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Life can only be understood backwards but it must be lived forwards.

Economic, health, and environmental crises: we know how anxiety-inducing the future can be for the new generations. And on top of that, we have to deal with everyday life events like illness, divorce, job loss, death, or birth. How can each of us individually or households resist, cope, and recover from these life shocks? The financial plan is an important tool as it helps you better plan for the future and therefore better withstand any unexpected event in your life.


Understanding your expenses

In France, the weight of housing-related expenses in household budgets has multiplied by 2.5 between 1959 and 2019. While it now represents 1/4 of French households' budgets, it accounts for 40% in Luxembourgish households. This is the largest expense category for households.

In addition, there are telephone and television expenses, banking fees, and various insurances, which now represent 34% of budgets compared to 15% in 1959. At the same time, the share of expenses on food and clothing has decreased from 38% in 1959 to 17% today.

Our consumption habits have therefore changed compared to past generations, and our material needs weigh heavily on the budget.


Managing your budget wisely

While there are no immutable rules applicable to everyone, the 50/30/20 principle allows for a budget with balanced proportions: 50% for essential needs, 30% for wants, and 20% for savings.

This rule, popularized by American Senator Elizabeth Warren in her book "All Your Worth: The Ultimate Lifetime Money Plan," allows you to categorize your expenses and allocate your salary accordingly.


Achieving financial goals

Financial planning plays an essential role for individuals and households to make the most of their money and prepare for the future. The goal is to help them make informed decisions about their money and achieve long-term financial objectives. Establishing a budget, saving for retirement, paying off debts, and building wealth are ongoing processes that require constant monitoring and adjustments over time.

Before setting goals, it's important to understand your current financial situation: Are you living above or below your means? What is your savings? What are your debts?

Once the current situation is assessed, it's important to set realistic financial goals over time: What do you want to achieve with your money in the short term (1 to 4 years) and long term (5 years and beyond)? How much money do you need to save to reach your goals? Create a timeline with achievable milestones within desired timeframes.

Once your goals are established, create a budget to track your expenses and monitor progress.


Be like the ant: Build an emergency fund

Do you remember that fable by La Fontaine? The grasshopper singing all summer while her neighbor, the ant, was busy collecting provisions for the winter...

Four centuries later, periods of scarcity still exist, and they depend less on weather conditions than on the unpredictability of our lives. Indeed, illness, divorce, job loss, the death of a spouse, or the arrival of a child are all factors that can disrupt personal finances. And the line between precariousness and one's current situation is not far away...

By setting aside a small amount each month, you can build an emergency fund. With, for example, six months' worth of expenses saved, this fund will provide you with greater peace of mind when facing an emergency.


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