Family and finance: how parents in Switzerland handle money

Sep 16, 2020.

How important is money in your family? Do you spend whatever you have? After your salary arrives, do you pay your regular bills and then simply get by on what’s left? Or do you have a budget that you monitor to be sure you can make ends meet? Is your family budget realistic enough for you to stick to in your daily life and keep unplanned expenses from causing you major financial difficulties? In our short series on family finances, we look at these questions with our partner, Budgetberatung Schweiz (Budget Advice Switzerland) and our pension experts.


When what you want and what you can afford are not compatible

Whether or not parents are under financial pressure after the birth of their first child depends largely on how much income they have at their disposal. Another important factor is how they handled their money in the years before starting a family. Some middle-income families spend freely until there is nothing left on their bank account by the middle of the month. Others with the same income indulge themselves far less and put every bit they save into a savings account or a 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 well, be constantly mobile, do a lot in 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 phase of life affects your family finances

Our lives are shaped by different events and phases. 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, later learning a trade or studying and eventually becoming young adults with their own income who may still be living at home. Each of these phases impacts the income and expenditure in your family budget differently.


Tip: If you own your own home, it’s essential that you budget the full costs. The costs of home ownership far exceed today’s temptingly low mortgage interest rates. Draw up a complete, realistic budget tailored to your home.


You decide yourself on major milestones such as marriage and purchasing a home, but not everything is 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 challenge of saving: when does it work best?

Saving is a big challenge for many families. Especially so for the “working poor”, who earn so little that they can barely cover their basic cost of living. The problem is that the biggest cost items are the same for everyone, no matter how much or how little you earn. Everyone has to pay for tent, energy, taxes, healthcare costs, food, communication 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 a nest egg for unforeseen events or for clear goals such as a baby break, further education or home ownership. 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 “constant dripping wears away the stone”. 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.

“A fairly recent phenomenon is the proliferation of high earners around age thirty who spend all their money and save hardly any at all. They quickly reach their financial limits when starting a family.”


Andrea Schmid-Fischer, President of Budgetberatung Schweiz (Budget Advice Switzerland)

Typical debt traps: what to look out for

With a little good will and 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 helps you to keep an overview.


What many people don’t know is that those who start a family, separate or divorce can fall into a debt trap. The lower middle class is particularly at risk when these things happen.


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

Budgetberatung Schweiz

The Budgetberatung Schweiz (Budget Advice Switzerland) provides various budgeting tools. In addition to budget templates, you can find various sample budgets of different phases of life and incomes at or in the BudgetCH app. While the sample budgets may not fit your situation perfectly, they will give you a good overview.


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