The Finances of a Sensible Person

The finances of a sensible person — how to (re)build your financial life in uncertain times.

I’ve created a ready-made plan for the sensible person so you don’t have to 😉

Of course, this is just an outline—a framework that needs to be filled in according to your own capabilities, needs, and beliefs. Nevertheless, even this outline provides a solid foundation for most “financially sensible” people to reflect on how they have managed their finances. And whether the way they’ve done it is of quality and brings peace of mind.

Introduction: How to survive financial turbulence without losing your mind?

You know what’s the most overrated asset in the financial world? Money. Seriously. Many people have it, but few know how to use it wisely. Why? Because the key question is: “How do you keep it, grow it, and not lose it?” In this text, you’ll learn how to do just that.

I’m not here to teach you life lessons. I’m not some internet finance guru bragging about a Ferrari parked in front of his (rented 😉) house. I’m a practitioner. That means I share strategies I use myself to maintain financial peace of mind. Making big money isn’t the art—keeping it and securing your future is.

So if you’re looking for magical solutions, miraculous investments, or quick ways to get rich, this isn’t the place. But if you want to learn how to build solid financial foundations in times when inflation devours your savings faster than you think, you’re in the right spot.

Let’s start with the basics: who is a financially sensible person, and why is it worth becoming one?

Chapter I: Who Is a Financially Sensible Person?

A financially sensible person doesn’t have to earn millions to sleep peacefully. They don’t need a stuffed wallet to feel free. But they do need to understand their finances and act strategically.

So, who is this person? They are someone who understands that:

• You can’t rely on just one source of income.
• Saving is essential, but without an investment plan, saving alone isn’t enough.
• Diversification is fundamental — across income streams, assets, currencies, and institutions.
• It’s best to avoid debt, but if you must take a loan, do it wisely.
• Controlling fixed expenses is a priority.
• Risk management is crucial — insurance isn’t a luxury.

A financially sensible person lives by one rule: “It’s not about how much you have, but how you manage it.”

Let’s be honest: in a world where anyone can lose their job overnight, multiple income streams are a must. This means you should build your financial foundation on several pillars.

Let’s take a closer look at what these pillars might be.

Chapter II: Pillar I – Income (Building Multiple Income Streams)

1. A job? Why not, but it’s just the beginning!

If you have a full-time job, that’s good. A steady job provides stability, but usually doesn’t bring financial freedom. And don’t count on your salary growing faster than inflation—that’s quite rare.

A sensible person knows that a full-time job is just one piece of the puzzle. That’s why they build additional income streams. Generally, the options fall into categories like business, real estate, and investments.

2. Your own business — why it’s worth selling your skills

Here’s one thing to know: your mind is your greatest asset. Have knowledge and skills? Learn to sell them! (Or partner with someone—or hire someone—who can sell what you “produce.”)

You can do this through:

• Business consulting (or life coaching 😉)

• In-person or online training sessions

• Your own YouTube channel, podcast, etc.

• Selling your own books or e-books

• Creating online courses

You don’t need to start a big corporation. Begin with a sole proprietorship.

An example from my own life? I run companies that generate revenue from accounting services, consulting, and investment projects (which I also carry out personally). Each income stream is independent, and that gives me financial peace of mind.

3. Real estate rental — so-called passive 😉 income, but done smartly.

Renting out, for example, an apartment is one of the most popular sources of passive income (whether it’s truly passive… well, that depends, but that’s not the focus here). And a word of caution — renting also comes with risks.

A sensible investor knows that when renting out a property, they must account for:

• Repair and maintenance costs.
• The risk of vacancy.
• Changes in tax regulations.
• Keeping track of legal changes to ensure the imbalance between landlord and tenant rights and obligations doesn’t reach a point where renting becomes too risky.
• The risk of a problematic tenant and having a contingency plan if things go wrong.

That’s why you should always plan your rental income with a safety margin. Above all, in your financial plans, don’t assume the property will be rented out 12 months a year—though other factors are also very important.

4. Dividends, interest, bonds — what else can work for you?

Not everyone has the time or desire to manage an active business or rental properties—and that’s perfectly fine. That’s why, especially in those cases, it’s worth considering income from capital:

Dividends from publicly traded companies.

Interest from bonds.

Returns from ETFs.

REITs — investments in commercial real estate through the stock market.

If you think long-term, it’s also smart to add a tax shield by investing through accounts like IKE, IKZE, or OIPE.

An example? I have ETF and stock portfolios with two brokers—one European and one American (geographic diversification). I invest in dividend stocks, ETFs, and REITs. I don’t need to follow the market daily. Consistency is key. I’ve defined my “why” for these investments and review them periodically. As long as the fundamentals behind my “why” don’t change, all these assets will stay in my portfolio.

Chapter III: Pillar II – Asset Diversification and Wealth Management

Asset diversification — an age-old folk wisdom about not putting all your eggs in one basket.

Diversification is the key word. Why? Because no asset is 100% safe. Real estate can lose value, the stock market can drop, and inflation can eat away your savings. When there’s global uncertainty, stock markets may fall, but precious metals like gold might rise. At the same time, the value of your investment studio apartment in a good location may increase, while your stocks on the Warsaw Stock Exchange fall. This all shows that what ultimately matters is the sum of your investments — your entire portfolio. Because it’s almost never the case that all assets are up at the same time. Diversification then brings peace of mind. Negative emotions are the worst “nightmare” for any investor.

That’s why a financially sensible person holds wealth in different forms, for example:

• Real estate (e.g., rental apartments, land).
• Financial assets (stocks, ETFs, bonds).
• Alternative investments (gold, art, watches, crypto, etc.).
• Cash in various currencies (PLN, EUR, USD, CHF).

Geographical and Institutional Diversification

Don’t keep all your money in one country or one bank. A financially sensible person uses various institutions:

• Accounts in Polish and foreign banks.
• Accounts with different brokers (e.g., Saxo Bank, Interactive Brokers, XTB, or others — just examples, no specific recommendation).
• Investments in different countries (e.g., European and/or American stocks and ETFs).

Cash and Emergency Fund

A sensible person knows unexpected situations can always happen. That’s why they keep an emergency fund covering 12–18 months of living expenses.

How to keep cash?

• In a bank (term deposits, savings accounts).
• In a safe (physical cash for emergencies).
• In foreign currencies (EUR, USD, CHF).

An example from my own life? I keep cash set aside for different purposes and in different currencies. Some is held in accounts in Poland, some abroad, and some as physical cash.

Chapter IV: Pillar III – Risk Management and Wealth Protection

1. Insurance — your protective shield

A sensible person doesn’t rely on “it’ll somehow work out.” They protect themselves against various risks:

• Life insurance, survival insurance, and coverage for critical illnesses.

• Property insurance (home, apartment, car).

• Income loss insurance.

• Liability insurance for personal and business life.

An example from my own life? I have several policies that protect both me and my business. I’d rather pay a few hundred zlotys a year than worry about things going wrong. Additionally, these policies protect my loved ones in case of the unexpected. I also have policies that secure my income for up to 24 months if I’m unable to work during that time.

2. Legal structures for asset protection

Protect your assets through appropriate legal structures:

• Limited liability companies (Sp. z o.o.)

• Simple joint-stock companies (P.S.A.) or joint-stock companies

• Family foundations

• Even private foreign foundations or foreign holding companies (depending on your income level and asset size)

Example? I run several companies that help me manage finances and minimize risk. Owning a business is also a tool for asset protection. Some companies are for earning, others for holding assets, others for alternative investments, and some for succession planning.

Chapter V: Pillar IV – Cash Flow Management

1. Cash Flow – Manage Your Finances Like a CFO

If you don’t know how much you earn, how much you spend, and where your money “disappears,” it means you’re not managing your finances — your finances are managing you. And that’s a quick path to financial chaos.

That’s why a financially sensible person keeps a cash flow budget (both personal and business, often separate for each financial activity), analyzing money flows:

• Income — all incoming funds from various sources.

• Fixed expenses — rent, bills, insurance.

• Variable expenses — food, entertainment, hobbies.

How to do it?

• Write down all your income and expenses.

• Divide expenses into categories: fixed and variable.

• Identify areas where you can cut costs.

2. Monitoring Finances – Consistency Is Key