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Steps for building a luxury wardrobe on a budget

The joy of dressing is an art – John Galliano

During the last 3 years I have been actively working in building a perfect wardrobe for my lifestyle. My desire for a perfect wardrobe started once I did some self-evaluation and noted the following:

a) I was spending my money on clothes of questionable quality that needed to be replaced after only a few uses. Most of these clothes had a terrible cost per use ratio!

b)These fast fashion clothes were not particularly flattering as they were mass produced at minimum cost. The quality of the materials and the cut were far from ideal.

c) I had a cluttered wardrobe that was not providing me “I feel good” outfits. I didn´t like the way I looked and felt no confidence wearing my outfits.

Tired of this situation, I decided to take action and started a personal project to gradually turn my disastrous wardrobe into a perfect-for-me one. I have been seriously working on it for the last 3 years and I have made great progress. This is a detailed plan of the steps I took to be where I am today: a much more confident woman who loves her outfits.

1. Honest evaluation of your lifestyle: work, leisure and weather are key

The most important step is to prepare an honest assessment of your lifestyle to make sure you are buying the pieces that you will use a lot and that will stay in your wardrobe forever. There are a few things that I suggest you consider for this assessment:

Working clothes: Different jobs come with different needs. Think about your needs: Do you need special clothes for work? Do you need business attires or you can wear more casual shirt & jeans outfits? Do you have to wear heels & make up? Do you work inside an office or outdoors? Do you work from home?

Casual clothes: What are your favorite activities for the weekends? Can you use some of your working clothes and downgrade them to create a more casual outfit? Do you have a lot of free time or you spend most of your time at work or doing work-related activities? Do you have kids and need disaster-resistant garments?

Weather: This may look obvious but you need to buy accordingly to the weather. When I was living in the north of England, I noted that a lot of my friends loved to buy summer clothes because it gave them great summer vibes… well, summers in the north of England were chilly so you really don’t need a huge summer wardrobe. They were shopping with their emotions not for their needs. My advice is that you invest more in the items that really suit the climate of your living area.

2. Evaluation of your current wardrobe

It is now time to open your wardrobe and answer the following questions to yourself:

What are the clothes I wear the most?

What is the outfit I find more flattering for my figure?

What are the garments I rarely wear and why?

What are the parts of my body I like the most?

What are the parts of my body I dislike?

This is a very important step because it can seriously help you in identifying the type of colours, materials and styles you already feel the most comfortable. You can divide all your garments in three blocks: keep (you like & you wear); maybe (you like but not wear often); retire (you don’t like & you don’t wear).

I will suggest to take pictures wearing your favourite outfits and the pieces you are not-so-sure-what-to-do-with-it. You can also ask a good friend or relative for their advice but remember your wardrobe is for you and you should follow your inner preferences.

Don’t be scared of decluttering pieces you have not worn at all in the last 3 to 5 years. Those ones are not working for you so it is better to let go and sell/donate them.

As an additional tip, I will also suggest to focus on those outfits that enhance what you like the most of your body rather than finding outfits for hiding what you don’t like. Remember that the most important missing of your clothes is to give you confidence & positive energy.

3. Find your style crush(es) and use them to build your signature style

We all have at least one or two celebrities/actors/bloggers/models etc.. that we admire in terms of style. To help me build my perfect wardrobe, I created a folder compiling all my favourite outfits from my “style crushes”. I focused more on women who have a similar body complexity and height as mine because I normally find that those similar outfits look flattering on me. I have also prioritized on women who are on a similar decade as me because I tend to like more their styles and feel our lifestyles are more similar.

If you do not know where to start, Pinterest is a great tool for doing your search: you can type the name of the person you like to copy and add key words: style, summer, winter, casual, red carpet etc… so you can get a very good overview. You can also use it to find out similar styles to those you have already searched to expand your options. My suggestion is that you start with a broad search and once you have a good amount of material saved you can downside it to your favorites. This selection process will also help you to clear up your mind about the things you like the most.

After compiling a few pictures you will start identifying certain patterns that are common to them. Those are the things that can help you build your uniform and that you can use for inspiration to put together new outfits.

4. Beware of your imaginary self wardrobe

A word of caution! When choosing your style crush, do not be tempted by your imaginary-self choices. You may enjoy watching Gossip Girl but if you are not living in the Upper East Side and constantly attending high class events you may find it difficult to adapt their clothing to your lifestyle. Personally, I love to see high heels in shops but I know that these type of shoes are totally incompatible with my lifestyle… therefore I chose not to buy them even if they look great in tv or in some of my crushes’ outfits.

5. Conscious identification of your signature pieces & outfits

You have already accumulated a great deal of information and now it is time to get some conclusions. There are surely recurring patterns in your preferences: specific materials and colour combinations, pieces that match very often (i.e. high knee boots and skinny pants), pieces that you can dress up or down creating several outfits (i.e. a camel coat)…

Next, you need to analyse how to blend those preferences with the clothes that you are keeping and how to identify garments that compliment the clothes that you like but don’t wear often. This is probably the most difficult part and it may require you to try a lot of different clothes in shops to ensure you find the right combinations for you. Do not get disappointed if you find this difficult at the beginning. Once you have trained your eye a little bit, you will enjoy this new sense of personal creativity.

I have noted that after trying a lot of things, I tend to deviate more from original outfit replicas and have become more creative in the way I mix and match. With time, you will see that you will develop your own style, too.

6. It takes work and patience… but it pays off

You may think this is a lot of work. Well, it definitely is! However, I have to say that spending this time and effort in building a wardrobe has really helped me in many ways. These are some of the positive effects I have experience myself:

I have learnt to know myself: I have identified new things that work for me and things that simply don’t, no matter the trends of the fashion industry. I know what to look for and where to get it.

I have learnt to appreciate quality and beauty in well made garments: I now understand why so many people see dressing well as a form of art. There are garments so well made and with such level of detail that they totally look like art pieces.

Increased confidence: The best look is the one that truly reflects you. I see a new sense of alignment in who I am and the image I portray. I came to realise that looking good means looking like the real me.

People treat me better and get a lot of compliments: you know the expression “Clothes make the man”?. In the past, I though this sentence was only a remainder that society will treat you better if you look expensive. I have changed my mind now. I wear no logos, I don’t follow any market trends… However, wearing very well made pieces that truly reflect my persona triggers me to do better and be better. That is more attractive than any expensive logo.

Any thoughts on why you should dress well?

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My saving & investing journey vol. 2: learning to invest

Once again it is time to revisit the past and share some of the most special moments of my financial journey so far. In 2017, I decided to get more serious with my money. However, I have to admit that 2018 has been my most important year from a financial perspective. This is the progress I made in 2018.

Recap: Learning to save money

After behaving like a financial moron for a few years, I decided to take action and start saving aggressively in 2017. You can see in the table below that I was capable of saving 25 k€ in a year by becoming intentional about money.

2018: Learning to invest & monitoring

I still remember the feeling on January 2018 when I opened my bank account status and saw how much more money I had. I was able to accomplish my savings goal and had 36 k€ saved under my name. It was thrilling! I also got another piece of good news: I got an extra €2000 bonus in January for outstanding performance at work during 2017. It seemed like money was falling from the trees 🙂

After one year of automatically throwing a chunk of money into my savings account, the habit of living below my means was already well ingrained and it felt less and less difficult every month. In addition, I was doing quite well at work, so I got a salary increase in January 2018 which meant more money available for saving.

I had become a very disciplined saver. Nonetheless, I knew that there was more to be done. These are the steps I took in 2018 to improve my finances.

Step 1: Investing

Most of the personal finance books I had read stated something very clear: if you want to build wealth saving is not enough, you have to invest your money. From January to April, I spent countless hours researching what could be potential investing options. In the end, there were two attractive options for me: stock market & real state.

Stock market: In a long term investment horizon (i.e. > 20 years), the stock market has returned money to its investors. I am no expert in trading stocks or evaluating businesses’ profitability, so I decided to go for a widely diversified index fund to invest my money automatically every month for at least, the next 30 years. It is easy, convenient and it only requires discipline. Living in The Netherlands, I chose the Aandelen Ontwikkelde Landen fund offered by Meesman and contribute €400 every month. The performance of the fund had been very good, showing close to 10% returns in the last 10 year horizon.

Real state: Investing in real state is very attractive. However, I needed to spend more time doing research to fully understand how and where to invest in real state in The Netherlands. I also needed understand the law and taxation associated with owning real state in this country. Therefore, I decided to postpone investing in real state until I did my homework.

Disclaimer: In The Netherlands, we contribute to a pension scheme every month and that money is directly deducted form our pay checks and invested in a mutual fund. So, I have been investing in mutual funds since 2015. Because it is a pension fund, we cannot access this money until retirement age (around 68 years old).

Since May 2018, I also started a personal investing account to complement my pension scheme and build wealth. This is a taxable account but I can access this money any time I want without penalties.

Step 2: Monitoring my net worth

Because I was starting to diversify my money into savings and investments, it made more sense to start monitoring my net worth. All the personal finance books mentioned the importance of tracking your net worth (i.e. difference of assets minus liabilities) to ensure you are winning the financial game and to have a clear snapshot of your asset allocation.

In 2017, I was only focused in saving money but in 2018 I wanted to start building wealth. To ensure I was making good progress, I started to monitor my savings, cash and index fund portfolio performance on a monthly basis. I also started to track my net worth and asset allocation on a yearly basis. You can see my numbers for 2018 in the table and graph below.

Monitoring my monthly saving & investing progress and my overall net worth

Step 3: Keep learning

Reading books about personal finance had helped me to learn about money. This year, I continued reading a lot, specially about investing. Apart from reading, I also started to follow some personal finance bloggers and to watch some You Tube channels about money. Overall, this has expanded my knowledge and understanding about personal finances and has shown me that you have to constantly keep educating yourself.

Overview 2018

Overall 2018 was a critical year for me. Not only I started to make more money and progress at work but I also started to take more action towards my financial education. If you look at the numbers below, I was able to save & invest a total of €30700 and my net worth exploded to € 66722. Even today, I am very proud of this achievement.

Lessons learnt

Discipline and motivation is the most powerful combination to achieve your goals. Don’t give up and place yourself in an environment that motivates you (it can also be a virtual one).
We are creatures of habits: you will get used to save and it is less painful as time goes by.
You will not regret buying those expensive shoes/vacation/car for long but you will regret not being prepared for the future.
Tracking your progress will help you to keep your motivation levels up and it is a very rewarding feeling.

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My saving & investing journey vol.1: financial awakening

Time literally flies! It has been already more than 2 years since my boyfriend and I took the decision to move to the Netherlands and I am happy to share with you the progress we have made so far. This is a very important post for me because I am going to share with you how I became interested in personal finance and started to take very important actions towards my future and financial well-being.

Disclaimer: even though, both my boyfriend and I have made financial progress, I am only sharing my results and keep his numbers private (as he wishes).

So, this is what happened in the last 2 years…

Recap: situation in December 2015

My boyfriend and I moved to the Netherlands in October 2015. I got a good job offer in industry and my boyfriend decided to join me even though that meant losing his job. We were sustaining ourselves basically from my pay checks and some of his savings and we had to spent some money in accommodating in a new country. As a consequence, I was able to save only € 205 and recouped the €2000 in moving expenses back.

2016: Living la vida loca

Unfortunately, I cannot fully disclose my finances for 2016 because I was not tracking anything at the time… Overall, 2016 was a good year for us. I got my one-year contract extended for another year and we were really enjoying living in The Netherlands. We were quite frugal at the beginning and we only spent some money eating out from time to time. We did not have a car at the time because I had only a small commute from home to work. That helped us to save big money in transportation, too.

Early in summer, we got great news: my boyfriend got a job that he really liked and it was just 5 minutes away by bike. The company also gave him money to spend on a bike for commuting to work (this is quite common in the Netherlands). We were both so happy!

With the two of us now working and having low fixed expenses (rent, food and some little commuting from me) we were in a position to have some fun! And we did… we travel around the country and splurge in enjoying some weekends out in European cities. We also shopped in the fashion outlet and enjoyed a few more expensive meals. It felt very refreshing after some time of frugal living.

Looking at my yearly money balance, you can see I was splurging in live and was able to save only €6000 in 2016

Money balance 2016: Saved €6000 in a year

2017: Financial awakening

In January 2017 I received my yearly account statement from the bank and I was disappointed when I saw that I only had €10000 under my name. How was this possible? I had been making some money since I came to The Netherlands but I had very little to show up for. I was 33 years old at this time and suddenly, I was feeling again behind in life. How could this be? Now my boyfriend and I were working at good jobs, so we should be accumulating more money. Where was our money going?

Then I realised. We were living partially frugally: we had low fixed expenses (low rent, low electricity bills, no car…) but then we were discretionarily spending our money without paying any attention to it: shopping, eating out, travelling… you name it! We were guilty of all that.

I decided that this year was going to be different. I was going to show myself that I was capable of handling my money like an adult. January 2017 was indeed, the beginning of my financial awakening. It all started by taking two actions.

First action: Establishing a savings goal

The first thing I did, was to calculate how much money I was going to make from working in 2017 after taxes and pension contributions. You can see in the table below that I was going to take almost €38 k€ home. That is quite some money!

How much money I will make in 2017 after taxes and pension contributions

I was determined to keep as much of that money in my account, so I decided to try living on a fixed €1000 amount per month. If my boyfriend contributed another € 1000/month, then we should be able to live comfortably with a €2000/monthly budget for the two of us. And let’s be honest, we should be able to live a good live with that money considering that our fixed expenses were very low at the time.

To make this goal work out, I decided to transfer €1750 to my savings account every time I get my monthly pay check and to fully transfer my bonus and 8% allowance to my savings account as soon as I get them.

And guess what? After one year of forcing myself into saving, my account balance changed to 36 k€. That meant I was able to save more than 25 k€ in a year.

Money balance in December 2017: Savings progression: I was able to save more than 25 k€ in a year!

Second action: reading finances

Let’s be honest: the first months of budgeting were hard. Putting a chunk of money in my savings account felt great but there were days I wanted to spend money, like my friends and everyone else around me. After a couple of months, I realised that to keep my motivation high, I had to expose myself to a good financial environment.

As reading is one of my hobbies, I started reading some books about personal finance. The more I read, the more I realised I knew next to nothing about finances. Books became my new best friends, I was devouring them every night. If you are curious, this is the full list of personal finance books I have read in 2017:

The Millionaire Next Door – by Thomas J. Stanley

The Millionaire Mind – by Thomas J. Stanley

How Rich People Think – by Steve Siebold

The Automatic Millionaire – by David Bach

Money: Master the Game – by Tony Robbins

The Millionaire Fastlane – by M.J. de Marco

The Simple Path to Wealth – by J. Collins

Rich Dad, Poor Dad – by Robert Kiyosaki

The Old Money Book – by Byron Tully

Reading all this material boosted my confidence and made me understand that no matter what the rest of society was doing with its money, I finally was in the right pathway. I was not saving or being cheap. I was paying myself first. And that money had the potential to buy me the most important thing: freedom.

Lessons learnt

It is very easy to spend money when times are good. Remember life will also throw you hard balls from time to time and you have to be prepared for those times.
You won’t save money unless you make it a priority: establish challenging but realistic saving goals every year.
Educate yourself in finances: If you are not in a good financial environment, books can do wonders for you.
Sometimes you have to ignore society and do what you must.

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My saving & investing journey vol. 0: Financially illiterate

I am very glad to share this post with all of you because I truly believe that looking back at the past, is a humbling exercise to practice. As I am approaching the end of my 30’s I want to make sure I remember the lessons learnt during this decade and set realistic but also challenging goals for my 40s.

This is my story and the lessons I learn on my early 30s.

Behind in life

I started my 30s by getting my Ph D in a STEM field by a quite prestigious university in England. It may look like a flashy start but don’t be deceived. Yes, I got an amazing education and yes, everybody was complimenting this achievement but I was feeling behind in life. Really behind in life.

A Ph D in England meant 4 years of academic sacrifice for me. Meanwhile, most of my friends had landed in a job and were starting to climb the corporate ladder. They were also moving ahead in life: they had some decent savings, long term relationships and some of them were even planning on having children.

I have just got my flashy Ph D title but c’mon, how come someone could have only 8000 € in her piggy bank and no partner in life by the time she turned 30? I spent countless hours and weekends working on my research field but that gave me little money and little time to build more personal relationships.

After completing my Ph D, I decided to stay for another 1.5 years in England working as a post-doc. I really loved my research field but somehow, I reached a point at which I could no longer make so many personal sacrifices to (maybe?) one day in the future be eligible for a track tenured position as an assistant professor in any given University.

It’s always darker before the dawn

I was 31.5 years old and I knew I needed a change. Once my post-doc contract ended, I packed back my stuff and moved back to Spain. I went to live with my mother to minimise my expenses while trying to find a job in industry.

Even though I will be forever grateful to my mother for letting me stay with her, I found coming back to Spain very hard. Having spent 5.5 years abroad had changed me. I had grew a lot as a person and gained more perspective by having travelled the world but my friends in Spain were kind of stagnant. I felt out of place. I also missed England and being part of an international community.

To make things worst, I was living out of my savings while applying for jobs. I sent away many CVs but the summer was very quiet and I was getting anxious.

Finally, September came by and I got a few interviews in England and one in the Netherlands. That gave me a big boost because my savings were drowning and I was not happy with the idea of staying in a village in Spain for much longer.

Unexpectedly, one positive thing did happen during this difficult time: I met someone. We shared a lot of interests in common. We started dating and he gave me a lot of support during this time.

After 4 months of struggle, I got an offer for an international company in the Netherlands. I have never thought of moving to the Netherlands but the offer was good and the Dutch really speak very good English. I said yes immediately and agreed to start within one month. My now boyfriend did not think it twice and happily agreed to move to the Netherlands with me.

A new beginning

We arrived at the Netherlands on the 31st of October 2015. I was 32 years old and had 4000 € in my bank account and a lot of hopes about starting over in a new country with my boyfriend. We felt in love with the Netherlands almost immediately. We liked the climate, the international environment, the peaceful atmosphere and the idea of biking in the cities.

Financially speaking, our starting was a little hard: my boyfriend left his job for joining me in this adventure so we relied entirely on my salary and some of his savings for sustaining ourselves. We also had to buy basic stuff at the beginning (a bed; Ikea furniture; cutlery…) which pretty much consumed 2000 € of my savings in a month. However, I was now receiving a monthly pay check and that allowed us to move forward.

Situation in December 2015

At the end of December, we were finally installed in The Netherlands and I was quite happy with the job. My boyfriend was still interviewing for positions so we were quite frugal at the beginning: we shared a one bed apartment with relatively low rent and we did not spend much going out. I was even able to save a little bit and managed to get € 4205 in my bank account.

Lessons learnt

Following your passion is fun but being self-sustainable and have a healthy personal/work balance is more important that any good feeling or prestige derived from your dream job.
In difficult times, I was able to live on very little (€1000/month or less). It sucks but it can be done. Some people live on less than that, so suck it up and push for changing your situation.
Finding a good partner is the best thing that can happen to you in life. I cannot be more grateful of having mine in my life.
Moving is expensive, be financially prepared for extra expenses when you change countries.
You will make some money mistakes when you arrive at a new place. It is ok! You have just landed. Keep in mind that it takes a few months to learn all the tips and tricks, so don’t beat up yourself too much at the beginning.
After spending some time in academia, receiving a steady, monthly pay check felt like a blessing. Even now that I am close to my 40s, I still appreciate the sense of stability derived from a steady income.
Landing in a good job can really put you behind faster. I was able to recoup the €2000 we spent in accommodating with my first 2 pay checks.

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My monthly budget before having kids

As life goes by and I get older (and wiser?), my saving and investing habits are also evolving. Retrospectively, I can now see how much progress I was able to make in a couple of years of serious financial make over. If you are curious about my complete financial journey, you can check my financial journey series to look at the details of my financial evolution.

It is 2019 and my husband and I really wish to expand our little family and have a baby. In this post, I will show you how we are preparing financially for it.

Current personal situation

At this time of my life, I am in my mid 30’s and I am living with my now husband in the Netherlands. After renting for some years, we are finally buying our first home and making a significant down-payment to sign for a linear mortgage with very low interest rate (1.7%).

We both work full time with permanent contracts and are very happily located in the Netherlands, so we really envision a good future for us in our current location.

Current saving & investing strategy

During the last 2 years, I have been very motivated to save and invest aggressively. My motivation stems from these two reasons:

I want to increase my net worth and become financially independent
I wish to have a baby (and be financially prepared for all the expenses it takes)

To achieve these goals, I have been following a few tactics that have helped me to make the most out of my payslips. I have to say that it was hard at the beginning. But it really works. Monitoring my progress has given me even more energy for working towards my goals.

Current salary structure

Before I start to show you how I handle the money, I would like to give you an overview of how much and how I get paid from my 9 to 5 job:

Monthly salary after taxes and retirement contribution: 3710 €/month
Pension contribution: 300 €/month (personal contribution) plus €300/month (company match). This money (€300) is automatically taken from my pay check every month and the money is directly invested by the company in mutual funds. I can only have access to this money once I reach retirement age (67 years old). (This is the standard retirement system in the Netherlands)
Yearly bonus (variable) fully paid in April…and 52% goes away in taxes… 🙁
8% gross salary allowance for vacation. This is fully paid in May.

You know the basics, let’s dive into it now.

Current monthly budget

You can see my complete money allocation for every month in the table below:

Savings: I am currently saving aggressively to prepare for the future baby expenses and real state investment, so I am allocating 40,4% of my monthly payslip towards savings.

Index funds investing: To benefit from the power of compound interest, I am automatically investing a potion of my salary in a personal index funds account. This is a taxable account but I can access this money at any time. My investing contribution accounts for a 16,1% of my payslip.

Living costs: My husband and I split all of our living expenses and we each contribute €1000/month. This is enough to cover our mortgage, bills, food and entertainment. I spend 27% of my salary on living costs.

Health insurance: it is compulsory to have a health insurance in the Netherlands. I am relatively young and have a healthy lifestyle so I do not have to pay much for it. It is only 3% of my monthly salary.

Miscellaneous: I have a cheap phone contract and I use public transportation for commuting to work so I don’t really spend much money in there. I only have a bit more expensive gym membership, but I go to the gym very often so it pays me off. These additional expenses amount 7,5% of my payslip.

Fun money: every month these is some little money left to have some fun. It is only 6% of my payslip but it is more than enough to avoid feeling deprived. Some months, I don’t even touch this money.

Extras

In the Netherlands we receive a 8% gross salary allowance in May for our holidays. I exclude this money from my monthly budget but I allocate 50% of it towards summer and winter holidays and the other 50% is invested in my index funds account.
I also receive a yearly bonus in April based on performance. This is a variable amount but I made a deal with myself: this is the only money I can use for my personal expenses (my wardrobe yay!!). It helps me to be motivated to perform great because if I earn it, I can spend it 🙂
Tax returns: my husband and I agreed that any money that we receive form tax returns will be directly allocated to an extra mortgage payment.

My tips & tricks to handle money

Overall, I am currently saving and investing 56,5% of every pay-check. This is quite a number. You can also save and invest a decent chunk of money if you follow some of the tips I am using:

Save like a maniac when you are younger and have less responsibilities

Kids & babies consume a lot of money. They also demand your time and attention. If you wish to have a family, I really advice you to start saving & investing before embarking on it. Ignore social pressure. You don’t have to be a parent at 28 if you are not ready. It is ok to be a parent at 32 and spend 4 years preparing for it.

Reduce your living expenses before having a family

Align with your partner and try to see where you can cut expenses. I rather rent a small place for a couple of years and save some money to buy a nice house later. You can also cut a lot in food and utilities when you are young. The older you get, the more difficult it gets to sacrifice comfort.

Keep yourself busy

Some days I am so busy that it is literally impossible for me to spend money. Use your time wisely.

Pamper yourself with your bonus money

This strategy helps me to be productive and motivated at work. Keep in mind that great performance at work is also rewarded with promotions and salary increases.

Get into the habit

We humans are creatures of habit. It make take some effort to delay gratification but eventually you get used to want less and use less. We really don’t need so many things to live a happy, meaningful life.

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How to budget for a dream wardrobe at any salary

You can look fabulous at low cost

*You can find great style even in a cookie box*

According to financial expert Peter Dunn, you should spend a maximum of 5% of your take home paycheck on clothes. This also includes shoes and complements. Do you want to have an idea of how much you should spend in your wardrobe? Multiply your take home paycheck by 0.05 and you can see where you stand.

Maximum amount of money you should spend on your wardrobe based on salary

You can glance at the numbers on the table to see how much a 5% of your take home pay will look like.

What 5% of your take home pay-check looks like at different salary levels

If you want to stand on a conservative side and spend maximum a 4% of your pay-check, you can stick to the numbers on the table below. These numbers were obtained by multiplying your monthly pay by 0.04.

What 4% of your take home pay-check looks like at different salary levels

How much I spend on my wardrobe

Do I personally follow this 5% rule? NOPE. I was spending close to 5 – 7% of my pay-check in my wardrobe when I was younger and less financially savvy (my-oh-my!). Nowadays, I am below that 5% benchmark. Funny enough, I am in the process of building a luxurious wardrobe on a savvy budget. In this post, I will show you the strategy I am using and how can you apply it to various income levels.

Building my dream, luxurious wardrobe

During the last 3 years, I have been following some rules to finally build my dream wardrobe. It consists of a well thought selection of high quality and perfectly fitting garments. I only select pieces that can be worn for years, are flattering to my figure and fit my lifestyle perfectly. Everybody has their own unique definition of a dream wardrobe, so I would definitely advice you to stick to what works for you. You can read the steps I am following to build my perfect wardrobe here.

*Slowly building my dream wardrobe with lovely pieces*

How I prepare my yearly budget for clothes

Every year I follow this set of rules to make sure I keep my spending on track:

1. Calculate your maximum budget following the 5% rule

You can identify your maximum yearly budget by looking at the calculations in the tables above. Try to spend no more than that! Even if you are in a low salary, you can see there is quite some annual budget to make intelligent purchases.

2. Define your priorities for the year

Make a list of specific items that you would like to add to your wardrobe. Depending on the price of the item, you can buy a single thing (something really expensive like a coat or a bag) or several pieces of lower cost.

3. Do extensive research about the items you want to buy

Personally, I consider aspects such as the quality, affinity with my lifestyle, compatibility with the garments on my wardrobe, expected cost per wear and so on. This will help you to create an approximate budget for each piece and to understand the maximum amount of money you will feel comfortable paying for each item.

4. Revisit your current wardrobe

Select the items you no longer wear and place them for sale. Nowadays there are a lot of alternatives for selling, from e-bay to luxury second hand websites (vestiaire collective; the realreal; Yoogi´s closet; fashionphile…). Curating your wardrobe helps you making space for the garments that you love and gives you some extra budget for future purchases.

5. Intentionally target the brands/shops you feel more comfortable even if they are more expensive

The key is to avoid discretionary spending on things of questionably quality and/or poor fitting. In the long run, it is better to buy less pieces every year and invest in items you truly love and perfectly fit your body and lifestyle.

6. Consider looking in the pre-loved market

Nowadays there are many online platforms where you can find second-hand items in very good condition for a fraction of their original price tag. This strategy is particularly useful for more expensive items as you can cut the costs significantly.

7. Be patient

Sound advice: do not buy if you are not 100% sure. It is better to keep on looking for the perfect item than spending your money in something that does not give you enough value.

8. Always look at the bright side

Even if you are getting 1000 € every month, you can still spend up to 600 € per year in your wardrobe. That is quite some money, honey! The real progress is made by being intentional and avoiding impulsive shopping at all cost.

9. It takes time

Rome wasn’t build in a day. Neither will be your dream wardrobe. I have already working on mine for 3 years and there is still quite some work pending. By following this tips, I have made much better decisions and I can already put together some amazing outfits.

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How to Save Money like the Dutch

The perks of going Dutch

When it comes to handling money, I have to admit that the Dutch have particularly impressed me. I have been living in The Netherlands for 5 consecutive years and I am fascinated about the good financial habits and great money-mindset instilled within the Dutch society. As an expat, I want to share with you the tips & tricks that I have learnt from them and that I am now practising myself. Let’s get started!

Need to do some shopping? go second-hand or at big discount

My Dutch friends are always saying “I want good value for my money”. The Dutch appreciate high quality but the habit is to buy high quality items second hand or at big discounts on sale seasons. There are indeed plenty of second-hand shops in The Netherlands for buying electronics (secondhand4all), furniture (kringloops), bikes etc. We also buy some things first-hand but mainly at the big season sales in summer and winter. It is common practice to eye the items you want for months and then, take big pride in buying them at discount. The bigger the discount, the better.

Time your purchases to make the most out of your money

I could simply write a full article covering this topic so I am going to highlight a few examples:

Don’t be urprised if everyone at work is talking about summer holidays after New Years Eve… We book our summer holidays in January because you find the BEST plane ticket deals. Period.

The Dutch buy electronics once a year during the no-VAT weekend (end of February). You get to save that extra 21% plus there are some special offers on top from unsold last years’ products. Hell, yeah!

We like to buy cleaning, grooming & bathing products in large quantities when special offers pop up. So, get ready for a trip to Kruidvat or Etos to stock up on the heavily discounted products.

Do you live close to the German or Belgium border? If so, become a master in comparing diesel/gasoline price differences among countries and cross borders to buy the cheapest option. Your friends will look at you with pride.

Quality is preferred over flashy/disposable items

I would say the average Dutch individual looks quite polished. They gravitate more towards classic, high quality products that last a lifetime rather than flashy or disposable ones. They buy once but they buy well. Do not be surprised if some of your colleagues at work wear the same jacket for 20 years. In general, the Dutch don’t walk around fully covered in logos, even though some Dutch people are very wealthy. You can spot some classic luxury items here and there but ostentation is not the norm.

Money is spent in what really matters

In my opinion, the Dutch are masters of intelligent spending. They value owning the best home they can afford and the government encourages you to own your home. They also like to have a good car which not necessarily means a super expensive but a safe and long-lasting one. Even though your home is not an asset and Dutch people tend to go for high mortgages, it makes sense financially to own your home here. Renting in the Netherlands is so unbelievably expensive that it hurts. During the last years, house appreciation has also been high in The Netherlands. If you plan to stay for at least 5 years, it is cheaper to buy.

Cut your spending in what you don’t value

All my Dutch colleagues bring their own lunch at work from the janitor to the CEO. Eating in the cantina is considered frivolous spending at all levels. They also take the free coffee from the machine instead of buying a 3 € top quality cappuccino from the coffee corner. They recognise the excellent quality but money has to be saved and spent where it matters the most. Another great example: we re-negotiate our utilities every year to make sure we have the best deal. Every single year.

Saving is not enough, you have to invest

I am utterly impressed by the amount of Dutch people that have set a low-cost index funds account. It shocks me because the pension system here is one of the best in the world (if not the best). Everybody contributes monthly to their company pension scheme plus there is social security in place. It really tells you something about the Dutch ability in handling their money when so many people have build for themselves another financial pillar for the future. Simply awesome.

Being financially savvy is considered cool

The Dutch are proud of making sound financial decisions. Money is taken seriously and good habits are instilled during childhood. It is common practice to split the bill and pay individually when you go out for food/drinks (the expression “to go Dutch” refers to this way of splitting the bill). Most of my friends have set a budget or can tell you with accurate precision where their money goes every month. There are always exceptions but in general, financial discipline is in order.

Nothing goes to waste & we are obsessed with recycling

It is not in the Dutch genes to bin anything. Don’t expect people here to throw away food. Don’t expect people here to simply dispose/bin their clutter (they sell it on the street during King’s day celebration, btw). The Dutch are also naturals at recycling and it is the norm to co-exist with four different trash cans at home. We recycle plastic, paper, diapers, glass and green waste from our gardens. On average, I visit the recycling point as much as the gym: three times per week. The organic waste bags from the municipality are also very expensive which makes recycling good for the environment… and for our wallets.

The Dutch methods work: they are wealthy

Let’s look at some statistical data here. Dutch people are doing great at accumulating wealth. In 2019, The Netherlands counted 800,000 millionaires over a population closed to 17 million (disclaimer: the term millionaire refers to individuals owning 1 million US $ or more in assets excluding primary residence). Only 10 countries in the world had more millionaires than the Netherlands. However, the average Dutch is not doing bad either as private wealth in the Netherlands is more evenly distributed than in other nations.

What about you? Do you share any of these traits of the Dutch?