Saving money in Switzerland is that an oxymoron?
People, especially visitors to Switzerland, love to talk about how expensive Switzerland is.
And Switzerland’s expensive reputation is not without reason.
Prices, especially in restaurants and bars, are much higher than in the neighbouring countries.
This expensive reputation also arises because the Swiss tourism sector and ‘Swiss brand’ is targeted towards high-end markets.
Yet, Swiss people save a lot.
In 2018, the average Swiss household saved 1,589 CHF per month – one of the highest savings rates internationally.
Of course, a lot of this is down to the high Swiss salaries which make it possible to save more of your income.
But income is just one side of the coin.
The Swiss somehow manage to save a significant amount of money each month, despite paying an average price of 6 CHF for a beer.
So, how do Swiss people save money while living in such an expensive country?
Focus on the big ticket items, not the almond lattes or avocado toast
When trying to save money, many people make the mistake of focusing on the small stuff. But saving a few francs on your morning coffee won’t make much of a difference if you live in a swanky apartment or drive a fancy car that is beyond your means.
The three biggest expenses in Switzerland are accommodation, taxes, and health insurance.
More than one-third of each months income is spent on just these three expenses.
Optimise the big-ticket items first. Then once you have optimised these, you can focus on the smaller items like coffee.
1. Hack your taxes
Taxes in Switzerland are relatively low, however, they still eat up a large portion of your income.
Therefore, if you are looking to save money this is one area where small adjustments can have a big impact.
You can find my post on income tax rates in Zurich here.
To hack your taxes get to know all the deductions you can take when you file your tax return.
There are numerous different allowances and items which you can deduct from your taxes.
For example, lunch at work, health care, donations, childcare, commuting costs and so on can all be deducted.
Paying attention to these deductions and taking the time to file your taxes properly can save you 1000s of francs down the road.
Especially important for reducing your tax bill, are 3rd Pillar payments. If you have a 3rd Pillar (and I recommend you have one) make sure to contribute the maximum amount each year and deduct this in your tax return.
For people earning over 85,000 CHF per year, Pillar 3 contributions make a big difference to your final tax bill.
2. In Switzerland it matters where you live and you could save money by moving
Taxes are collected on the municipal, cantonal, and federal level.
And often the municipal tax rate is the highest of the three.
This is why it can really matter which town you live in.
For example, someone living in Kilchberg, Zurich and earning 100,000 CHF would pay a tax rate of about 9 per cent. However, if they moved to Rifferswil they would pay 12 per cent!
The result is a difference of several thousand Swiss francs.
The same applies between Cantons.
Zug and Schwyz are well-known as the best cantons for people looking to minimise their tax bill.
Therefore, if you are looking to save money in Switzerland look at the big picture and how your taxes affect your finances.
3. The average Swiss spends 1,362 CHF on rent each month
Rent is most likely your largest expense every month.
In 2019, the average rent in Switzerland was 1,362 CHF.
In Zurich average rent was even higher at almost 1,600 CHF each month.
The rule of thumb in Switzerland is that your rent should not exceed more than one-third of your gross salary.
In fact, it is nearly impossible to find a landlord to rent to you if you violate this rule.
Nonetheless, even if you follow this rule, one-third of your income is a lot!
As your largest expenditure each month, it is worth carefully considering the budget for your apartment.
You could save 6,000 CHF more in one year just by living with a flatmate.
If you don’t want to live in a shared apartment then you can save a similar amount each year by moving just a little further away from city centres.
Oerlikon and Dubendorf are both easily within 30 minutes of central Zurich but you can get a much nicer apartment for a much lower price than if you live in the centre of town.
If you already have an apartment and moving isn’t an option, you might be able to profit from the fact that Swiss rental prices are pegged to the reference interest rate.
This law means that if the official interest rate decreases (which is currently the case) then you can request an equal reduction in your rent.
This is one of the simplest ways to reduce your rent, however, many people don’t do it because you have to be proactive and actively request the equivalent reduction.
But, by not requesting a rent reduction when the interest rate decreases you are leaving money on the table that you could save or spend on something else!
Therefore, when it comes to rent, it pays to be proactive.
4. Find good quality furniture for cheap or even free online
Moving furniture is a pain and disposing of it in Switzerland is expensive. Therefore, many Swiss instead sell their furniture online or even give it away for free to avoid dealing with it.
This results in a large amount of good quality furniture from beds, to couches, and dining room tables, being listed on various sites in Switzerland at really good prices.
There is really no need to buy new with the amount that is available second-hand.
My favourite websites for buying second-hand in Switzerland are Facebook, Ricardo, and Tutti.
On Facebook Marketplace you will find many people in your area selling their wares. There are also plenty of Facebook groups local to your area where people regularly post their items for sale when they move.
Join these Facebook groups and keep an eye out and you can easily score a new bedside table or office chair.
Ricardo and Tutti are two online platforms where private individuals can list their items.
Ricardo is the slicker platform of the two and offers both direct sales and auctions. Whereas Tutti is much more simple. However, some items like furniture are often available much cheaper on Tutti.
5. Shop around for your health insurance
The next large monthly expense after rent is your health insurance.
Basic health insurance is mandatory in Switzerland, making it hard to avoid this expense.
However, there are a few ways that you can minimise your health insurance bill.
1. Choose your provider carefully and compare the best health insurance each year.
Use Comparis to compare and choose the best health insurance provider for you.
As the health insurance premiums tend to change each year, it is best to repeat this exercise at least every two years.
2. Choose your franchise
When you select your health insurance, you can choose which franchise you wish to have.
The options for persons over the age of 18 are:
- 300 CHF
- 500 CHF
- 1,000 CHF
- 1,500 CHF
- 2,000 CHF
- 2,500 CHF
The higher the franchise, the lower your monthly health insurance cost.
Nonetheless, if you want to save money you should not necessarily choose the highest franchise.
Your decision should depend on your best estimate of how often you will seek medical attention throughout the year.
When deciding on the franchise only the very lowest and the highest franchise make financial sense.
If you have medical issues or expect to see the doctor often then you should go for the lowest franchise of 300 CHF.
If however, you expect to spend below 1,900 CHF on your health costs then the 2,500 CHF franchise is financially the best option for you.
3. Choose your mode of health insurance carefully
Another way to reduce the cost of your health insurance is to adjust your health insurance model.
The standard model is where you can go to your doctor or any other doctor (that is recognised by the health insurance) directly. This is the most convenient but also the most expensive option.
You can however reduce your costs by choosing the Telmed model or family doctor model.
In the family doctor model, you have a ‘family doctor’ that is your doctor who you must see before you can be referred anywhere else.
In the Telmed model, before going to the doctor or to a specialist you have to call your health insurance call centre and explain that you would like to see a doctor and then they will decide and advise you which doctor you may see.
Both the family doctor model and the Telmed model are cheaper than the standard model and are a simple way to save money on your health insurance.
6. Embrace public transport and ditch the car
The next big cost after taxes, rent, and health insurance is transport.
The average Swiss household pays around 750 CHF each month for transport.
This is quite a large amount and can be easily reduced if you are willing to forgo a few luxuries.
In general, having a car is expensive in Switzerland. Parking, taxes, annual highway tolls, service fees etc. all add up quickly.
A car is a luxury that is not as necessary in Switzerland as in other countries which don’t have a public transport network that is as extensive as Switzerland’s.
Therefore, if you do not absolutely need a car for work and it is more of a nice-to-have, consider foregoing the car for public transport or bicycle.
Instead, use services like Mobility for those days where you really need a car and take the train the rest of the time.
You can get almost anywhere in Switzerland with public transport (even the tiniest village high up in Graubünden is accessible by Post Auto) and it is safe, easy, and clean.
And although it isn’t cheap, there are many ways to save money on ticket costs in Switzerland.
If you live in a city and don’t have to commute to work due to work-from-home or you are still a student, then the 9 O’Clock Pass is a great option.
With the 9 O’Clock Pass you can use all the zones on your ticket from 9 am to 5 am Monday to Friday, and throughout the whole day on the weekend.
You can buy it on a daily, monthly, or annual basis. The 9 O’Clock Pass for all Zurich zones is only 134 CHF per month.
Another option to reduce your transport costs is the Day Ticket Pass.
If you plan to travel further, for example on a ski trip to the mountains, then you can buy a Day Ticket Pass from your local municipality at a reduced price. Most municipalities in Switzerland offer discounted day passes to their residents.
You just need to choose and reserve the pass for the day that you wish to travel and pick it up from your local municipality.
Some offer them for as low as 40 CHF (normally a day pass with a half-tax card is 75 CHF).
In this case, planning ahead and reserving the pass early is crucial!
7. Be smart about your grocery shop
Again compared to its neighbours, grocery shopping can be relatively expensive.
Especially if you buy organic you can expect to pay much more than elsewhere. According to NZZ, organic items in Swiss grocery stores cost up to three times more than in Austria or Germany.
Nonetheless, there are ways to save money on your grocery shop.
If you do prefer to buy organic food then a smart option is to bypass the supermarkets entirely and head directly to the producers. You can either visit farmer’s markets, which are in most cities on multiple weekdays or buy directly from the farms through farm shops.
Not only do you get fresher produce but it is also more affordable and you support local farmers.
The two largest supermarkets in Switzerland are Coop and Migros. And Swiss people grow up with their parents going to one of these and they tend to identify as either a “Coop-” or “Migros-Child”.
Coop and Migros have a pretty strong duopoly on the market in Switzerland. However, new incumbents such as Aldi and Lidl have entered the Swiss market in recent years, ramping up the competition with lower prices.
If you are looking to save money on food then shopping at Lidl or Aldi will drastically reduce your expenditure in this area.
Another option is to go grocery shopping later in the day, past 4.30 pm, especially on Saturdays, when many perishable items are reduced by up to 50%.
Although it is busier on a Saturday it is often still worth it to buy your groceries late on Saturday afternoon, due to the heavy discounting that shops do before Sunday when they have to close.
8. Review all your subscriptions
Although you should focus on reducing your big expenditures first, small expenses can add up quickly.
This is especially the case for monthly or annual subscriptions where you may no longer even be using the product that you are paying for!
Therefore, reduce your spending by carefully reviewing your credit card bill for all recurring charges and then decide whether you still use or need these subscriptions.
Moreover, it is quite easy in Switzerland to get stuck paying a subscription for a whole additional year just because you forgot about the annoying three-month-long cancellation period.
Many services and subscriptions in Switzerland need to be cancelled a whole three months in advance!
Annoying, I know.
But forgetting this cancellation period means that you might get stuck paying for that travel insurance that you no longer need for another year.
Therefore, note the cancellation deadlines in your agenda or set a reminder on your phone so that you don’t miss them.
There are many templates available online that you can use to cancel these services.
Just search for “Kündigungsvorlage” download the template and send it to the service you wish to cancel.
If you follow the above tips then you will have taken a big step towards saving more money each month.
Of course, there are other ways to save money, such as ordering TooGoodToGo instead of Ubereats and these are great savings tips but they will only have a small impact on your overall savings rate.
By focusing on the biggest expenditures that you have each month and reducing these you will be well on your way to increasing your savings balance on your bank account.
Now that you have saved all that money, don’t lose it to inflation and negative interest rates! Check out my post on how to choose an investment fund and consider investing your money to have it work for you.