Hamburg Florian Wagner was fed up with it. Get up early every morning, drive to the office, sit in pointless meetings for hours, too many meetings, a lot of wasted time. The nice colleagues and the 75,000 euros annual income didn’t motivate him either. “In the end, I didn’t think it made sense anymore what I was doing all day,” he says. So he quit. That was three years ago.
At that time, Wagner already had a deposit worth 140,000 euros. Today he is 34 and stands at 430,000 euros. He wants to retire at 40. Professional savers like Wagner are called “frugalists”. The trend comes from the USA, the goal: financial freedom. But how do you get there?
About a strict financial plan and one or the other career decision, as Wagner’s case shows.
Nothing works in the frugalist life without saving. But you need a concrete plan. At Wagner it looked like this: In just four years as an engineer at an automotive supplier, Wagner managed to set aside an average of 30,000 euros each year and invest it.
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Wagner invested all of his money in long-term, low-risk financial products; for him it was broadly diversified ETFs: 70 percent went into an index fund with stocks from industrialized countries, 30 percent in a fund with stocks from emerging countries. Value at the time: 140,000 euros. “As the son of a civil servant, that gave me the security to quit in peace.”
Tip 2: Learn to have fun “efficiently”
At that time Wagner could have lived on his depot for seven years, that’s how he calculated it. 20,000 euros a year was enough for him. Of course, this sum is very individual, says Wagner, but he knows that he is still a moderate frugalist. For some single people, an average of 850 euros a month is enough for rent, food, leisure time and annual vacation. A family of four can get by on 2500 euros a month, he says.
How high the expenses are depends primarily on the rent – which is of course higher in Stuttgart, where Wagner lives, than in a village in Brandenburg. For financial independence, 25 times your own annual expenditure is necessary, says the frugalist rule of thumb.
“Frugalism has nothing to do with stinginess and stinginess,” emphasizes Wagner, “it’s about creating the best life for yourself.” That means: Less meat, but the good from the organic butcher. Eat out less, prefer to cook with friends. Enjoy a beer on the balcony in the evening instead of sinking into the bar after work. “Frugalists don’t limit themselves completely, they are already having fun today – just efficient.”
Wagner lives in a two-room apartment, rides his bike instead of a car, travels to Bavaria instead of to the Ballermann, because hiking is more fun for him than getting drunk on the beach. And when he has children, he wants to buy the basic equipment used and give them “more time than stuff”.
Tip 3: develop new sources of income
The fact is: not everyone has so much money on their way that, like Wagner, they can quit without worries. Some people may even like their job, even if their earnings are measly. But then the financial freedom is far behind your own life expectancy.
“Frugalism is applicable to everyone, even with a small salary. It just means that I spend my money consciously and learn how to invest, ”explains Wagner. “And when I have little, I have to be more conscious of my money.”
Especially with low incomes, it is a matter of finding other sources of income in order to feel financially freer: “You can be active online with any hobby, from sewing to tree pruning, and earn additional money, for example via a blog,” advises Wagner. “The goal is not retirement, but rather financial carelessness, more flexibility.” That could create the freedom to take a sabbatical or go part-time and have more time for the children or a hobby.
Tip 4: Have a lot of courage in the salary negotiation …
Negotiating the salary is probably the most direct lever to increase your own monthly income. “Many change jobs, which means that larger salary jumps are possible,” says Wagner. Of course, it also helps when negotiating salaries if the account or – better still – the deposit is already well padded. And the fixed costs are as low as possible.
Anyone who first has to spend 10,000 euros a month to maintain their own standard of living is of course more dependent on a job, has less confidence in negotiation poker and does not change jobs as quickly as Wagner with his monthly fixed costs of less than 2000 euros.
During the negotiation itself, he advises that one thing should always be kept in mind: What do I really want? It doesn’t necessarily matter that a few hundred more flow into the account at the end of the month. In addition to more money, the goal of salary negotiation could also be a more exciting work environment – or a few home office days a month when you at least don’t have to commute. That too is freedom, says Wagner. To stay in a job that drains you just for the money is really not healthy.
Tip 5: … and even more courage when you quit
With his finances, Wagner was well on the way to financial freedom when he felt frustrated at work. Then he did what is the frugalists’ number one priority, more important than saving and investing: he chose the better life. And quit. “Without knowing what I’ll do then,” he says.
A year after his resignation, he was already earning more income than before in his secure job. Wagner now advises companies on website optimization and earns money with his blog “Geldschnurrbart”. And he has written a book that has the same name as his goal: “Retire at 40”.
Florian Wagner: Retirement at 40 – Financial freedom and happiness through frugalism
Econ, 2019
304 pages
14.99 euros
“The termination was the best decision ever, life is so important,” he says. As a school leaver, the native Swabian still thought: an engineering degree, really hanging out, internships abroad, that brings in a lot of money. Today he says: “I would start my own business straight away, learn skills that I can use on the Internet.”
A finance app is already in the works. If he is soon to be completely independent financially, then “it doesn’t have to throw in any money directly”. Because financial freedom is above all that: the freedom to do what you want.
If you do a job you like, you don’t have to compensate as much after work, says Wagner. Fewer after-work beers, fewer hobbies to compensate for, less vacation time to relax. And less is always more in the account – not only with frugalists.
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