Organising family finances

The 5-step plan for family finances (Germany):

Step 1: get an overview

• List all income and expenses
• Set up a 3-account model (1 personal account each + 1 joint account)
• Draw up a budget using the 50-30-20 rule

Step 2: protection

• Liability insurance (a must!)
• Term life insurance (if you have children or a mortgage)
• Occupational disability insurance (for the main earner)
• Emergency fund: 6 months' salary in overnight money

Step 3: building wealth

• ETF savings plan for the parents (retirement provision)
• Junior securities account for the children (training/university)
• Use capital-forming benefits + Riester allowances (€950/year for free with 2 children)

Step 4: optimise taxes

• Check tax classes (III/V or IV/IV?)
• Deduct childcare costs
• File a tax return (average €1,095 back!)

Step 5: provision

• Write a will
• Lasting power of attorney + living will
• Sort out your digital estate