Getting started in Sweden

[Jiggie]

Hi!
Greetings from Stockholm. I'm not sure how many other Swedes there are on this forum but I figured there's probably a few. I'm a 21 yo engineering student and I'm about to move out of my parents house. I'll be completely in charge of all my financial decisions from now on and I want to make sure I get a good start. I've read a lot about personal finance on this blog and others and I've decided to challenged myself to become FI by my 30th birthday, just like mmm did. This goal might prove way to ambitious but I enjoy working toward hard to reach goal and there isn't anything at stake really. The great flaw in my plan is that I got very little experience actually managing money. So I figured I'd ask you experienced mustachians! What advice would you have given yourself when you were just starting your adult life? What do you wish you had known?

(I'll use USD instead of Swedish Crowns in this case study to make things easier)
In Sweden, universities don't have tuition fees and there is a incredibly beneficial, government provided student loan. My monthly income will be 1500 USD equivalent after taxes, 300 of which will come from a government student allowance, 700 from student loans and the last 500 from a weekend job. The interest on the loan is less than 1% but interest isn't charged until I've either graduated or quit university!

I'll try to live on about 6-700$ each month, but I'm not sure how feasible that is. I'll live in a student dorm at a monthly rent of 320$. Hopefully food, cell plan, public transport card and everything else can be covered by a few 100$.

The only asset I have is a bank-account with roughly 20k$ which I'll soon be placing in a passive index fund. These are my personal savings along with what my grandparents have saved for me.

To summarize, I'm starting at 21 with 20k$ and a monthly savings rate of 8-900$. In two and a half years I'll graduate and get a full time job which will allow me to at the very least double my monthly savings. I'm not sure how much money I need invested to be able to call myself FI, but I believe 300k$ to be a good ballpark estimate.

What do you people think? Have I overlooked something obvious? Am I being a naive toddler who doesn't now how the real world works?
If you are a Swedish mustachian, what tips can you give me on reaching FI in the Swedish society?
 

[Roe]

Welcome!

There are some, but we seem to be fairly few. There is a thread in the meetup section, started in 2014 with 26 replies so far.

It sounds like you are of to a great start. You don't have (relevant) debts, you will have influence over future earnings and it will be much easier to avoid scaling up than it is to scale down.

The popular career paths might give a high starting salary and make economic sense if you plan to work until 65, but they might not be your best move if you only plan on working 5 years or so. Maybe go with something that is very intense and lucrative from start, but might put people of because they actually want a life aswell. Work on an oil rig might be a good option?

What is your plans for housing after you graduate? Most likely you will either have to increase that cost, move to a cheaper area with lower salary or live cheap and have the commute from hell. Don't count on getting roommates. It will work straight out of school, but you risk being abandoned a year in when their income increases and the expenses have to match. Then what do you do? This would also be a good argument for working somewhere where you live on site for stretches of time. No commute, and your actual home can be somewhere really cheap. Find a small apartement in Eskilstuna or similar, and you might even cut your housing expenses.

The Trinity studie isn't based on the swedish stock market. It's hard to know for sure without doing a completely new study, but from what I've read we might have to use a 3% SWR. While it's good to have in mind, it wont affect you much. If you at 30 decide to expand your FI to FIRE, you will have a very low income but lots of opportunities to increase it.

[havregryn]

We lived in Sweden but moved to Luxembourg with the primary goal of earning money.
In Sweden I'd say the main problem is that your earning potential is limited (for the US readers unbelievably limited) and your salary is practically more determined by your age than your skillset.  So unless you opt for something like an oil rig or maybe some specific branches like finance, you are not going to be earning all that much money from the moment you graduate to your early thirties.  At the same time a lot of things are way more expensive than elsewhere and you either need to be a lot more extreme or accept that your minimal spending is going to be relatively high. At the same time, Sweden is obviously specific in the sense that healthcare, education and any kind of public service is free so you probably don't need all that much money to consider yourself financially independent if you are fine with living a very lean Mustachian existence. Especially if you leave Stockholm. I imagine a single Mustachian living somewhere where it is possible to rent a studio for 2000-3000 sek (or having magically inherited a small place to live) can live with 10 000 sek a month, if not even less, and feel great.

I think Sweden is a bad place to be in the stage of accumulating money but a good place to be once you're FI.

[Roe]

I think Sweden is a bad place to be in the stage of accumulating money but a good place to be once you're FI.

Very true.

Also being born, growing up and studying here is great. Just as long as you move for the accumulation phase.

[Goldielocks]

To summarize, I'm starting at 21 with 20k$ and a monthly savings rate of 8-900$. In two and a half years I'll graduate and get a full time job which will allow me to at the very least double my monthly savings. I'm not sure how much money I need invested to be able to call myself FI, but I believe 300k$ to be a good ballpark estimate.

Hi Jiggie,

I am certainly not that knowledgeable about Sweden, but I did work in Oslo when I was 21, living in student dorms (I was on a coop work placement while in university).  I have also lived and worked in the US and in Canada.  Each country is fairly different, and there are other regional differences, too.   My comments are based on living the core differences between MMM and Norway (not Sweden)  and Canada.

I think you have an excellent plan while in university.  Take your extra $800 and invest it while a student with subsidized loans, etc.   This is a terrific benefit that frugal students (who get a job), can often take advantage of, and should.

The flaw is your plan to double your monthly savings once you get a job.   I worked for the city of Oslo, in their civic engineering department and asked a lot of questions from people under 30.   The take-home portion of your pay is not huge, instead you get great benefits, time off, and a pension with lots of deductions and taxes.  On a monthly basis, you may bring in the same amount as you are as a student, yet your housing costs will increase once you are out of the student housing.   You may actually have LESS money each month once you start working, although none of your income is a loan for future repayment.

The next challenge is the PENSION -- everywhere that has a pension, it locks people into a LONG career cycle.   Northern Europe, seems to be particularly so.   Instead, you may want to revisit the 10 year FIRE, and instead plan to go to 80% workload or less, once you are 32, and then work until normal minimum retirement age.   Many parents in their 30's already do this, as part of an approved company leave plan..it should not be hard to arrange a career of it.

**Do not get a car if you can put it off for 10 years, do so.  I know that you aren't planning on it, but this is such an enormous one for an urban Scandanavian city, I thought it needed repeating **

[Rubic]

Possible reddit forum you might be interested in: https://www.reddit.com/r/EuropeFIRE/

[Jiggie]

Welcome!

There are some, but we seem to be fairly few. There is a thread in the meetup section, started in 2014 with 26 replies so far.

It sounds like you are of to a great start. You don't have (relevant) debts, you will have influence over future earnings and it will be much easier to avoid scaling up than it is to scale down.

The popular career paths might give a high starting salary and make economic sense if you plan to work until 65, but they might not be your best move if you only plan on working 5 years or so. Maybe go with something that is very intense and lucrative from start, but might put people of because they actually want a life aswell. Work on an oil rig might be a good option?

What is your plans for housing after you graduate? Most likely you will either have to increase that cost, move to a cheaper area with lower salary or live cheap and have the commute from hell. Don't count on getting roommates. It will work straight out of school, but you risk being abandoned a year in when their income increases and the expenses have to match. Then what do you do? This would also be a good argument for working somewhere where you live on site for stretches of time. No commute, and your actual home can be somewhere really cheap. Find a small apartement in Eskilstuna or similar, and you might even cut your housing expenses.

The Trinity studie isn't based on the swedish stock market. It's hard to know for sure without doing a completely new study, but from what I've read we might have to use a 3% SWR. While it's good to have in mind, it wont affect you much. If you at 30 decide to expand your FI to FIRE, you will have a very low income but lots of opportunities to increase it.

The living situation after graduation is a problem for sure. I will probably end up having 2-3 times higher housing expenses. This also brings up a new dilemma. Should I invest the money I have now in an index fund? I might need most of it for a down-payment for an apartment in two and half years and such a short term investment seems risky.

Finding another country to work in for the accumulation face might be a good idea. My university have exchange programs with hundreds of schools and if I get my masters degree in another country I might have a good chance to land a job and working visa there. The US might be a good bet but there are probably good options within the EU as well.

[Jiggie]

To summarize, I'm starting at 21 with 20k$ and a monthly savings rate of 8-900$. In two and a half years I'll graduate and get a full time job which will allow me to at the very least double my monthly savings. I'm not sure how much money I need invested to be able to call myself FI, but I believe 300k$ to be a good ballpark estimate.

Hi Jiggie,

I am certainly not that knowledgeable about Sweden, but I did work in Oslo when I was 21, living in student dorms (I was on a coop work placement while in university).  I have also lived and worked in the US and in Canada.  Each country is fairly different, and there are other regional differences, too.   My comments are based on living the core differences between MMM and Norway (not Sweden)  and Canada.

I think you have an excellent plan while in university.  Take your extra $800 and invest it while a student with subsidized loans, etc.   This is a terrific benefit that frugal students (who get a job), can often take advantage of, and should.

The flaw is your plan to double your monthly savings once you get a job.   I worked for the city of Oslo, in their civic engineering department and asked a lot of questions from people under 30.   The take-home portion of your pay is not huge, instead you get great benefits, time off, and a pension with lots of deductions and taxes.  On a monthly basis, you may bring in the same amount as you are as a student, yet your housing costs will increase once you are out of the student housing.   You may actually have LESS money each month once you start working, although none of your income is a loan for future repayment.

The next challenge is the PENSION -- everywhere that has a pension, it locks people into a LONG career cycle.   Northern Europe, seems to be particularly so.   Instead, you may want to revisit the 10 year FIRE, and instead plan to go to 80% workload or less, once you are 32, and then work until normal minimum retirement age.   Many parents in their 30's already do this, as part of an approved company leave plan..it should not be hard to arrange a career of it.

**Do not get a car if you can put it off for 10 years, do so.  I know that you aren't planning on it, but this is such an enormous one for an urban Scandanavian city, I thought it needed repeating **

Thank you for your answer!
I realize the potential for a huge salary isn't that big in the Swedish job market, but you can still earn a lot if you're willing to put in extra hours. I once managed to earn 27,000 SEK (3,290 USD) after tax in one month working two low skilled jobs. I earned so much because I did 60 hours of overtime and worked doing late evening and weekend shifts when the hourly wage is higher. This probably isn't something that can be kept up indefinitely but so far I've managed going to school 40+ hours a week and still work an average of 15 hours each weekend. I agree with you that doubling my savings rate after graduation might be very hard but I don't think it's impossible ;)

Also I will try to not get a car. If I keep living in Stockholm, a city with very good public transport, I won't have much use for a car anyway.

[Linea_Norway]

Here another person from Norway. If you are young, your job is to maximize your earnings. Try to find a best possible paying job. If that is in Norway, move there for a couple of years like many Swedes do. And utilize all possible tax free earning things. Like in Norway we can rent out less than half the value of our house for tax-free. We can receive money from organizations up to 10.000 NOK a year tax-free. You can earn 6000 NOK a year tax free from each private person your work for (painting house etc). As a student you can earn up to 58.000 or so NOK for free. Make sure you max out all possible options that Sweden offers.