Personal Finance I: Budgeting, Saving and Payslips

At last: your first apprentice's wage is in your account. Depending on the occupation, it is usually around CHF 600 to 1000 per month in the first year of an apprenticeship – your own money, which you have earned yourself. This is the moment that decides who is in control: you control your money – or your money controls you.

Do you know the 'end-of-the-month shortfall'? At the start of the month, your account feels full and you spend money on going out, shopping and food on the go – but by the 25th, there is nothing left, even though it did not feel as if you had spent much. This does not happen because someone is bad at maths. It happens because without a plan, lots of small expenses remain invisible.

The solution is a budget: a simple plan made before the month begins that determines where your money should go. A budget is not a punishment or a ban – quite the opposite: it makes sure there is enough money for what matters to you. In this module, you will build one step by step, using the example of Lina, a third-year apprentice. First, however, you will look at what her payslip actually says – because you do not plan with the pay stated in your contract, but with the amount that actually arrives in your account.

Lina's apprenticeship contract promises CHF 1100 per month. But only CHF 1026 reaches her account. A mistake? No – the answer is in the small print on her payslip:

• Gross pay: the agreed pay before any deductions – CHF 1100 for Lina. This figure is used for calculations, but it never reaches her account.
• Deductions: small portions of the pay that go directly to social insurance schemes. For Lina, these are:
  • AHV/IV: Old-age and survivors' insurance pays the pensions of today's pensioners – this is known as the intergenerational contract: today's workers fund today's pensions, and the next generation will pay for you later. IV protects people who can no longer work because of an accident or illness.
  • Non-occupational accident insurance (NBU): your accident cover outside work – you already know about compulsory accident cover through your employer from “Insurance: useful or unnecessary?”; you pay the NBU premium yourself, which is why it appears as a deduction on your payslip.
  • Sickness daily allowance insurance: replaces part of your pay if you are ill for an extended period.
• Net pay: gross pay minus deductions – CHF 1026 for Lina. This is the figure you use to plan your budget.

There are two things you should know so that your first real payslip does not confuse you. First, AHV/IV contributions only begin on 1 January of the year in which you turn 18. This deduction is therefore often missing during the first years of an apprenticeship, making the payslip correspondingly shorter. Second, the basic health insurance premium does not appear on the payslip: it is billed separately. The exact amounts and percentages vary by employer and occupation – what matters is the principle: gross pay → deductions → net pay.

A budget consists of four building blocks:

1. Income: everything that comes in – net pay, perhaps pocket money or a contribution from relatives.
2. Amount saved: the amount you set aside first – more on that in a moment.
3. Fixed expenses: the same amount is due every month – a mobile phone plan, a public transport pass or a contribution towards board and lodging at home. They are predictable but difficult to change at short notice.
4. Variable expenses: these fluctuate from month to month – going out, clothes, food on the go and games. This is where you have the most flexibility.

The most important rule is: save first, then spend. This means setting aside the amount you want to save as soon as your pay arrives – like a bill you pay to yourself, ideally by standing order into a separate savings account. Experience shows that people who do it the other way round and save 'whatever is left at the end' save nothing. The end-of-the-month shortfall reliably swallows the rest.

Lina's budget looks like this:

Item	Amount
Income: net pay	CHF 1026
Amount saved (first!)	− CHF 100
Fixed: mobile phone plan	− CHF 30
Fixed: public transport pass	− CHF 60
Fixed: contribution towards board and lodging	− CHF 150
Left for variable expenses	CHF 686

By saving CHF 100 per month, Lina has put aside CHF 1200 after a year – at this rate, she will reach her goal of CHF 2400 for a moped in two years. If she spends less in a particular month, the remainder also goes into her savings account. And if an unexpected bill arrives – for the dentist or a broken bicycle – her reserve saves her from going into debt. That is exactly what “Persönliche Finanzen II: Schuldenfallen und digitales Bezahlen” is about.