How families in Switzerland manage their money.

From saving tips to debt traps: everything that's good to know about family finances.

Andrea Schmid-Fischer

The umbrella organisation Budgetberatung Schweiz (Budget Advice Switzerland) offers a range of budgeting tools. In addition to budget templates, it also provides advice on budgeting for various life stages and incomes at budgetberatung.ch.

Some people simply spend without budgeting and hope that their money will cover everything they need. Others stick to a strict family budget. But, is your budget actually realistic? In our Family Finance series, we talk about how families in Switzerland are managing their money.

When what you want and what you can afford are at odds

Whether or not parents are under financial pressure after the birth of their first child largely depends on how much income they have at their disposal. Another important factor is how they managed their money in the years before starting a family. Some middle-income families spend freely until there is nothing left in their bank account by the middle of the month. Others with the same income indulge far less and put every bit they save into a savings account or third pillar retirement account.

In recent years, many families have noticed a widening gap between their financial needs and their financial capabilities. People want to live in nice homes, always be on the go, pack a lot into their free time and go on amazing holidays. For many, this has become the modern standard, which can lead to financial problems. Fulfilling this standard while covering basic living expenses like taxes and healthcare costs can create a financial hole.

How your stage of life affects your family finances

Our lives are shaped by different events and stages. We go from being single to being a couple and then a family. Children grow quickly as infants and toddlers and then they are off to school, next learning a trade or studying, and eventually become young adults earning their own living, but perhaps still living at home. Each of these stages affects the income and expenditure in your family budget differently.

Tip: If you own your own home, it’s essential to budget for all associated costs. This is because the costs of home ownership go way beyond just paying the (temptingly low) mortgage interest rates. To do so, draw up a complete, realistic budget tailored to your home.

Although people can make decisions regarding major milestones such as marriage and buying a home themselves, not everything is as predictable. Events such as divorce, disability or death are not only emotionally difficult but also have far-reaching financial consequences. This makes it all the more important that you address these issues and take them into account in your family budget.


The flexible pillar 3a – to suit your needs

Open your pillar 3a online in just a few minutes.

The challenge of building savings: what's the best time?

Saving is a big challenge for many families. Especially so for the “working poor”, whose earnings often only just cover their basic living costs. The problem is that the biggest cost items are the same for everyone, regardless of how much or how little they earn. Everyone has to pay for rent, energy, taxes, healthcare, food, phones and transport.

The best time to put money aside is usually in the years before starting a family or after your children have completed their initial education/training. Try not to dip into your savings in the years in between, but keep them as emergency funds for unforeseen events or for clear goals such as a baby break, further education or buying a home. Don’t get frustrated if you can only save small amounts while you are raising a family. Over time you can still accumulate a decent sum, true to the saying “every little helps”. Depending on where they live and their financial background, families are also supported and given preferential treatment, such as tax breaks, reduced premiums, scholarships or other allowances for children and education.

Typical debt traps: what to look out for

By being careful and with a little discipline, you can avoid these three typical debt traps for families:

  • Disorganised bookkeeping. Settle all bills immediately and file them systematically. A lack of order can lead to outstanding bills and reminders.
  • Failing to include taxes in your budget. Put aside a fixed amount for taxes on a regular basis, preferably by setting up a standing order to a separate account or by making direct transfers to the tax office.
  • Using payment methods that don’t debit your account until later. Use debit cards, TWINT or cash whenever possible. This will give you a better overview of your available funds.

What many people don’t realise is that starting a family, separating or divorcing can also cause you to fall into a debt trap. These kinds of events present a risk in particular to those on lower-end, average wages.

Nevertheless, you shouldn’t forget that less money does not necessarily mean a lower quality of life. There are many great things to do that hardly cost anything: cycling to a family picnic by a lake may even be more fun than an expensive weekend trip.

A fairly recent phenomenon is the increase in high earners around the age of thirty who spend all their money and hardly save at all. This means that they quickly reach their financial limits when starting a family.

Suitable insurance products