market previously, there were 6 such funds. Now there are already 8 funds based on 4 different indices:
MSCI ACWI index (currently around 2,800 companies),
MSCI ACWI IMI index (currently around 8,800 companies, but the only ETF tracking it "samples" a lot, so it has significantly fewer companies in its portfolio),
FTSE All-World index (currently ~4,300 companies and several more financial markets than ACWI),
Solactive GBS Global Markets index (currently around 3,400 companies).
Since the tracked index slightly influences the differences in the investment results of these funds, below is the first breakdown of the current offer along with the division into tracked indices:
The leaders in terms of assets are still the leaders and for the past 2 years their assets have grown significantly and are still neck and neck:
iShares MSCI ACWI UCITS ETF ( IE00B6R52259 or IUSQ or ISAC) saw its assets grow from around EUR 4.8 billion to EUR 11.5 billion over two years.
Vanguard FTSE All-World UCITS ETF (IE00BK5BQT80 or VWCE or VWRA) saw its assets grow from around EUR 4.5 billion to EUR 10.6 billion over two years.
In the meantime, the following changes to the offer have occurred:
iShares MSCI ACWI's (I E00B6R52259 ) biggest competitor – the SPDR MSCI ACWI UCITS ETF fund reduced its costs from 0.40% per year to 0.12% per year,
at the same time, the costs of SPDR ACWI IMI UCITS ETF (IE00B3YLTY66) funds were reduced from 0.40% to 0.17%,
a competitor to Vanguard FTSE All-World UCITS ETF (IE00BK5BQT80) was created in the form of the cheaper Invesco FTSE All-World UCITS ETF (IE00716YHJ7) – cost 0.15% compared to Vanguard's 0.22%,
the cheapest ETF for global shares was created – the Amundi Prime All Country World UCITS ETF (IE003XJA0J9), which tracks the Solactive GBS Global Markets index,
Lyxor MSCI All Country World UCITS ETF (LU1829220216) has changed its name to Amundi MSCI All Country World UCITS ETF, as Amundi has acquired Lyxor.
So we have 5 big changes in the offer that gave me a reason to update this ranking. So let's take a look at the basic parameters of the 8 funds as of September 2024.
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The current offer of European ETF funds for global shares really is full of choice. There are large ETFs (over EUR 10 billion in assets) and small ones (below EUR 100 million in assets). There are funds that have been around for years (2011) and completely new ones (created in 2024). Finally, there are cheap funds (0.07% per year) and expensive funds (0.45% per year), which allows you to quickly filter out funds that are not good enough to make investing in them worthwhile. Here are the basic parameters of ETF funds for global stock indices in September 2024:
In fact, the biggest issue in this ranking will be choosing between large, proven funds that have higher reported fees (iShares and Vanguard) and new funds or funds that have recently significantly reduced fees but have not yet proven that low fees translate 1 to 1 into better future performance (although in theory they should). We also don't know if iShares and Vanguard won't be cornered and have to lower their fees slightly to remain competitive.
I will now discuss all the parameters step by step, starting from the time of existence of ETFs.
Which global ETF has been around the longest?
You may be surprised to learn that the oldest global ETFs in the European offering are the State Street-run SPDR MSCI ACWI UCITS ETF ( IE00B44Z5B48 ) and SPDR MSCI ACWI IMI UCITS ETF (IE00B3YLTY66), which have been around since May 2011. The Amundi MSCI All Country World UCITS ETF (LU1829220216) and iShares MSCI ACWI UCITS ETF (IE00B6R52259) are not much younger, having been around since September and October 2011, respectively.
After them, we have a 7-year break without new additions, and then the addition of 2 ETFs in 2018 and 2019 (in July 2019, the popular Vanguard FTSE All-World UCITS ETF with the ISIN code IE00BK5BQT80 was added to the European offer). The youngest of the funds are the Invesco FTSE All-World UCITS ETF (IE000716YHJ7), added in June 2023, and the Amundi Prime All Country World UCITS ETF (IE0003XJA0J9), added recently in June 2024.
As you can probably guess, neither of the 2 youngest funds have managed to accumulate large assets yet, nor do they have a rich enough history to receive too many points in the ranking. However, they do have some advantages, which I will mention shortly, and for now I will take a look at the size of assets among the 8 ETFs compared.
Which global ETF has the largest assets?
In this context, not much has changed since 2022, as the two largest ETFs accumulating global stocks are the iShares MSCI ACWI UCITS ETF (IE00B6R52259) and the Vanguard FTSE All-World UCITS ETF (IE00BK5BQT80). What is shocking is the scale of their asset growth, which in 2 years amounted to 141% and 133% respectively (although the former has been on the market for almost 14 years!). This proves the increasingly strong trend of passive investing among European investors, who, as you can see, very often focus on the simplest global stock funds.
In terms of assets, the competition is very far behind iShares and Vanguard, because the largest 2 among the remaining funds, i.e. SPDR MSCI ACWI UCITS ETF (IE00B44Z5B48) and SPDR MSCI ACWI IMI UCITS ETF (IE00B3YLTY66) provided by State Street have assets at least 4 times smaller than the leading 2 ETFs of this type. Not to mention the Invesco FTSE All-World UCITS ETF, created a year ago, which, despite being the cheapest ETF in this rate for almost a year (TER = 0.15%), collected "only" a little over EUR 350 million in assets during the year. This shows that passive investors are usually loyal to the fund they started investing in and do not change providers/funds as soon as something a little cheaper appears (0.15% vs. 0.20% or 0.22%). And since we're on the subject of costs, let me briefly discuss the costs of global stock ETFs.
Which global ETF is the cheapest?
Just 2 years ago it was completely unthinkable that an ETF fund for global shares, however complicated to create and run, could cost less than 0.20% per year. Currently, as many as 4 ETF funds for global shares cost less than 0.18% per year, and these are:
Amundi Prime All Country World UCITS ETF (IE0003XJA0J9) with an annual cost of 0.07%,
SPDR MSCI ACWI UCITS ETF (IE00B44Z5B48) with an annual cost of 0.12%,
Invesco FTSE All-World UCITS ETF (IE000716YHJ7) with an annual cost of 0.15%,
SPDR MSCI ACWI IMI UCITS ETF (IE00B3YLTY66) with an annual cost of 0.17%.
The above means that we can only wait for the move of the largest ones (Vanguard and iShares), who will probably not want to lose their dominance to smaller but much cheaper funds Amundi, SPDR and Invesco.
Why, however, do I not recommend that you “jump” straight into the cheapest fund Amundi Prime All Country World UCITS ETF (IE0003XJA0J9)? For several reasons:
low cost does not always mean the smallest tracking difference (i.e. the difference in performance between the index and the fund), and this fund has been around too short to have at least 3 full years of results and to reliably examine its tracking difference (TD),
this fund has existed for a short time and has still accumulated small assets. This may have a negative impact on its liquidity, and the lower the liquidity, the higher the transaction spreads and "crossovers" between the fund's price and the value of the assets in its portfolio, which may have a negative impact on its purchase prices.
So let's check how the funds' real results compare to the costs they declare.
Which global ETF best tracks its index?
In every ETF comparison and ETF ranking, I pay special attention to the so-called Tracking Difference (TD), which is nothing more than a comparison of the fund's performance with the index that is its benchmark. The lower the tracking difference value, the better, and if this value is negative, it means that the fund is beating the index it tracks, which is possible thanks to, among other things, the profit from securities lending.
Despite their not-so-low costs, the lowest track spreads so far have been achieved by the iShares MSCI ACWI UCITS ETF (IE00B6R52259) – annual cost 0.20% and track spread -0.17% and SPDR MSCI ACWI IMI UCITS ETF (IE00B3YLTY66) – annual cost 0.17% and track spread -0.17%. Funds from UBS and Vanguard are also doing well, as their track spreads are lower than their declared annual costs.
The biggest mystery is the SPDR MSCI ACWI UCITS ETF (IE00B44Z5B48), which, with costs previously amounting to 0.40% per year, has achieved a good 0.07% annual tracking difference. A mystery, because after reducing costs from 0.40% to 0.12% per year, we can also expect the tracking difference to decrease significantly and potentially enter the podium when it comes to beating the MSCI ACWI global stock index. This is an interesting observation, worth noting, because the previously unremarkable fund has a chance to start beating its more expensive competition (but let's give it 2-3 years to examine the impact of the new, lower costs on its results).
Time for the ranking that everyone has probably been waiting for.
Global Stock Market ETF Ranking
It probably won't surprise you that, all things considered , the best ETF fund for the global stock market is the iShares MSCI ACWI UCITS ETF with the ISIN code IE00B6R52259 and tickers ISAC (LON) or IUSQ (FRA).ISAC/IUSQ is a very large fund, existing for many years, with a correct annual cost and a much lower tracking difference and very good results compared to the competition. The only drawback of this ETF is the relative difficulty of buying a unit due to the relatively high price of around EUR 75, which is currently over PLN 320, although most ETFs in this list have even more expensive units.
Second place was taken by Vanguard FTSE All-World UCITS ETF (IE00BK5BQT80) also known as VWRA (LON) or VWCE (FRA), from which I deducted points for its shorter history (from 2019), slightly higher annual cost and slightly higher tracking difference, and for being even harder to buy for the deductible amount. Harder because the unit price is currently around EUR 120 (~ PLN 500), so if your brokerage doesn’t let you buy fractional shares/ETFs (like XTB or IBKR ), you may have trouble buying units for the deductible amount.
In third place I placed the SPDR MSCI ACWI UCITS ETF fund (IE00B44Z5B48) with the ticker ACWD (LON) or SPYY (FRA), which attracts attention especially due to the recent reduction of the annual cost from 0.40% to 0.12%, which means that its mapping difference (on average 0.07% in the last 3 years) may be drastically reduced in the future. It has an acceptable asset value, but buying its unit for a specific amount may be very difficult, because it costs about EUR 200, i.e. over PLN 850 (hence, for the MSCI ACWI index I suggest a larger fund from iShares, and we can watch SPDR in terms of results in the coming years).
Among the competitors to watch is certainly the cheapest (lowest fees) and youngest fund Amundi Prime All Country World UCITS ETF (IE0003XJA0J9) with ticker WEBN (FRA), whose low cost (0.07% per annum) will certainly attract new investors. WEBN has an additional advantage in the form of a low unit price (only EUR 9, or less than PLN 40), which makes it easy to buy for a certain amount even without the possibility of fractional trading.
The only problem with the WEBN ETF is that it tracks a different index than most of the above ETFs, which is the Solactive GBS Global Markets, which resembles the MSCI ACWI in terms of composition and global market coverage(both indices claim to cover about 85% of the world). The Solactive GBS Global Markets index, like the FTSE All-World index, treats Poland as a developed market. In contrast to the MSCI ACWI and MSCI ACWI IMI indices, which treat Poland as an emerging country (jokingly: this gives us Poles an ambitious reason to boycott MSCI index funds and choose FTSE or Solactive index funds).
Without further ado: WEBN is a very young ETF with a low asset value, which I would give 2-3 years to get going, check its results and the difference in projection after that time and only then make a decision on whether to recommend it. Remember that costs are not everything, and the 2 winning ETFs, despite relatively "high" (for ETFs) costs, have very low differences in projection.
Where to buy global stock ETFs?
Both leaders of the ranking, the ISAC/IUSQ and VWRA/VWCE funds, can be purchased both in DM BOŚ , as well as in BM mBank, XTB and Interactive Brokers . The availability of the remaining funds will be slightly worse, but among the brokerage accounts for ETFs that I recommend, both DM BOŚ and Interactive Brokers offer them (and 4 of them also XTB).
I suspect that many brokers will soon add the new Amundi Prime All Country World UCITS ETF fund to their offer due to customer pressure caused by its revolutionary low annual cost (and that's good, because competition makes the entire price offer improve). Just because it was cheap (0.20-0.22% per year) doesn't mean it won't get even cheaper (0.05%-0.10% per year), so we wait for the giants, namely BlackRock (iShares) and Vanguard to move in terms of lowering the prices of ETF funds on global shares. If thanks to the above ranking you have chosen the right ETF for yourself, and you don't have a brokerage account yet, I would be grateful if you could set one up from one of my affiliate links (they are in the box below). Many thanks!
Looking for a cheap stock and ETF brokerage account?
You can find the full ranking of stock and ETF brokerage accounts here .
Which Global Dividend-Paying ETF Should I Buy?
If you want to receive dividends from a global stock ETF, you will only have 3 ETFs to choose from:
Vanguard FTSE All-World UCITS ETF Distributing (IE00B3RBWM25) with tickers VWRL or VWRD,
Amundi Prime All Country World UCITS ETF Dist (IE0009HF1MK9) with tickers WEBG, WEBJ or WEBK,
Invesco FTSE All-World UCITS ETF Distributing (IE0000QLH0G6) with tickers FTWD or FTWG.
In terms of parameters, there is no point in ranking these funds, because only one of them (Vanguard FTSE All-World UCITS ETF Distributing) has been around long enough for any comparison (apart from examining the parameters) to make sense:
The dividend-paying VWRL (Vanguard FTSE All-World UCITS ETF Distributing), with assets of over EUR 14 billion, is currently the largest European global equity ETF. The rapid growth of assets in the paying version of the aforementioned Amundi Prime All Country World UCITS ETF (WEBG/WEBJ) is very impressive, having only been in existence since February 2024, but having already accumulated EUR 1.3 billion in client assets. This is certainly due to its low costs (0.07% per annum) and suggests that similar growth will soon be seen in its accumulating version (WEBN), which was launched a few months later and is not yet listed on most European exchanges, which naturally hinders its growth.
In terms of availability, it is currently easiest to simply choose the largest Vanguard FTSE All-World UCITS ETF Distributing (IE00B3RBWM25) with tickers VWRL or VWRD, which is the basis of the offer in all the main brokerage houses and offices specializing in ETFs. In DM BOŚ you can also buy the cheapest fund of this type from Amundi (Amundi Prime All COuntry World UCITS Distributing):
Although payout funds are generally much less popular than accumulation funds, due to the significantly lower costs than the Vanguard fund, I also expect cheaper competition from Amundi and Invesco to be added to the brokerage offer.
What should I do if the global ETF I previously purchased is not the cheapest?
First of all, don't panic, because in the world of investment funds (and ETFs), the cheapest fund is not always the best, because declared annual costs are just one of the criteria influencing the results achieved by the funds. Now you will think "how so? You are always the one who demonstrates an obsession with costs and suggests choosing the cheapest accounts, funds and brokerage services!" and you will be right (see, for example, the entry " How to gain more? Control costs and avoid expensive institutions! "). However, a cost difference of 0.05-0.15 percentage points per year (e.g. the difference between 0.20% and 0.07% per year) is something completely different, as is a cost difference of 1-2 percentage points per year (e.g. the difference between a TFI with a cost of 1.50% per year and an ETF with a cost of 0.20% per year).
So what to do if you previously bought iShares MSCI ACWI UCITS ETF (IE00B6R52259) or Vanguard FTSE All-World UCITS ETF (IE00BK5BQT80) with annual costs of 0.20% and 0.22%, respectively, when funds with a cost of 0.07% (Amundi Prime All Country World UCITS ETF) and 0.15% (Invesco FTSE All-World UCITS ETF) appeared on the market and SPDR MSCI ACWI UCITS ETF (IE00B44Z5B48) reduced fees from 0.40% to 0.12% per year? Do not panic and do not make emotional decisions, because these smaller and cheaper ETFs will not necessarily beat the results of more expensive ETFs from this group. Let's give them at least a few years to verify whether lower costs will directly translate into better results (and let's give iShares and Vanguard time to react to these cost reductions, because I suspect they will also start reducing the costs of their global equity funds).
Also remember that the cheapest Amundi Prime All Country World UCITS ETF tracks a different index than its competitors, so the difference in results may be mainly due to differences in index compositions, not annual costs alone. I would suggest following the non-obvious SPDR MSCI ACWI UCITS ETF (IE00B44Z5B48), because after reducing costs from 0.40% to 0.12% per year, it has a chance of beating the competition from iShares in the coming years. To answer the question in the headline: I would keep buying the same ETFs I did (unless I bought more expensive ETFs like Amundi MSCI All Country World UCITS ETF), because in passive investing, consistency and pragmatism are more important than the difference in costs of about 0.1 percentage points per year.
You have reached the end of this short but specific entry, in which I compared 8 accumulating global stock ETFs and 3 distributing global stock ETFs. I am extremely pleased with the high growth in assets of funds from this group, because All-World funds are the simplest solutions for participating in global economic growth. I am also pleased with the development of the offer, because the emergence of cheap competition for the two giants and the reduction of costs by smaller funds will almost certainly mean that when I write an update of this entry (in 2-3 years), the offer of investing in ETFs for global stocks will almost certainly be much better than it was in 2022 and 2024, i.e. when I wrote and published the previous ranking of this type and this entry.
If you liked the post, I would still like to ask you to comment below the post and follow me on Twitter (X) and on Facebook . I would also like to remind you about the possibility of joining our discussion group on Facebook , where you will find countless discussions on investing of all kinds. Thanks for reading to the end and see you in the comments!
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The information presented on this website is the author's private opinions and does not constitute investment recommendations within the meaning of the Regulation of the Minister of Finance of 19 October 2005 on information constituting recommendations concerning financial instruments, their issuers or exhibitors (Journal of Laws of 2005, No. 206, item 1715). The reader makes investment decisions at their own risk. The author of the blog is not responsible for the content of advertisements placed on the blog.
Are you wondering whether your child should continue to put change into a piggy bank, or maybe it's time to take a step towards modernity - a child account, card and savings account?
In the digital age, financial education has a completely new face, and the best way to teach your child to manage money responsibly is to set up a bank account, a debit card, and a savings account.
Sounds serious? Maybe a little, but don't worry - this is a step that will definitely help your child in the future... because who among us walks the streets today with a wallet stuffed with banknotes and pays everywhere in cash? Exactly...
For me, good preparation of a child for everyday, "adult life" means, above all, raising him in real conditions and building habits that are deeply rooted in the reality around us.
Child account – why is it worth it?
Here are 10 reasons that will convince you that it is worth ditching the traditional piggy bank and giving your child modern financial management tools!
1. Financial education from an early age
Instead of tossing change into a piggy bank, kids can learn how money really works—in digital form! Having a bank account is a practical lesson in finance, available at your fingertips.
Why? The child learns the principles of budgeting and sees what it looks like to control spending.
Why is it good? Interactive access to the account allows the child to see how much money they have and how much they spend, which develops their financial skills and allows the parent to watch over the whole thing. The best banking applications will give you a parent panel, where you can smoothly manage what the child can do on their own, as well as watch over all their accounts and cards.
Benefits: You are shaping your child's habits that will be invaluable in adulthood! Your child learns to control their finances, instead of just putting aside change for no apparent purpose.
Example? Your child receives pocket money in the form of a transfer. Instead of losing track of how much money they have, they can check their account balance on an ongoing basis and make informed purchasing decisions. They see the account shrinking, but they also see it growing as they save and more money is added to it.
2. Money security
Losing a wallet is bad luck, but losing cash is painful! A bank account gives your child the peace of mind that their money is safe. If you lose your card, you can block it with a single click. Additionally, you, as a parent, set payment limits on your child's card.
Why? Money in an account is much safer than cash in a wallet or a child's pocket.
Why is it good? Banks offer a range of security features, such as PIN, card blocking or SMS authorization, which minimizes the risk of losing money. The child learns to take care of the password, PIN and security of online transactions.
Benefits: In the event of theft or loss, parents can react quickly and protect their child's funds.
Imagine your child loses their wallet. The cash is gone, but what about the card? Just block it, and the money is still in the account! As a parent, you can also conveniently change the PIN for your child's card.
3. Control over expenses
When a child has an account, parents can easily monitor how they spend their money. Every transaction is visible in the banking app, which allows you to better understand their financial habits... Talk about what they spend on and how much... and how much they save.
Why? Monitoring expenses allows parents to correct their child's financial mistakes and shape habits that serve their child.
Why is this good? You can respond to inappropriate spending and teach your child how to manage their money better.
Benefits: Building healthy financial habits, opportunity to talk about responsibility for money.
Example: If you see that your child has spent too much on snacks, you can discuss how to better manage their pocket money.
4. Motivation to save
The funds in a savings account pay interest from the first złoty. This is much more motivating than keeping money in your wallet.
Why? A savings account makes money work instead of sitting idle. A child begins to learn what interest on capital is.
Why is it good? The child sees the real effects of saving, which motivates them to save more.
Benefits: Better understanding of how long-term saving and money management works.
Example? Your child puts 100 PLN into a savings account with an annual interest rate of 7% and after a few months sees how this sum grows! You can also, as a parent, "raise the stakes" and introduce a "Parent Bank" that pays out and transfers additional interest to the savings account.
5. Preparing for adulthood
The sooner a child learns to use banking, the easier it will be for them to manage finances in adulthood. An account and a card are basic tools that each of us uses every day.
Why? Preparing to manage finances independently is a key skill in adulthood. You won't do it for your child their whole life. The sooner they start learning, make their own mistakes, learn the mechanics of relatively small amounts of money - the better their entry into adulthood, independence and responsibility will be!
Why is it good? The child learns the mechanisms of account management, makes transfers, pays by card, which will make it easier for him to function in the adult world of finance.
Benefits: Readiness to manage larger amounts of money, ability to control expenses and income.
Example: Your teen is learning to transfer money, manage a budget, and plan expenses, which helps him be better prepared for future financial challenges. As he gets better at it, you can start giving him money from more budget categories, such as money for his school supplies, summer camp, or clothes.
6. Access to modern payment methods
Account card, BLIK, contactless payments – these are already the standard in everyday payments online and in stores. A child can learn all this from an early age. Thanks to this, your child will be able to pay safely without having to carry cash.
Why? Modern payment methods are faster and safer… and more convenient for your child and you!
Why is it good? They make everyday shopping easier, and your child gains the ability to pay for their purchases and payments online independently... if you allow them to do so in the parent panel, of course.
Benefits: Convenience, security, learning to use modern financial tools.
Example? Your child pays for a sandwich in the school shop using contactless payment, and you receive a notification about the transaction on your phone… or you send them to the local shop, top up their card or account. They can pay on their own, without calling you at the checkout for a BLIK code… and blocking the queue. A much more comfortable situation for everyone.
7. Building responsibility
A child who has access to an account and a card learns to be responsible for their own finances. They must plan their expenses, save for larger purchases, and make sure not to exceed their budget.
Why? Managing your own account teaches your child that money has value and that you can't spend it thoughtlessly because you won't have enough money for things that are really important to you.
Why is it good? The child becomes more responsible because he has to make decisions about his finances. He has to choose what to spend and how much to save… and perhaps most importantly – how to save the “reward” for later, until he saves up money for his goal (but more on that in a moment)
Benefits: Learning to plan and control expenses, greater financial awareness.
Example? Your child is planning to buy a new phone or a new toy, so he learns to save some of his pocket money for a bigger expense… and here we come to a point that is extremely important not only in finances, but in life in general!
8. Learning to plan and set goals
A child who has a bank and savings account learns not only to be responsible for their spending, but also to plan and achieve their goals . The account allows you to set savings goals, such as buying a dream toy, gadget or financing a trip... or multiplying savings or investments. Instead of acting impulsively, the child has the opportunity to plan their goals and learns to strive to achieve them.
Why? Financial planning teaches a child patience and the ability to save for bigger goals, instead of spending everything on current needs.
Why is it good? Learning to set financial goals is one of the key skills that will pay off in adulthood. Your child will understand that achieving bigger things takes time and taking the right actions regularly.
Benefits: Better money management, ability to plan for the long term, satisfaction from achieving larger financial goals.
Example: Your child wants to buy a new gaming console. Instead of expecting an immediate purchase, they plan to save up some of their pocket money over a few months, learning patience and self-discipline to achieve their goal.
9. Access to attractive banking offers
A bank account for a child may be covered by promotions – e.g. additional bonuses for opening an account, better interest rates on savings or loyalty programs.
Why? Attractive promotions are a great way to increase your financial benefits and collect an extra financial bonus.
Why is it good? The child can take advantage of additional bonuses and learns to calculate the total profit from given promotions or banking products.
Benefits: It's quite simple - additional funds from the promotion, greater savings.
Example? Your child's account may be covered by a promotion that gives them PLN 200 for meeting simple conditions... and in super promotions, you as a parent can also receive such bonuses.
Before we move on to the next, tenth point, I have to tell you about the current promotion of the Przekorzystne Account at Bank Pekao SA, because it's the best place! Why? Because your bonuses grow with the opening of an account for children! For me, this is a super banking hit this fall.
Super HIT! Pekao promotion! Free account, +7% savings and up to PLN 500 in losses!
Until September 30, 2024, Bank Pekao SA adults and their children have a chance to open an Advantageous Account in the starting promotions and to invest their savings in the Savings Account and the Mój Skarb savings account with a promotional interest rate.
The Advantageous Account at Bank Pekao SA is primarily:
free account management
0 PLN bank fee for gold card withdrawals from all ATMs in Poland and abroad
high interest rate of 7% per annum on the Savings Account
up to PLN 500 in starting bonuses: up to PLN 400 in bonuses that will be transferred to your account and your child's account, as well as an additional bonus worth PLN 100
I'll tell you everything step by step and explain how you can grab all the bonuses in this promotion!
Up to PLN 400 bonus in the promotion of Bank Pekao SA plus a voucher worth PLN 100!
Adults can expect a bonus of up to PLN 200 (PLN 50 paid immediately after opening an account).
You can also get a PLN 100 voucher for registering your Mastercard in the Priceless Moments® program
If you are a parent, you can also get an additional PLN 200 for a child's account.
Your total benefits will then total PLN 500. That's quite a lot! ... and if you have two children, then for the next account for a child you will get... yes! another PLN 200 bonus!
In addition, you have the option of opening a savings account at 7% per annum. A very high upper limit is a pleasant surprise, because you have guaranteed interest for 5 months up to a maximum limit of PLN 100,000.
This is a really good offer that is worth taking advantage of. All this in a package with a free account in a large and well-known Polish bank!
Bonus up to PLN 200 in the promotion for parents step by step:
Are there any conditions for this promotion? Of course, but you can fulfill them effortlessly and completely remotely – without leaving your couch.
Who is eligible for the promotion at Bank Pekao?
This promotion is open to anyone who did not have (or was not a co-owner of) a personal, savings or term deposit account with Bank Pekao from January 1, 2022 to June 13, 2024. On the day of joining the promotion, you cannot have any credit product with Bank Pekao SA.
What does this mean? It means that if you had, for example, a personal or business account or if you closed your personal account, savings account or deposit with Bank Pekao SA before 1 January 2022, you can take advantage of the promotion.
The bonus of up to PLN 200 is divided into two parts.
You will receive the first bonus of PLN 50 when, by September 30, 2024, you complete an application for an Konto Przekorzystne account on the promotion website along with an account card and the Pekao24 electronic banking service and the PeoPay application.
Also remember to indicate your consent to the processing of personal data to the extent necessary to participate in the promotion.
…now the important thing!
When submitting the application, choose the form of concluding the contract online by confirming your identity using another of your accounts or using biometrics on a selfie (via the website – online or mobile application).
The bank's plus is that it meets its customers' needs and if, due to technical problems, it is necessary to complete the process, e.g. at a branch, it will take into account that we tried to do everything on a selfie. Then we will still receive the prize. However, the condition is clear - the application must be started online . Do you want a bonus? You can't skip this step.
You can receive a second bonus of PLN 150 if in each of the three following months after opening the account (i.e. for accounts opened in September 2024, these will be the months: October, November and December 2024) you make at least 5 payments with the card for any amount. This applies to regular purchases in stationary stores and online. Remember, however, that Blik payments do not count.
And that's it. For meeting this condition you will receive another 150 PLN bonus! That's a total of 200 PLN!
Remember! Until you receive all the rewards, do not terminate the account agreement or the card agreement issued for the account.
Increase your benefits by PLN 100 for registering a Mastercard card, and enjoy total bonuses worth PLN 300.
In addition to the above-mentioned bonus of up to PLN 200 for opening an account with a card, there is also a parallel promotion for registering a Mastercard card with an image in the Priceless Moments® program.
Pekao, in addition to account cards (standard, red and gold), also offers so-called image cards: for example, music, gamers or sports. For such a card, you pay a one-time fee of PLN 5 for its issuance. You pay PLN 5, but you can take part in a promotion with a voucher for PLN 100. You can do everything in online banking, when setting up or after setting up an account.
Priceless Moments® Program – what is it?
This is a loyalty program for Mastercard cardholders. You receive points for every card transaction. Now you can get 8,000 welcome points (worth exactly PLN 100) for meeting simple conditions. You can exchange the points for vouchers for shopping in popular stores or cinemas.
Who can participate?
The "Develop your passions with Bank Pekao SA" campaign may be participated in by adults who were not clients of Bank Pekao SA as of 14.06.2024 and have not yet registered any card issued by Bank Pekao SA in the Priceless Moments® program. Previously registered cards from other banks are irrelevant here.
What should be done?
Register your Mastercard in the Priceless Moments® program by 13/10/2024. You can do it conveniently online in Pekao SA online banking or the PeoPay application.
Within 30 days of registering in the Mastercard Priceless Moments® program, make at least 5 card transactions for any amount (in any stationary or online stores). For meeting these conditions, you will receive 8,000 points (PLN 100).
You will receive the code entitling you to collect 8,000 points via online banking or the mobile application by the end of the month following the date of meeting these conditions.
You need to activate it by logging into your Mastercard account . You select the My Account tab, then Promotional Codes. You enter your code and confirm. Activated points worth PLN 100 are valid for half a year. That's how much time you have to exchange them for a reward from the catalog.
7% for savings!
You can open a savings account while applying for a personal account or via electronic or mobile banking, after concluding the agreement. Remember, however, to do it no later than 30.09.2024, so there is no point in putting it off and it is best to do it while submitting the application, selecting the savings account option.
What are the promotional conditions for the savings account?
Interest rate: 7% per annum.
Validity period: 5 months from opening. This is a guaranteed interest rate for the entire period.
Maximum amount covered by promotional conditions: PLN 100,000.
In addition to new customers, a 7% annual savings account can be opened by current customers who had (or co-owned) a personal, savings or deposit account between 1 July 2023 and 13 June 2024. And during the given period, the monthly total of these account balances did not exceed PLN 2,000.
You can deposit or withdraw money to your savings account whenever you want and it is run for PLN 0. All withdrawals of savings from your savings account to your personal account, made using the mobile app, are free of charge. This way you avoid the PLN 7 fee for your second and subsequent withdrawals in a month.
Interesting offer? On this bank's website you can easily and quickly take advantage of this promotion!
Do you have a child? You can gain another PLN 300 for a child account and increase your benefits to PLN 600!
If you have a child aged 0-17, you can increase your bonus and get an additional PLN 200 to start with for a child's account in Pekao. This is thanks to the promotion "Parents recommend an Account for Benefits to children".
Have more children?Get 200 PLN for additional accounts for children.
Each child account has a separate bonus (2 children = 2 prizes of PLN 200, etc.)
The “Parents recommend the Przekorzystne Account for children” promotion is open to children aged 0-17.
The child must be a new customer. This condition will be met if the child did not have a personal account with Pekao from 1 January 2021 to 13 August 2024. And did not participate in previous editions of the promotions "Parents recommend Konto Przekorzystne for children", "First pocket money for an account with PeoPay KIDS" or "Extra PLN 50 for a teenager".
The easiest way to open an account for your child is online, in online or mobile banking (in the Parent Panel) or at a branch. All you need is the child's PESEL to set up an account for your child.
Products opened for a child and the conditions that must be met depend on the child's age. Details can be found on the bank's website .
For a child under 6 years of age:
By September 30, 2024, conclude a contract for the Advantageous Account and enroll your child in the promotion.
As of November 30, 2024, ensure that your child has more than PLN 200 (e.g. PLN 201) in their Benefit Account.
For children aged 6-13:
By September 30, 2024, conclude a contract for all products included in the PeoPay KIDS Package (Konto Przekorzystne, Mój Skarb savings account, PeoPay KIDS Mastercard card and PeoPay KIDS mobile application) and enroll your child in the promotion.
By November 30, 2024, the child must pay 3 times with a PeoPay KIDS Mastercard or BLIK and log in to the PeoPay KIDS application.
For a child aged 13-17:
By 30.09.2024, set up a contract for a Przekorzystne Account, a Mastercard Debit FX card and the PeoPay application for your child, and enroll your child in the promotion
By November 30, 2024, the child must pay 3 times with a Mastercard Debit FX card or BLIK and log in to the PeoPay application.
The prize of PLN 200 will be transferred to the child’s Benefit Account by 31/12/2024.
An additional reward for the parent in the form of points in the Mastercard Priceless Moments program.
If you have a child aged 6-17, you can increase your bonus even more. Now you can get 8,000 welcome points (worth PLN 100) in the Priceless Moments program. All you have to do is order a Mastercard card for your child with the image "for gamers" (child aged 6-17) or "sport", "music" (child aged 13-17). And this is thanks to the campaign "Develop passions with Bank Pekao SA".
What should be done?
Register your Mastercard in the Priceless Moments® program by 13/10/2024. You can do it conveniently through the Pekao SA online banking system or the PeoPay application.
Within 30 days of registering in the Priceless Moments® program, make at least 5 card transactions for any amount (in any stationary or online stores). For meeting these conditions, you will receive 8,000 points (PLN 100).
How much does a Preferred Account cost?
The Przekorzystne account and the card issued to the child's account are free. So there's no need to worry about fees .
7% on child's savings account.
My Treasury Account is a savings account. The interest rate is 7% per annum for 5 months for amounts up to PLN 5,000.
The bonuses described above are guaranteed and you get them after meeting the conditions.
To sum up – this is a really great promotion, in which it is difficult to find any significant flaws. Both you and your child , after meeting the conditions , collect solid bonuses in cash – PLN 200 each, and in addition there is also a voucher worth PLN 100. The total benefits to be collected in this promotion is as much as PLN 500! In addition, high interest (7%) on the savings account. .. and remember that the benefits increase by another PLN 200 with each child and opening an account for them, or a package of services (depending on the age of the child) !
And now the last 10 points that will convince you that it is worth abandoning the traditional piggy bank and giving your child modern tools for managing finances!
10. Preparation for future investments and financial obligations.
A child who uses a bank account, payment card and savings account from an early age is better prepared to understand more complex financial products, such as investments, credits or loans. These skills will be extremely useful in adult life. The best banking applications have their virtual, child trainers who teach the child through play about the intricacies of the world of banking finances. Everything is adapted to the age and level of advancement of the child on their educational financial path.
Why? Early familiarization with basic financial mechanisms will make it easier for your child to navigate the world of more complex financial products in the future.
Why it's good: When your child learns how to manage an account, a payment card, and savings, they will better understand how the financial market works and will be more aware of their future obligations.
Benefits: Better understanding of products such as credits, loans or deposits. The child will be more aware of the responsibility associated with taking on financial obligations and will be more able to manage them in adulthood.
Example? When your child enters adulthood, instead of being surprised by investment or credit offers, they will be aware of the mechanisms of banking products, which will allow them to make more informed financial decisions, such as investing in funds, various financial assets or a mortgage.
The decision to set up a bank account, payment card and savings account for your child is an investment in their future. It is not only a way to store money safely, but above all an excellent lesson in financial management, planning and responsibility. Each of the reasons discussed shows how valuable such financial education is - from the safety of money, through learning to save, to preparation for adulthood.
Give your child a chance to start developing skills now that will pay off in the future. Money in a piggy bank is great, but it's the bank account that opens up the world of finances to your child, preparing them for the real challenges of adult life. Set up an account today and see how your child develops their financial skills!
I have been recommending on the blog for a long time the Konto Przekorzystne in Pekao SA with a package of accounts and services for children. The current promotions last until 30.09.2024, so don't delay and make your move today! Take advantage of the promotion!
Important information:This article was created in cooperation with a Partner. This means that I received compensation for the time and work devoted to the product review, which will allow me to continue developing the blog. Remember, however, that I never encourage you to buy products that you do not need. What's more, I do not derive financial benefits from the sale of this product. I received compensation only for writing its review. The rules of cooperation are such that the Partner has no influence on my opinions about a given product. My task is to "explore" this product and describe how it looks and works for my readers. The Partner cannot change my personal views and opinions, the only thing is to resign from publication. I make every effort to thoroughly review a given product. I hope that after reading this article you will feel the same way. Your trust is most important to me - so I want you to know what such cooperation looks like. That is why I inform you openly about it, and there are few such articles on the blog.
If you don't take control of your money, sooner or later financial problems will take over your life. Some say that rich people are constantly thinking about money. But that's nonsense! It's poor people who are obsessed with money and don't have enough money. Money has a huge impact on our lives. But remember, it works both ways! What we do and the decisions we make have a huge impact on our finances and whether we are ultimately rich or not. That is why in this article I will tell you about 7 life decisions that have SERIOUS financial consequences. Check if they won't cost you dearly.
The English have a saying: "Pennywise Pound Stupid", which can be loosely translated as "wise about pennies and stupidity about zlotys". This refers to situations in which we are very focused on finding small savings, but at the same time we do not see much more important problems that can ruin our finances. I talk more about this in the video:
Major errors
Many people who are just starting to take care of their personal finances often hear “good advice” about how small, everyday decisions can significantly affect their financial situation. You’ve probably heard these recommendations: if you want to have more money, then:
don't drink coffee in town
make yourself sandwiches for work so you don't have to buy lunch
Instead of going to the cinema, have movie nights at home
put a brick in the cistern to use less water when flushing
I'm not saying this is bad advice. Each of these actions can be effective tactics to help you take better care of your finances. But what good is it if the effects of these actions can be easily squandered by larger, bad decisions. Decisions that we live with the consequences of later for many years, and which determine the quality of our lives.
Decisions with serious consequences
Looking for such important decisions, I have created a list of those that, in my opinion, have the greatest financial consequences and that you cannot prepare for in school. I will not elaborate on them too much, because I am extremely curious about your opinion and would like to discuss this topic in comments. Here's my list:
1. Relationship with the right person
For many, this is not an obvious issue and is seemingly far from finances. Meanwhile, there is probably no greater thief of life's energy and time than a relationship with the wrong person. Staying in toxic relationships inevitably leads to a degradation of the quality of life, also in financial terms. Lack of common financial goals, reluctance to take care of things together about finances, spending money in secret on stupid things - these are just a few examples of actions that can negatively affect the finances of a relationship. The most spectacular finale is, of course, divorce and the great war over money associated with it.
Fortunately, it also works the other way around: a relationship with the right person – who loves us, helps us develop, motivates us and gives us wings – is a real catalyst for positive phenomena in our lives. Of course, I am not encouraging you to abandon your partner at this point/ rki because it doesn't help you take care of your finances. Remember that sometimes it's a matter of lack of communication. In that case, you might be interested in these articles:
I know, I know. I can already see the comments under this article: "I'm in my 40s, it's too late for me." In my opinion - IT'S NOT TOO LATE . Harland Sanders, the founder of KFC, tried different jobs for most of his life. He opened his first restaurant after forties, and only at the age of 62 did he start building the KFC brand. Another example. Look at this year's high school graduates. Today, their mustaches are just starting to fall apart, and in 10 years they will be doctors, teachers, IT specialists, lawyers or in general they will be doing professions that today they do not exist yet. If it works for youngsters, just think how it will work for you – with your knowledge, maturity and life experience. If, of course, you consciously and intentionally focus on action for the next 10 years. Regardless of your age, 10 years from now you could be a great expert in a new field you choose. The decade will pass anyway, and it's up to you where you'll be then . I am providing you with additional materials that may help you with this topic:
No matter how old you are or what your financial situation is – consumer loans and credits are the biggest, most dangerous, most brutal enemy on the road to financial security. The installments will drain your wallet in a ruthless way and will deprive you of your hard-earned money with great efficiency. They will like a ball and chain, like a heavy burden that you can barely carry on your own shoulders. Instead of realizing your dreams and achieving your goals, you have to toil away every day to pay off the next installments and interest. That's not life - it's modern slavery! So – avoid consumer debt like the plague, and if you have it – it’s high time to get rid of this crap from your life. If you need support on this topic, I recommend this series of articles: How to get rid of debt?Now let's move on to the next point.
4. A smart purchase of a flat or house
This decision is worth several hundred thousand złoty, and is often made in a terrible way, based on emotions or opinions of family members or friends who are not familiar with this. If someone stupidly takes out a mortgage loan during this transaction, the beautiful dream of a cozy apartment can quickly turn into a nightmare. in a nightmare with a bailiff in the lead role. A mortgage is the only form of debt that makes sense for individuals. But only if we take it out wisely, after detailed calculation and consideration of various scenarios.
On how to wisely take out a mortgage loan, I created a course: "Mortgage loan step by step". But in this article I would like to draw your attention to one important element that you need to consider when making this decision. It is the location of your apartment or house. And – note – I don't mean the proximity to the city center, but something much more important. The town you decide to live in. Do you really have to spend your life in a town that is becoming depopulated and where unemployment is high, having any place in Poland, or even in the European Union? You decide where you live and reside. Do not leave this decision to chance or the decisions of your parents or grandparents, because it is not their life, but yours.
5. Continuous development and increase in income
Do you want to finish school, get a job and work peacefully until retirement? Or maybe you have a cushy job and would like to stay there until the end of your career? Forget about this approach! It ended in the previous century. If you count on such a scenario, you will not only be poor, but also frustrated. Today, knowledge becomes outdated very quickly. Therefore, continuous learning, acquiring new skills, developing a network of contacts and consistently negotiating higher wages for your better and better work is the best recipe for improving your financial situation. If the topic of increasing income is interesting to you, I encourage you you to read these articles:
For minor financial disruptions and unforeseen expenses, there is a financial safety cushion, which I often talk about on the blog and my YouTube channel. On the other hand, the protection against major financial disasters is proper insurance. Even if you are an incurable optimist, be sure to take care of a few of them. The minimum insurance plan is in my opinion:
Third Party Liability Insurance for Motor Vehicle Owners. Without this insurance, you may, for example, have to pay for the treatment of someone you had a collision with for the rest of your life.
Home insurance against fire and other accidental events.
Medical expenses insurance when traveling abroad.
And in many, though not all, cases: pure protective life insurance.
The lack of any of these policies can very quickly make you (or your loved ones) completely bankrupt. That is why I strongly encourage you to take care of this topic. And now we come to the last point.
7. Saving for retirement on your own
Is retirement too distant a topic for you? Should ZUS take care of you because you pay contributions? Maybe so – but don't fool yourself. It won't take care of you . Don't count on your children either, because then they'll have their own children, their own expenses and their own mortgage loans. Or maybe it's not worth saving because you won't live long enough? If you think so, forget about all the above points, take out as many loans as you can and have fun until you drop on the borrowed money. Just think beforehand - just in case - what you will do when You will live to see retirement – just like 90% of your peers. The real risk is not that you will die before retirement. The real risk is that you will live to see retirement, but it will be a miserable life because you will have no money for anything . The good news is that that you can counteract this today. How? I encourage you to read these articles:
This is my personal list of life decisions with the greatest financial consequences. If we do not make wise choices in these matters, all the Cafe Lattes and Cappuccinos that we give up in the city will not help us much. Of course, this list is not complete - I am counting on Your help in completing it. Please write in the comments what life decisions you think have huge financial consequences.
Everything about IKE and IKZE transfers.
One of the most common questions in readers' emails is how to transfer IKE or IKZE to another institution that has lower fees or a richer investment offer. We also transfer IKE and IKZE accounts for pragmatic reasons, e.g. we want to keep all our accounts in one company or do it where our loved ones do. Transfers of funds or securities are only possible between IKE and IKE and between IKZE and IKZE and in the act they are called "transfer payment", which is a bit counterintuitive, because it has nothing to do with retirement payment from these accounts.
It is therefore not possible to transfer funds from IKE to IKZE and from IKZE to IKE. It is also not possible to maintain two IKE accounts or two IKZE accounts at the same time, because these are personal accounts with a limit of 1 IKE and 1 IKZE per person. For this very reason, for people who want to change the way of saving and investing on IKE or IKZE to another (e.g. from funds to a brokerage account), the only solution is to transfer funds or securities, i.e. a so-called transfer withdrawal, which I will describe today.
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In short
In this article you will learn:
How to transfer funds and securities from one IKE to another and from one IKZE to another.
How much does it cost to transfer funds and securities between IKE?
How much does it cost to transfer funds and securities between IKZE?
Between which third pillar accounts (IKE, IKZE, OIPE, PPE, PPK) can funds be transferred?
An important piece of information at the very beginning of the post is that the issue of transfers between Pillar III accounts is not trivial. Firstly: almost no transfers between different types of Pillar III accounts are allowed (e.g. you cannot transfer funds from IKE to IKZE) . Secondly: even transfers between the same types of Pillar III accounts are not always possible and easy to perform , so I will start with a few examples of what is possible and what is not.
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If you already have an IKE or IKZE, you can transfer funds to any other type of the same account.
It is therefore possible to transfer funds from IKE to IKE and from IKZE to IKZE, which involves the sale of securities/investment fund units or the termination of deposits, or the redemption of bonds, and then transferring the funds to the same type of account in another financial institution.
If you run a brokerage IKE or brokerage IKZE and have purchased financial instruments there, it is also possible to transfer them to the same type of account in another brokerage institution , but only if it agrees to accept these specific financial instruments (more on this in the chapter on the transfer process).
Transferring funds from a PPE to another PPE is only possible after changing the employer , but I do not recommend this transfer, since in such a situation the funds can also be transferred to an IKE (see: the next subsection of this entry) , so instead of investing in (usually expensive) PPE, the funds can be invested in cheap ETFs on an IKE.
PPK has no such restrictions, because we can transfer funds between PPKs without any limits (if we have more than 1 active PPK, because, for example, we work in several places at once or we changed jobs and "have" PPK left over from our previous employer). Technically, it works like this: if we work for, for example, 3 employers at the same time and each of them has enrolled us in different PPKs, then the payments are directed to 3 different institutions, but we can transfer funds between PPKs at any time at our discretion.
For PEPPs, the only limitation on the transfer of funds is the "5-year rule", which in theory blocks the possibility of transferring funds between PEPPs within 5 years of their establishment, because in practice the PEPP provider may depart from this rule and allow more frequent changes of the institution maintaining the account.
Graphically it looks like this:
As usual, when it comes to the third pillar of the Polish pension system, nothing is easy, obvious or predictable, and movements between the same types of accounts are different depending on the type of account. Unfortunately, it is not any simpler in the case of transfers between different third pillar accounts, which are heavily restricted by law.
Transfers between different third pillar accounts
While many people (including me) would like to make any type of transfer possible between different Pillar 3 accounts, unfortunately most of them are either impossible or limited by inheritance/divorce or some other exceptional event that I wouldn't wish on anyone. Here are all the possibilities for transferring funds between different Pillar 3 accounts:
PPE -> IKE in the event of a change of employer (i.e. no longer working for the company offering this specific PPE) by submitting an instruction to the company managing the PPE,
IKE -> PPE without limits, but I don't understand this transfer at all and I absolutely do not recommend it, because it is a change of a potentially cheap service into an expensive one. I would also like to remind you that PPE has strange conditions for payment (I described them in this fragment of the entry this fragment of the entry Your pension "(4/5) - How to increase your pension?" ),
IKE -> OIPE without limits, but this is another transfer that is, in my opinion, pointless, because we will not return from OIPE to IKE (under normal conditions), and OIPE is a more expensive account than IKE (at least with the current market offer),
PEI -> IKE only in the event of inheritance or divorce,
PPK -> IKE only in case of inheritance,
PPK -> PPE only in the case of inheritance, but in my opinion the PPK -> IKE variant is much better for the reasons I mentioned earlier.
Interestingly, no transfer to or from IKZE is possible, which can be explained by tax benefits different from the rest of the accounts (current instead of deferred). Here is a system of partially connected vessels for transferring between Pillar III accounts:
Probably the main conclusion from reading this fragment will be that if your current employer offers PPE and if you do not plan to work for them for the rest of your life, then by all means deposit funds there with the thought that they will end up in your IKE someday ;). And under no circumstances transfer funds from IKE to PPE or OIPE, because for me this is a waste of the potential of the IKE account, which can currently be run in the cheapest (brokerage) form of these 3 types of accounts. If you do not know which IKE to open, I refer you to the entry " Ranking of IKE and IKZE accounts. The best IKE and IKZE for you ".
How to transfer IKE to another institution?
The basis is the fact that you cannot have more than 1 active IKE or IKZE at the same time, but this does not mean that you cannot temporarily open a second IKE or IKZE account in order to transfer yourfunds collected in this form of investment. The legislator allows 30 days as a time for the so-called transfer payment of funds and (possibly) securities to another IKE or IKZE and I will describe this process in this subsection of the entry. Let's distinguish 2 types of transfers between IKE and IKE and IKZE and IKZE:
Transfer of funds (cash) from one IKE to another IKE or from one IKZE to another IKZE, which is possible between any types of accounts, but after prior sale of financial instruments/fund units/bonds or termination of deposits,
Transfer of funds (cash) or financial instruments from one IKE to another IKE or from one IKZE to another IKZE , which is possible only between two brokerage IKEs or two brokerage IKZEs and only if the receiving institution (target, the one where we opened a new IKE or new IKZE) agrees to accept the selected financial instruments.
Graphically it looks like this:
Currently, only transfers from IKE to IKE and from IKZE to IKZE are possible, and it is worth mentioning that if the institution accepting the funds has the given securities in its offer (the ISIN code counts, so you can usually exchange one currency version of the same ETF for another [they are worth the same, after currency conversion]), the transfer can take place in the form of securities (without having to sell them and then buy them from a new institution). Otherwise, you must first sell the instruments you have, then transfer the funds to a new IKE or IKZE, and then purchase the same or different instruments/fund units on a newly opened IKE or IKZE account.
What information is transferred with an IKE transfer?
You may be wondering what information is transferred with a transfer between two IKE accounts or between two IKZE accounts. According to Article 21 of the Act on IKE and IKZE, in addition to the obvious information (such as personal data), the institution to which you are transferring the account will receive the following information:
date of first deposit or date of receipt of first transfer withdrawal (whichever is earlier),
total payments in each calendar year,
the amount and dates of transfer payments accepted on IKE or IKZE,
the type, quantity and purchase dates of securities, if transferred,
the amount and dates of partial refunds (only from IKE),
current value of funds from payments,
the sum of basic contributions paid if a transfer from PPE was accepted to IKE.
All of the above information is necessary for, for example, correct calculation of the tax due in the event of a partial or full withdrawal from IKE (I described it in the entry " How to withdraw money from IKE and IKZE? Withdrawal, refund and partial refund "), therefore, they must be transferred without question together with the funds or securities in the account. It is time to describe the process of transferring IKE and IKZE accounts to other institutions. I will start with the simpler procedure, i.e. the one in which we assume the sale of securities and the transfer of cash from IKE to IKE or from IKZE to IKZE.
How to transfer funds to a new IKE or IKZE?
This operation involves selling what is on your current IKE/IKZE and ordering a transfer of the funds obtained in this way to another institution. It is performed in 5 steps, which I have presented in the diagram below:
Regardless of the type of IKE you have and the IKE you want to transfer funds to (or the IKZE you have and the IKZE you are transferring funds to), the process should be very similar.
Sign an agreement with a new company managing IKE or IKZE,
(Important) indicate that you are opening an account with the option of "transfer withdrawal from another institution",
This can usually be done online/by mail,
Receive a document confirming the opening of a new IKE or IKZE,
Such a document is usually received physically (by traditional mail), but sometimes it can be received electronically,
Make sure it's signed,
Find and fill out the transfer withdrawal application in the institution managing the current IKE or IKZE. Attach a document confirming the opening of a new IKE or IKZE, sign both documents and send them to the company managing the current IKE or IKZE,
Wait for the funds to be transferred between IKE accounts or between IKZE accounts (takes up to 14 days),
After receiving the transfer, the new IKE or IKZE will be activated and the old one will be closed.
The process consists of receiving confirmation, finding and filling out the application and forwarding them (signed) to the company maintaining the current third pillar account. Depending on the institution, this can often be done 100% remotely/online, i.e. without the need to visit a branch, but if there are any ambiguities in the transfer process, we will probably not avoid this visit or phone call. If you want to transfer not only money, but also financial instruments, then continue reading.
How to transfer financial instruments to new IKE or IKZE?
The matter is a bit more complicated if you are transferring between two brokerage IKEs or two brokerage IKZEs and on the current IKE or IKZE you have purchased financial instruments that you do not want to sell. In such a case, there is 1 point in the instructions and step 4 is slightly changed. Here is how to transfer securities between two IKEs or between two IKZEs by transfer withdrawal:
Here is a step-by-step guide on how to transfer securities between IKE and IKE or between IKZE and IKZE:
Ask the target institution (e.g. by email) whether it will accept your financial instruments, providing their ISIN codes / names / tickers (to make the work of the person checking as easy as possible),
The brokerage firm may accept or reject the transfer of any financial instrument at its discretion (usually it only does this if it is not available on offer),
If the company accepting the transfer from IKE or IKZE rejects the selected financial instrument, you can either move somewhere else or simply sell this particular security and transfer the remaining instruments + free cash to this brokerage institution,
Sign an agreement with a new company managing IKE or IKZE,
(Important) indicate that you are opening an account with the option of "transfer withdrawal from another institution",
This can usually be done online/by mail,
Receive a document confirming the opening of a new IKE or IKZE,
Such a document is usually received physically (by traditional mail), but sometimes it can be received electronically,
Make sure it's signed,
Find and fill out the application for a transfer withdrawal with the transfer of financial instruments (important, because it may be a different application than in the previous instruction) in the institution maintaining the current IKE or IKZE. Attach a document confirming the opening of a new IKE or IKZE, sign both (or three) documents and send to the company maintaining the current IKE or IKZE,
Wait for the transfer of funds and financial instruments between IKE accounts or between IKZE accounts (takes up to 14 days),
in practice, this type of transfer may take slightly longer than the transfer of funds alone,
After receiving the transfer, the new IKE or IKZE will be activated and the old one will be closed.
Note that thanks to this you have 2 IKEs only temporarily and only one of them is active (meaning there are funds/financial instruments on it).
Do the deposit limits disappear after transferring IKE or IKZE?
I'm adding a short paragraph about this because many people ask me this question. Let's say that the IKE deposit limit in year X is PLN 25,000, and you've already used 50% of this limit by depositing PLN 12,500 into IKE in institution A. In July, you notice that company B has a much better offer and decide to order a transfer payment from IKE in company A to IKE in company B. What happens in this case to the used and unused IKE deposit limit in year X?It should be transferred to the new institution as one of the pieces of information (this was mentioned earlier) in the transfer process, so company B should allow you to pay another PLN 12,500 in year X, i.e. the entire unused IKE deposit limit.
If the company accepting funds or securities on your new IKE or IKZE refuses to allow you to make payments in a given year, remind them that, together with the transfer, they were obliged to accept information about the amount and date of payments to this account in the previous company and are now obliged to allow you to make an additional payment (until the annual limit is exhausted).
How much does a transfer payment order from IKE or IKZE cost?
The IKE and IKZE Act allows for the collection of up to PLN 150 if the client orders a transfer withdrawal within 12 months of the date of opening the account. My analysis shows that most institutions actually collect it, but some of them have waived it (for example: BM mBank). Currently (2024) these fees are as follows:
Some institutions (e.g. DM BOŚ or BM PKO BP) charge the statutory PLN 150 just for "slamming the door", i.e. not only for a full refund from IKE or IKZE, i.e. their liquidation, but also for a transfer payment to an account of the same type in another institution.
Apart from this fee, the withdrawal of funds (cash) itself usually costs nothing, but I cannot write the same about the transfer of financial instruments between brokerage IKEs or between brokerage IKZEs.
How much does it cost to transfer financial instruments to another IKE?
If you would like to transfer financial instruments held in a regular brokerage account (not IKE or IKZE) to another company, then in 90% of cases your brokerage house will charge a fee for this (the accepting brokerage house will probably charge a fee as well). In the case of brokerage IKE and IKZE, it is a bit better, because most companies have waived the "exit" fee, i.e. the fee for transferring instruments (Polish and foreign) from IKE or from IKZE to another company. For example, in 2024, neither BM mBank nor DM BOŚ will charge this fee if you decide to launch a transfer of foreign securities from IKE or from IKZE in these companies elsewhere:
Unfortunately, I cannot say the same about the "entrance fee", i.e. the fee for accepting a transfer of foreign financial instruments, for which DM BOŚ charges PLN 65 / EUR 15 / USD 15 / GBP 13 for 1 ISIN (depending on the currency of the instrument's listing). This fee applies only to foreign instruments, because DM BOŚ does not charge such a fee for accepting instruments listed on the WSE on IKE or IKZE.
Looking for a cheap stock and ETF brokerage account?
If you already have an IKE-Bonds account open and you are interested in having a SUPER IKE account, visit the nearest Customer Service Point and complete and sign: "Annex to the Agreement on maintaining the Individual Retirement Account IKE-Bonds transforming the IKE-Bonds account into a SUPER IKE account".
Many people are also concerned about the costs of such relocations.
When transferring from IKE Bonds, SUPERIKE or IKZE Bonds, do we pay a penalty for early redemption of bonds?
When making a transfer withdrawal from an IKE Bonds, SUPERIKE or IKZE Bonds account, there is no fee for early redemption of bonds (which used to be, for example, PLN 2, and currently [for new issues] PLN 3 for 1 EDO bond). This may be an additional argument "for" transferring an account from an IKE Bonds to a brokerage IKE or from an IKZE Bonds to a brokerage IKZE, which I suggest in the post " Why do stocks fit IKE better than bonds? ".
Since you already know how to transfer IKE or IKZE to another institution and how much it may cost, let's check now how you can make the most of the third pension pillar (more as a curiosity than anything else).
Tricks related to IKE and IKZE
If you've been reading my posts for a long time, you probably know that I'm against our Polish national "scheming" and "slying", so I'm far from recommending abusing the nuances of the Polish pension system. If you've been reading my posts for a long time, you know, however, that I really like to analyze laws in depth and that certain things "scream" in the context of the possibility of optimizing your future pension. I'll add that both tricks are completely legal, but in my opinion they involve a certain amount of scheming (which I generally don't recommend in life, because it ends differently, and simple long-term investing shouldn't necessarily involve scheming).
Paying more into PPE knowing that we will change employer
Most of us (especially if you belong to the millennial generation or one of the later/younger ones) will change jobs at some point in the future. Since this entry concerned only transfers between Pillar III accounts, I did not add information about the employee's possible additional payment to PPE, which in 2024 amounts to as much as 4.5 times the forecasted average salary in the national economy, i.e. PLN 35,208. This means that each employed PPE participant can independently pay 50% more to PPE during the year than the IKE contribution limit (let me remind you that in 2024 it is PLN 23,472 (3 times the forecasted average salary in the national economy)), and then (after changing employers) easily transfer these funds to their IKE.
If you are tired of working for your current employer and have a PPE with them or you know that they have one, then set up this account, make the maximum additional (employee) payments to this account for 1-2 years, and when you find a new job, order a transfer payment to your IKE account in your PPE. This is the best way to "cheat the system" in terms of paying much larger amounts to IKE than the statutory limit allows. Especially since the transfer of funds from PPE to IKE is usually free of charge and takes a maximum of a few weeks, so it is simply worth doing.
There is one "but" here - after making a transfer withdrawal from PPE to IKE, the institution running IKE may refuse the possibility of making a so-called partial return (pre-retirement) from this account. So be careful with this transfer if you are not sure whether you will not need some of the funds from your IKE at some point, but you do not intend to liquidate it (return it completely).
Contribution and tax relief of IKZE in order to withdraw it in a year without income
I often (including in the post " Is an IKZE account worth it? IKZE depending on the PIT rate ") mention that you should not save and invest in an IKZE if you are not sure that you will survive until retirement with this account. This is because an early (pre-retirement) return from an IKZE can be very costly from a tax perspective:
investing "inside" IKZE - similarly to investing on IKE - allows you to save on Belka tax and stock exchange tax (on capital gains),
However, when we make a refund from IKZE, the entire refunded amount increases our income earned in a given year (it is settled in PIT-36), which means that we can, for example, fall into a higher tax bracket and if the payments to IKZE saved us 12% of tax, the refund from IKZE can cost us up to 32% of tax!
So what would the trick be regarding the (pre-retirement) IKZE refund? To order a refund from IKZE in a year in which we do not earn any other income, so that it is "catched" to the tax-free amount in whole (or in part).
This means that if we have not accumulated too much money in IKZE, we lose our job and do not show any other income during the year, the return from IKZE can "save our skin", and is completely exempt from taxation. This is just a digression, because it does not concern the subject of transfers, but since IKZE does not allow any transfer to another account of the third pillar, it is worth knowing about this tax-favorable possibility of emergency use of the funds accumulated in this account. Especially since by making a return from IKZE, we do not pay the outstanding Belka tax or stock exchange tax.
In this shorter than usual post, I discussed the process of transferring funds or financial instruments from IKE to another IKE or from IKZE to another IKZE. I wanted the post to be complete, so I also mentioned the fees associated with such transfers and the possibilities of transfers between different and the same third pillar accounts, including PPK, PPE and OIPE. I hope you liked the post and if you find it useful, pass it on to a friend who may be interested in transferring their IKE/IKZE. If you have any questions or suggestions for further topics, simply leave a comment under the post, which I will try to answer as soon as possible.
If you like my work and want to support me, remember to follow me on Facebook and Twitter (X) and subscribe to my YouTube channel . Thanks in advance and see you next time!
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Reservation
The information presented on this website is the author's private opinions and does not constitute investment recommendations within the meaning of the Regulation of the Minister of Finance of 19 October 2005 on information constituting recommendations concerning financial instruments, their issuers or exhibitors (Journal of Laws of 2005, No. 206, item 1715). The reader makes investment decisions at their own risk. The author of the blog is not responsible for the content of advertisements placed on the blog.
You earn quite well, you don't squander money at all, and yet - again you haven't managed to save anything. Do you sometimes have "too much month at the end of money"? You're only halfway through the month and there are only meager remnants of your paycheck. Where did those go? all the money? In this article, I will show you how to finally take control of your finances. I will also share with you an effective tool that will help you take the first step towards improving your finances.
My name is Ania Mączka and I have been supporting Marcin as part of the FBO Team for 5 years. In this article, I would like to share with you 3 steps to creating a household budget . This is the magic tool that will help you take control of your own finances and you will be the one to say their money what to do instead of wondering where it went. Why am I the one to tackle this topic? I share the reason in this video:
Just a few years ago, before I met Marcin, my personal finances were a complete mess. Although I earned quite a decent salary, I was always “down to zero” at the end of the month. On top of that, my current husband, then fiancé, was paying off a consumer loan. We had big dreams – a wedding and a small wedding reception, travel, home renovation… I could go on and on. What good is it if all you hear in your bank account every month is the chirping of crickets? I started frantically looking for a way to take control of my finances and get them in order. I found Marcin's posts about the household budget and I decided to give this tool a chance. Now I can't imagine my finances without a budget, but believe me, it wasn't love at first sight.
I know that the topic of budgeting can seem extremely complicated and very tiring. I had that feeling myself when I was just starting to delve into the subject. But, you know what? To create your first household budget, you only need 3 steps. Before I tell you what those steps are – let’s start from the beginning. What is a household budget and why is it worth trying to keep one? We’ll also dispel one of the biggest budgeting myths.
What is a household budget?
A household budgetis a WRITTEN plan for your money. It is a map that will guide you to your destination. The purpose of your journey is, of course, to improve your financial situation. To get from where you are to where you want your finances to be, you need a map , which you will look at during the journey. All this so that you do not lose your way and reach your destination calmly. The point of budgeting is that instead of drifting from expense toexpense, you determine in advance what amounts you WANT to allocate to specific categories of expenses and Over the course of a month, you monitor whether you are sticking to these assumptions .
Interestingly, many people think that budgeting is about writing down expenses. And this is one of the biggest myths about budgeting. Collecting receipts and writing down expenses is just ONE element of budgeting – important, but honestly, not the most important. Writing down receipts , is driving a car, looking only in the rear-view mirror. Although you will inevitably look at it while driving, it is not the most important thing on a journey. To get somewhere (especially to places you have not been before - for example, in a country of very high value netto) you will need a map, a clean windshield and a good travel plan. And that is all a household budget is.
Why keep a household budget?
Why bother with budgeting at all? It's simple. When you work, you sacrifice your time - your precious life, really - to earn money. A budget is a tool that will make sure you spend that money according to your values and what you care about the most. Thanks to him, you don't spread your life thin and don't spend money on crap that you don't need.
How would you feel if your employer offered to pay you in unnecessary junk that's lying around in your basement or closet instead of money? It sounds absurd, doesn't it? You definitely wouldn't agree! So don't agree to thoughtlessly spending your hard-earned money. money. Create a budget and tell your money where to go instead of wondering where it went at the end of the month . Now I'll show you how to do it in practice.
How to Make a Home Budget – 3 Steps
It's actually easier than you think. Believe it or not, you're 3 steps away from the first month in which you'll be in control of your own finances. What are those steps? I'll tell you now:
STEP 1: Preparing for the trip. We pack our backpack, check how much fuel we have for the trip and what points we want to visit on the route
STEP 2: Create a financial roadmap for the next month and stay on track
STEP 3: Wrap up your trip and draw conclusions before your next lap (i.e. budget month)
Later in the article, we will discuss what exactly needs to be done in each step.
Own work: Reinventing the household budget – 3 steps to success
Step 1: Preparing for the route
We start with the first step, PREPARATION. Before you start setting amounts and creating your first budget, you will need a little reconnaissance . Preparing your backpack and car. Don't worry, this step won't be too time-consuming. You need 3 things.
Check how much fuel you have
First, you need to know how much fuel you have. I think you'll agree with me that it's hard to get going without it. The equivalent of fuel is of course your money. Or more precisely - how much money you have at your disposal NOW . Let's assume it's the end of the previous month and you start preparing a budget for the following month. Check how much money you have at a given moment: in your wallet, in your pocket, in your bank account, etc. If you have PLN 2,500 in your account and PLN 500 in your wallet, it means that you have PLN 3,000 at your disposal. It doesn't matter how much you'll get in a month, or when you'll get your next transfer. That is, to stick to our metaphor - when you stop at another gas station on your route. We'll start with what you have NOW. If you get more income over the course of a month, you'll easily replenish budget for these funds as they become available.
Determine how much money you have at your disposal NOW
The only thing that counts is the money you have at your disposal now.
Add up your bank account balance and available cash.
If you are managing a household budget with your family, take into account all the funds that you have at your disposal in a given month.
If additional funds flow to you during the month, you will then include them in your budget.
Decide which places you want to visit
Secondly, you need to determine which cities you want to visit along the way. That is, what expenses you need to and want to cover during the month. Therefore, a very important element of preparing a budget is to determine the categories of expenses that you incur and the approximate amounts that you allocate for them . Of course – the expense expenses are not equal. It is the same in travel – some cities are a mandatory point, others – completely optional. It is the latter that gives your trip flavor. And it is the same in expenses. Some of them are our needs – i.e. expenses that you have to bear, to have a roof over your head, a full belly and debts paid. Other expenses are whims . That is, things and amenities that you can do without. But we know - it is our whims that add flavor to life. That is why it is definitely worth including them in our plan.
Own study: Needs and desires – how do they differ from each other?
When preparing your budget, DETERMINE which expenses are absolutely necessary (your needs) and how much you need to spend on them . Then, determine the categories of your wants and the approximate amounts you currently spend on them. You can do this by looking at your bank account, or by doing a monthly experiment – writing down all your expenses and adding up the amounts in specific categories at the end of the month. If a month is too long for you – write down your expenses for 2 weeks and make some assumptions – e.g. if you spent 400 PLN on food in 2 weeks , over the course of a month it will be approximately PLN 800.
This stage of preparation ends with a ready list of your spending categories – you have them sorted from most important to least important and you know approximately how much you spend on these categories NOW.
List your expense categories and prioritize them
To efficiently identify the categories that you have, review your account history or write down your expenses for a few weeks.
Some standard categories of needs are: Bills, Fuel, Food, Savings, Household chemicals. Categories related to wants are: Eating out, Subscriptions, Clothes, Going out, Toys, etc.
Needs are more important than wants and should be higher in the hierarchy of categories.
Cravings add spice to life – so ask yourself which ones bring you the most value and include them in your budget.
If you want to look at a specific spending category, you can break it down in more detail. When I tried to reduce my food spending, I had separate categories: Grocery shopping, Eating out, Small food indulgences (like a yeast roll at a coffee shop or a candy bar from the vending machine at work).
With your first budget, you can grasp the categories “roughly” and adjust them to your needs in the following months, once you get the hang of budgeting.
What else will you need to be able to make our budget trip? Choosing a means of transport!
Choose your means of transport
Just like in life. You can go on a trip by car, on a motorbike, or even - by bike. The equivalent of this choice in budgeting is determining what you will create your first budget in. There are several options - if you have the drive, a lot of time and patience, you can simply do it on paper (this would be the equivalent of a bicycle). If you like spreadsheets, you can create your budget in Excel or Google Sheets. And if neither of those options sound good, you can try one of dozens of budgeting apps.
Own work: Sample applications for managing a household budget
What is most important when choosing a budgeting method? First of all, your personal preferences. The tool must be tailored to you. If you get a fever just looking at Excel, then maybe keeping a budget in it will not be the best solution for you. That was the case for me – because at work I worked a lot on Excel, the thought of opening it later in my free time to manage my budget gave me shivers! Everything changed when I started managing my budget in a phone app – the whole system was much more pleasant and it was easier for me to stick to it resolution. Just remember not to get too hung up on which tool to use. That's really secondary. If you don't have a preference, start with Excel, and once you've done your first few budgets, try other apps.
If you chose Excel, I have a surprise for you – Kasia has prepared a special budgeting file that will help you take action:
It is important, however, that the tool is not an INTERFERENCE that discourages you from keeping a budget. Therefore, choose a tool that is easy for you to use and does not arouse your reluctance.
Several options: budget on paper, in a phone app, or in a spreadsheet.
That's it for preparations. We have our vehicle, fuel, and an outline of the cities we'd like to visit. Time to roll up our sleeves and plot our exact route.
Step 2: We plan the route and set off on the journey
We are moving on to the second step, in which we will CREATE our BUDGET and live with it for the whole month. As you probably remember, a household budget is a WRITTEN plan for your money. And exactly: “written down” is the KEY to success in our second step. We will also draw from the previous step – our preparations.
Plan your exact travel route
We start by planning the exact route of our trip. In the previous step we determined which points we want to visit, now we need to check if we have enough fuel to visit all these places. In other words – we move on to creating our budget. In practice, it is simply about assign a very specific task to each zloty that you have at your disposal. Imagine that each zloty is your employee, to whom you have to assign a job to do. A group of employees will take care of the bills, others will take care of the apartment fees, and still others - food. When making a household budget " We “spend” our money on paper (or in an app) before the month even starts.
At this stage, you will use the list of spending categories created in the first step. Review it carefully and determine what your budget will look like. First, budget money for the most important things (bills, loan installments, food), and only then for the rest. Thanks to this you will know exactly what you can afford and which expenses must wait for better times or for a new inflow to the account. The point is that when we spend money on paper, we start by covering our most important expenses and at some point we will run out of money , we are sure that we will pay for the most important needs, and there will be no money left for whims. When you plan on paper and something does not fit - it is a clear sign that you need to make changes to the budget. And that is what it is all about.
I don't know if you caught this, so I'll repeat it again: in this step, EVERY złoty must be given a specific task to perform. This means that the sum of the planned installments, expenses and savings must be EQUAL to the sum of funds you have. When the money is transferred to your account additional funds – you can easily add them to your budget and decide which expenses you will cover from them.
Assign each zloty a specific task
Spend your money on paper – remember that every zloty must have a very specific purpose.
Start by meeting your NEEDS , then move on to your WANTS.
If your budget doesn't line up on paper, it definitely won't in real life. Review your expenses and try to cut out the less important ones.
The total of your planned expenses must be EQUAL to the total of your funds.
Stick to the established route…
And great – we have a plan ready, so let's hit the road! The second stage of this step is checking whether we are sticking to our plan, i.e. the established budget. How often should we look at the map? So often that we don't get lost! Only at this stage do we move on to writing down expenses. This is nothing more than checking off on our travel plan the attractions we have already visited.
It is at this stage that many people give up, because it requires a certain systematicity. My advice to you is this – write down receipts, preferably right after leaving the store or after making a transaction. Additionally, set a reminder on your phone, which will go off every day, e.g. . around 8:00 PM and will remind you to write down the transactions you have made. If you happen to neglect this habit - DON'T LET IT GO! Get back into the game as soon as possible and try to recreate the transactions as accurately as possible based on the history of the account and, for example, your mail, where you can find some online shopping.
Don't worry if you don't get to all your expenses. Just make your own assumptions, or create a new category in your budget: "I don't know what it went to." In my budget, I have 200 PLN for such strange expenses every month. That's my buffer. , which I often allocate to other categories at the end of the month. I encourage you to create such a category for yourself. Now you may be thinking: "But how? How can I create a new category during the month within an already established budget?". YOU CAN! You have my full permission and support in this matter. There is one condition: the total expenses in a month cannot exceed your earnings.The number of times we move money between categories during the month does not matter. Your employees have simply received a new task.
Write down your expenses and check that you are not exceeding your budgeted spending level .
Make writing down your expenses a new habit. Set reminders on your phone, stick a note in your wallet saying “write down this expense,” and ideally, write down your expenses right after you make a purchase.
If you forget, return to the game as soon as possible and recreate the transactions.
Create a category: "I don't know what it was spent on" or "Mystery expense" - if you can't identify some transactions, put them in this category.
Don't let go, even if you forget a few times. It doesn't matter how many times you fall, it matters how many times you get back up (Rocky? I think so!)
… and sometimes consciously deviate to more interesting places
Shifting money between categories is a natural part of budgeting and the last part of our second step. It's about making informed decisions about your budget. Just like when you're on a road trip, you sometimes decide not to visit a certain place because a more important one has come up, the same goes for budget – when an additional expense appears during the month, you determine whether to include it in the budget and from which category you can cover it. If new income has appeared in your budget during the month (for example, a bonus payment or 100 PLN found on the street) – As soon as you receive them, decide what you will spend them on.
Own study: When planning your household budget, make informed decisions
EVERY penny must have its purpose. Remember that if in such a situation you feel good with your current budget and do not need any more whims, it is always a good idea to allocate additional funds to increase your savings.
Make informed budget decisions throughout the month
If more valuable desires appear, determine which categories will cover the new "input" into the budget.
If you receive new income, budget for it immediately. Either for additional spending categories or simply increase your savings level.
You can move funds between categories as many times as you want. The important thing is that your expenses cannot exceed your income and your needs must be covered before your wants.
Okay – let's assume that everything went more or less as you planned and YOU REACHED YOUR DESTINATION! You kept a budget for the whole month. I hope that after a month you will see the first effects – I remember my surprise perfectly when after a month of conscientious budgeting I had a surplus at the end 400 PLN. I felt like I got a raise at work. I hope that your results will be similar or even better. But even if not - you can be proud of yourself for taking action with your finances throughout the month. It is this kind of action that will lead you to the magical land of high net worth. But let's not get too carried away, IT'S NOT OVER YET! Time to move on to step 3.
Step 3: We summarize our route and prepare for the next one
The route is done, it's time to sum it up. To make the next lap more enjoyable, we need to take a moment to analyze our fuel consumption, consider whether all the cities on the route were actually good stops, whether we didn't get a flat tire along the way and whether we got to where we planned . What else? This step is the moment when we decide whether we want to change anything in the plan for the next month. So after the budget is done, we summarize and draw conclusions from the past month. And this is the secret sauce of budgeting, so whatever happens – do not give up on this stage!
I have 3 elements for you to consider in this step:
First, think about what got you into a corner along the way. Did anything surprise you while you were budgeting? Did anything in your budget go wrong? Identify all the expenses that surprised you and ask yourself if you could have avoided thesurprise. prevent. Be sure to write down all the conclusions from this question.
Second, choose one expense category to optimize for the next month. This could be a category where you see some easy ways to reduce your expenses. For example, you see that a lot of your money is spent on subscriptions that you don't really use. Canceling some of them are easy wins.
And finally, thirdly – create a budget for the next month. Take into account all the conclusions from the first approach. If any category of expenses has spectacularly fallen apart and it may be similar in the next month – increase it. If after a week you have a crisis of writing down expenses – set yourself during this time, additional reminders and motivators. Anything that will help you act for the next month.
Summarize your budget:
Which expenses surprised you?
Could you have predicted them in any way?
Review your spending against needs – do any categories stand out and could be optimised?
Review your spending on whims – did all of them bring you value? Or could you have spent the money better? Pay attention to this when creating your next budget.
And that's really ALL. These are 3 steps that will help you go from money slipping through your fingers to taking responsibility for your finances. And now the ball lands in your hands. Download Excel for budgeting: DOWNLOAD EXCEL HOME BUDGET
and try to make your first budget. It doesn't have to be perfect. The important thing is to take the bull by the horns, start acting and take that first step. If you encounter any problems - IT'S NORMAL. Leave a comment and we'll try to help you. I'm keeping my fingers crossed for you and I'm waiting to hear how it went for you.
APPENDIX – How to Use Excel for Budgeting
Finally, a quick tutorial of the budgeting file. When you open the file, you will see that it has tabs at the bottom:
Home budget - template
Budget_template – contains a template of a completed household budget
Budget 1st month and subsequent months (2 months, 3 months) – these are the budgets for the following months.
We start in the Budget Month 1 tab. At the top right, you can change the budget month to another one if you start budgeting not in October, but, for example, in December:
Fill out the table: Funds in accounts – enter the funds at your disposal for which you are creating your budget in the individual fields.
3. You can enter additional revenues in the “Additional revenue budget” table:
4. In the table: “Expense budget” plan your budget. For your convenience, you will find the most common expense categories in the file. Scroll down the sheet to add additional expense categories.
5. List your expenses – on the right side of the budget you have space to list the amounts of your expenses in different categories throughout the month:
6. In the last tab you will find a SUMMARY – you will see at a glance how much you spent in each category in a given month of the year.
Seneca, the Roman philosopher, said, “If one does not know to which port one is sailing, no wind is favorable.” These words are especially apt in the context of financial planning. Without clear goals, we are unable to make the right decisions that will lead us to success. The next, crucial step on your financial path is to determine where you are headed. In other words, you need to set your financial goals—both small and large, depending on your needs.
Big financial goals are usually tied to life priorities, such as buying a house, securing retirement, or educating your children. But before you jump into those bigger plans, it’s worth focusing on smaller, more achievable goals that will help you build a foundation for the bigger ones. With this approach, you’ll get closer to your ultimate goal, step by step.
One of the most important aspects of setting financial goals is their specificity. You need to define exactly what you want to achieve, when, and what resources you will need to achieve it. For example, instead of saying, “I want to save for the future,” say, “I want to save 20,000 PLN over the next three years for a down payment to buy a flat.” A goal formulated this way is not only clearer, but it will also be easier for you to monitor progress and make any necessary adjustments.
When making financial decisions, you will encounter many traps that can lead to incorrect conclusions and actions. One such trap is the so-called gambler's fallacy . This phenomenon is the false belief that if something has happened several times in a row, the probability of it happening again is lower. For example, if you toss a coin and it lands heads several times, you may wrongly assume that it will land tails, when in fact each subsequent toss has the same chance of heads as tails.
Another common trap is ignoringthe law of regression to the mean. This phenomenon refers to the tendency of extreme results to revert to the mean on subsequent measurements. For example, if a particular investment has generated unusually high returns, there is a high probability that those results will revert to a more average level in the future. In practice, this means that it is not worth assuming that extremely good results will continue indefinitely, and one must allow for the possibility of reversion to the mean.
Confirmation bias is another trap you need to watch out for. This is the tendency to seek out and interpret information in a way that confirms our preconceived notions. For example, if you think a particular investment is a good one, you may selectively seek out information that confirms your opinion, ignoring red flags. To avoid this bias, it’s important to consciously seek out information that might challenge your beliefs and be open to different perspectives.
Another cognitive bias that can affect your financial decisions is the attribution bias. This is when you attribute the causes of your successes or failures to factors that are not relevant. For example, you may assume that your successes are due to your skills alone, and that your failures are due to bad luck or unfavorable circumstances. This way of thinking can lead to overconfidence and risky decisions without proper analysis.
Understanding these cognitive biases is the first step to avoiding them. To effectively manage your finances, you need to not only be aware of these pitfalls but also implement strategies that will help you make more informed decisions.
First and foremost, it’s important to regularly monitor your finances and assess your progress toward your goals . Setting realistic, specific goals and reviewing them periodically will help you stay motivated and adapt to changing circumstances.
Secondly, it’s worth developing your financial knowledge and using available tools, such as financial calculators or budget management apps. The more you know about finances, the easier it will be for you to avoid pitfalls and make decisions that will actually bring you closer to your goals.
The journey to financial independence is a process that requires not only knowledge and skills, but also awareness of the pitfalls that may lurk at every turn. Remember that every decision you make has its consequences. Striving for conscious and thoughtful financial management is an investment in your future that will bear fruit in the form of stability and security.
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Managing your household budget is a key aspect of any relationship. Choosing the right financial model can significantly impact the quality of your relationship. A well-chosen way of managing money builds trust and harmony, while an improper one can lead to conflict. It is important to work out a solution that meets your needs and financial goals together.
Here are some commonly used financial management models and tips for choosing the right one for you.
One joint account
All income goes into one account, which both partners use on a regular basis. This model allows for full transparency and joint financial decision-making. It is easier for the couple to track and manage joint funds, which can build a bond and strengthen cooperation.
Separate accounts
Each person in a relationship has their own separate account, which receives their individual income. Shared expenses are divided according to established rules, such as income ratios or fixed financial contributions. This model allows partners to maintain financial independence and can be beneficial when they have different money management styles or financial obligations.
Joint and separate accounts
A couple can have both joint and separate accounts. In addition to their individual accounts, they also have a joint account for joint expenses, such as housing bills, food, and other shared needs. This model allows for a balance between financial independence and joint management of funds for everyday needs.
How to find the best model for yourself?
Here are some tips to help you find the best model for managing your home budget:
Talk openly about your finances
The first step is to have an honest conversation about your finances. Review your income, expenses, debts, and savings together. Develop shared priorities and financial goals. It is crucial that you both feel comfortable and have a clear understanding of the financial situation of your relationship.
Understand your financial habits and needs
Each of you has your own unique financial habits and needs that you learned from your parental home. Understanding these habits and needs will help you create a financial management model that works for you and your partner. Talk about which expenses are your top priorities and what you expect from financial management in your relationship.
Establish clear rules
Regardless of the model you choose, it’s important to establish clear rules for managing your finances. Define who pays for what expenses, how much money goes into a joint account, and what your savings goals are. Clear rules can help avoid misunderstandings and conflicts.
Be flexible
Your requirements and financial situation may evolve over time. Be prepared to be flexible and adapt your budget management model to changing circumstances. Regularly discuss financial issues and adjust your approach to meet emerging needs.
Examples of planning a home budget
There are many tools and methods that can help you manage your household budget.
Here are some examples:
Excel: Creating spreadsheets to track your income and expenses can be especially useful because they can be customized to suit your needs and allow you to accurately track all your financial transactions.
Budget Apps : Using apps that help you manage your finances allows you to easily track your budget, automatically categorize transactions, and access reports and analytics, which can make day-to-day financial management much easier.
The Jar Method: Separating money into different spending categories using jars or envelopes can be a simple and effective way to control your budget and ensure that money is allocated to specific purposes, which in turn aids in saving and financial planning.
Finding the best model for managing your home budget requires open communication, understanding your needs and habits, and flexibility.
Every couple is different, so it’s important to find a model that fits your individual needs. Remember, regular financial discussions and budgeting together are key to a healthy and happy relationship.
How to live happilyand build financial harmony in a relationship, without quarrels and misunderstandings!
Online course “Financial Kingdom”
You will learn to communicate effectively about finances. You will budget together to achieve both individual and shared financial goals, building a solid foundation for your future. You will invest and secure your financial future!
Managing your household budget is a key aspect of any relationship. Choosing the right financial model can significantly impact the quality of your relationship. A well-chosen way of managing money builds trust and harmony, while an improper one can lead to conflict. It is important to work out a solution that meets your needs and financial goals together.
Here are some commonly used financial management models and tips for choosing the right one for you.
One joint account
All income goes into one account, which both partners use on a regular basis. This model allows for full transparency and joint financial decision-making. It is easier for the couple to track and manage joint funds, which can build a bond and strengthen cooperation.
Separate accounts
Each person in a relationship has their own separate account, which receives their individual income. Shared expenses are divided according to established rules, such as income ratios or fixed financial contributions. This model allows partners to maintain financial independence and can be beneficial when they have different money management styles or financial obligations.
Joint and separate accounts
A couple can have both joint and separate accounts. In addition to their individual accounts, they also have a joint account for joint expenses, such as housing bills, food, and other shared needs. This model allows for a balance between financial independence and joint management of funds for everyday needs.
How to find the best model for yourself?
Here are some tips to help you find the best model for managing your home budget:
Talk openly about your finances
The first step is to have an honest conversation about your finances. Review your income, expenses, debts, and savings together. Develop shared priorities and financial goals. It is crucial that you both feel comfortable and have a clear understanding of the financial situation of your relationship.
Understand your financial habits and needs
Each of you has your own unique financial habits and needs that you learned from your parental home. Understanding these habits and needs will help you create a financial management model that works for you and your partner. Talk about which expenses are your top priorities and what you expect from financial management in your relationship.
Establish clear rules
Regardless of the model you choose, it’s important to establish clear rules for managing your finances. Define who pays for what expenses, how much money goes into a joint account, and what your savings goals are. Clear rules can help avoid misunderstandings and conflicts.
Be flexible
Your requirements and financial situation may evolve over time. Be prepared to be flexible and adapt your budget management model to changing circumstances. Regularly discuss financial issues and adjust your approach to meet emerging needs.
Examples of planning a home budget
There are many tools and methods that can help you manage your household budget.
Here are some examples:
Excel: Creating spreadsheets to track your income and expenses can be especially useful because they can be customized to suit your needs and allow you to accurately track all your financial transactions.
Budget Apps : Using apps that help you manage your finances allows you to easily track your budget, automatically categorize transactions, and access reports and analytics, which can make day-to-day financial management much easier.
The Jar Method: Separating money into different spending categories using jars or envelopes can be a simple and effective way to control your budget and ensure that money is allocated to specific purposes, which in turn aids in saving and financial planning.
Finding the best model for managing your home budget requires open communication, understanding your needs and habits, and flexibility.
Every couple is different, so it’s important to find a model that fits your individual needs. Remember, regular financial discussions and budgeting together are key to a healthy and happy relationship.
How to live happilyand build financial harmony in a relationship, without quarrels and misunderstandings!
Online course “Financial Kingdom”
You will learn to communicate effectively about finances. You will budget together to achieve both individual and shared financial goals, building a solid foundation for your future. You will invest and secure your financial future!