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MONEY

‘My goal is to be happy’: how thrifty Germans are leaving the rat race early

Former meteorologist Lars Hattwig has achieved the "frugalist" dream that is gaining ground in ageing Germany: retiring in his 40s and living on the proceeds of a working life lived sparingly.

'My goal is to be happy': how thrifty Germans are leaving the rat race early
Lars Hattwig. Photo: DPA

“It was four years ago that I realized I didn't need my salary anymore. I didn't have to work any more. So I quit my job,” the Berliner, now 47, tells AFP.

Hattwig put himself through a sometimes punishing savings regime for 10 years and carefully invested the proceeds, giving himself the resources to make the leap.

“For one or two years I was extremely tight-fisted” after the 2008 crisis, he admits, as his share holdings lost some of their value before later recovering.

“I avoided turning on the lights at home, I checked the meter regularly, I bought the cheapest food,” he recalled.

“But that phase is over now.”

A craze for frugal living is spreading on German-language blogs and internet forums, stoked by those already living the dream or people imagining what might be if they could only scrape the cash together.

For example, each step of 29-year-old Oliver Noelting's pilgrimage towards financial freedom is chronicled in detail online.

“I can totally imagine that when I'm 40, I'll say to myself: I've been doing this for 10 or 12 years. Now I want to do something else,” the Hanover-based computer programmer says, pooh-poohing the official retirement age of 67.

“My goal is just to be happy.”

Making do with less

Known as FIRE — “Financial Independence Retire Early” — in the United States, where it originated, the motives of adherents to the frugalist movement range from the ecological to the political or just personal inclination.

Enthusiasts are often middle class and lead simple lives with a focus on health — and nary a cigarette to be seen.

For many, it's about freedom from “existential fear linked to money”, like anxiety over losing a job or unhealthy levels of stress that can lead to burnout, says Gisela Enders, author of a book titled “Financial Freedom”.

Few adherents have any interest in cars, large flats or designer clothes.

“Do I really need all these things the consumer society wants to convince me at all costs I can't do without?” Enders asks.

Asking such questions is often a prelude to taking action.

“Frugalists live below their means for the long term, aiming to achieve financial independence and in the end realize a specific dream or wish,” Hattwig explains.

Resources to help seekers along the path are plentiful, meaning budding ascetics don't have to be financial wizards to reach their goals, says Hattwig.

It's a German thing: we don't talk about money.” Photo: DPA

A top blogger in the US scene is known as “Mister Money Mustache” for his keen sense for a good investment.

Hattwig too offers coaching on how to invest in financial products and real estate — whenever he feels like it, and only for those who can pay for the privilege although he calls it a hobby.

Others gather at “Financial Independence Weeks” (FIWE), regular community meetings organized by a couple who used to live in Germany and moved with their two children to Romania. Their gatherings draw up to 25 adherents, according to Noelting.

Outside the system

No-one has compiled figures for the number of frugalists living in Germany.

“It's a German thing: we don't talk about money,” author Enders explains.

At a time when Europe's top economy is desperately looking for solutions on how to pay for pensions after 2025 when the post-war baby boom generation heads into retirement, raising the possibility of upping the retirement age, the frugalists seem to have hit upon one solution to the demographic headache.

But it's a choice that provokes criticism over how a society with a communal responsibility can continue to function if increasing numbers, who have benefited from it by receiving an education for example, pay less, or nothing at all, into the public social security, pensions and health insurance pots.

Hattwig regularly receives messages from members of the public on his blog complaining he is being selfish but dismisses them as an expression of “jealousy”.

“Sure, I may have paid less into the pension system, but I don't want a state pension,” programmer Noelting says.

After escaping traditional working life, most frugalists look for new goals, and often find themselves most motivated by voluntary work, says Enders.

Rather than complain, “when 25-year-olds are saying to themselves 'I want to stop working at 40', we ought to be thinking about the quality of working life that our society offers,” she suggests.

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MONEY

Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.

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