Finance - HangMoon

Personal Finance: How I spend my monthly salary in Finland

Like it or not, money plays an important part in our lives. I grew up without much knowledge about money or finance management. Studying abroad alone at 19 years old was the turning point that kind of "forced" me to educate myself financially. In this post, I will share with you my "pay yourself first" mentality that I have been following for the last few years in Finland.

Paying yourself first means when you receive your source of income, the spending should be in this order:

Firstly: your fixed expenses
Secondly: your investment and saving
Finally: other purchases

1. Fixed expenses

So, what are fixed expenses? If you notice, every month you will have certain recurring payments. In Finland, the biggest piece of monthly expense is normally rent/mortgage. Besides accommodation costs, you also have to pay for utility costs (water, electricity, Internet, phone, etc..). Additionally, groceries costs are an irreplaceable expense. These costs are normally quite stable and predictable, in other words, they are fixed expenses.

In my own personal finance strategy, debt should be avoided as much as possible. This "pay your self first" mentality not only guarantees that I have shelter and food to sustain a functioning life but also helps me avoid attaining any debts. That is why the first thing I do after receiving my salary is to transfer this fixed amount of money to my spending account which I use to pay the above-mentioned costs.

2. Saving and investment

Emergency fund

After fixed expenses, the next thing I always do is to transfer money to my saving and investment account. As a general rule, everyone should stack up an emergency fund that can cover their 3-month living expenses. Let's say your monthly living cost in Finland is 1200 euros (1000 euros fixed expenses + 200 euros for unexpected expenses), then it is absolutely necessary for you to have a minimum emergency fund of 3600 euros. An emergency fund can be a saving bank account or an investment account that you could convert into cash quickly.

The reason an emergency fund is "mandatory" is because life is full of surprises. You never know when you may get laid off from your job, or your car suddenly breaks down, or you have a sudden illness that requires immediate treatment and your insurance won't pay the money upfront...In those unexpected cases, a cash cushion will come in handy and help you land gently from the crashes. This emergency fund will help you sleep better at night!

Investment account

After you have saved enough for the emergency fund, the next step is to educate yourself and start investing. A saving bank account is not a very good place to store your money at the time of writing this blog post, given the extremely low interest rate (0% interest rate in most banks in Finland). The inflation rate would quickly devalue your hard-earned money. This explains the need for each individual to learn about investing in order to preserve wealth.

As Einstein said: "Compound interest is the 8th wonder of the world", investing indeed holds immense money-generating power over a long period of time. There are many investment instruments out there. Warren Buffet suggested: "A low-cost index fund is the most sensible equity investment for the great majority of investors". For the average person who doesn't have a lot of time to do market research, index funds seem to be a safe bet. However, make sure you do your careful research before putting your money into any kind of investment! I currently don't feel confident enough to dwell on this investing topic. Hopefully, in the near future, I could write a blog post about my personal experience in investing in Finland :)

Below are some interesting reads that I find helpful to learn about investing in Finland:

3. Other purchases

After paying the above money (for yourself!), the leftover money is your guilt-free money. After the big chunks of fixed expenses and saving/investment money have been safely reserved, you can spend whatever there is left on the things you love. You could buy that dress, purchase that online course, eat in your favorite restaurant, or save for your holiday trip. I am sure I don't need to give you ideas on how to spend your money, this should be the easiest part for you :D

The best part about this "pay yourself first" mentality is that you are in total control of your money while still enjoying your life. Don't just save and forget living, but also don't just spend it all and regret it later.

So far this strategy has been working really well for me! It helps me set realistic financial goals and encourages me to live frugally.

Do you follow the same strategy? Do you have any great financial tips that you would like to share? Feel free to comment and let me know :)

Disclaimer: The information provided in this blog post is for educational purposes only and should not be interpreted as financial advice. The author disclaims responsibility and legal liability (for both authorized and unauthorized users) for any loss, harm, or damage, however caused, resulting from accessing any section of this website. Please consult your financial advisor before making any finance-related decisions.

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Finance

Living cost in Finland: Is it expensive to live in Finland? (for students and non-students)

Finland is a country in the Nordics, a region famous for its high living standards and also its high living costs. After living in Finland for almost 4 years with and without student benefits, I think I've had a fairly good idea about how the living costs are like. In this blog post, I will share with you my own experiences and observations about costs in Finland.

A good thing to know about Finland is that different cities will have different prices, depending on how big the city is. I've lived in 3 different cities in Finland: Kokkola - a small city in the middle part of Finland, Turku - the third biggest city by population, and Helsinki - the capital of Finland as well as the most expensive city in the country. In this post, I'll try to break down the prices into 2 categories: student and non-student.

Accommodation

Student

If you are a student, the first thing you should do after being accepted to your school is to apply for a student apartment. The rent for a student apartment is substantially cheaper than a similar one from the market.

For example, in Kokkola the cost of a room in a shared apartment would be around €280 - €350. In Turku, I paid €250 for my TYS room in a 3-bedroom shared apartment. In Helsinki, my HOAS room in a shared apartment costs €264. For those who don't know, a shared apartment means that you and some other people will live in the same apartment. You have your own bedroom, but you will share common areas like the kitchen or toilets. If you don't like the idea of sharing your apartment with someone else, there are also single apartments/ studios that allow you to live alone. The cost is a little higher, around €300 - €500 for such an apartment. To get a better idea about how student apartments look like, you can visit HOAS (The Foundation for Student Housing in the Helsinki Region) for example.

Non-student

After graduating, I moved out of the student house. In Helsinki, rent is considerably more expensive than in other parts of Finland. The average rent price was €20.3/m² in Helsinki in 2019, while that of Tampere was 14.7€ /m² or Turku's was 13.7€/m² (source here). It is quite competitive to get a "good" apartment in Helsinki (aka good price, good location, and good condition) because the demand is high in the capital region. If you are interested in searching for an apartment in Helsinki, I would recommend Oikotie (only in Finnish though, use Google Translate if needed) and Vuokraovi.

Utility costs

Student

A great thing about student apartments is that all utility costs (water, electricity, Internet) are covered in your rent. If you are a student and you get a student apartment, your utility costs are basically zero.

Non-student

If you are no longer a student, it's gonna cost you a little extra. Utility costs include electricity, water, Internet,...

If you live in an apartment in a block, then your electricity bill should not be too high because the heating costs are covered by district heating. If you live in Helsinki, then your electricity bills have 2 parts: the electricity you consumed provided by the company of your choice (for example Helen, Fortum, Lumo, Energia 247...), and the transfer fee for this electricity (distributed by Helen). You can compare the best prices for electricity using this website, but remember to read the terms and conditions carefully because sometimes the cheapest offers have some catch (for example the cheap offer is only valid for the first 2 months, etc.). Depending on your usage and how big your apartment is, the electricity bill may vary from €20 - €60/month.

Water costs are sometimes included in the rent price. But most of the time from what I have seen, water costs are agreed in the contract as a fixed cost per person monthly. For example, an apartment may cost €1000/month for rent and €20/person for water. If there are 2 people living in that apartment, you will pay a fixed amount of €1000 + €20*2 = €1040 monthly to your landlord. Water costs fluctuate from €10 - €30/person/month.

For Internet cost, remember to check with your building's manager to see if there is any Internet provider already. Because most of the time, a building will already have an Internet connection for free, however with slow speed Internet. If you want to upgrade your Internet connection, you can often get a good deal from the same Internet provider that is operating in your building. Popular providers are DNA, Elisa, Telia,... Depending on your choice, Internet costs may vary from €10 - €40/month.

Transportation

Student

In big cities, public transport is available at a reasonable cost. For students, you will have a student discount. For example, in Turku, I paid €33/ month for my Föli bus card. In Helsinki as a student, I paid around €31/ month for zone A-B (45% discount for students).

Non-student

If you are no longer a student, you will pay the full price of €65.3/month for zone A-B in Helsinki (Updated Jan 5th, 2022). For more information about ticket prices, you can check HSL website.

Food costs

Student

The university cafeterias offer student meals (most often lunches) for a good price. During my student time, I paid €2.6 per meal. Student meal in my opinion is a quick and convenient option while still providing nutritious food. The meal has carbs, protein, salad, and a drink included in the price. You need a valid student card to get this student meal.

Non-student

Finland's food price is quite expensive compared to where I come from. To have an overview, you can take a look here.

On average I spend around €250 - €300 for grocery shopping monthly. Eating out costs me around €150 - €200 more. A tip for eating out in Finland is that most restaurants offer a cheaper lunch price which is around €10 - €15 per dish. This is a great deal because for dinner it would cost €5 - €10 more for the same dish.

Other costs

Student

The most outstanding cost for students should be insurance because as a foreign student, I didn't get much support from the public health system. Health insurance cost me around €200/year back then.

Non-student

There are other costs apart from the basic ones listed above. One of the most important costs is insurance. I bought home insurance for around €100 per year. I also took unemployment insurance from YTK for €110/year. If you are not a student anymore, you can rely on the public health care system if you have Kela (free, but the waiting time can be long until you get an appointment).

Overall, living in Finland would cost around €600 - €800/month for a student, and €800 - €1500/month for a simple adult (like me :D). I hope this post gave you a better idea of how much it would cost to live in Finland. Comment below if you have any questions, or if you just want to share your thoughts with me :)

Cheers!

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