Essential Money Tips for Living in Germany
Moving to Germany comes with its own set of financial rules you won’t find in your handbook.
Mastering these tips will help you avoid costly mistakes and build a solid money foundation.
The Powerful Schufa Score
Imagine a financial resume that opens doors to apartments, phone contracts, and even gym memberships. That’s the Schufa score in Germany—your lifeline in the financial world. When you arrive with a clean slate, you might find it challenging to gain trust from landlords or service providers. A strong Schufa score proves you handle credit and bills responsibly, while a negative entry can haunt you for years.
How to build your Schufa:
- Open a German bank account and route your salary, rent, and subscriptions through it.
- Make every payment on time—late or missed payments stick like gum on a shoe.
You’re entitled to one free Schufa report per year, so download it, review your entries, and dispute any mistakes promptly.
“Missing just one rent payment can wreck your financial reputation for years.”
Cash is King, but Cards are Catching Up
In Germany, cash still rules daily transactions—even in 2025, a local bakery may refuse your Visa or Mastercard. Instead, the Girocard (Germany’s debit network) is king. Use your Girocard at supermarket checkouts, pharmacies, and public transit machines.
Contactless payments and digital wallets are growing, especially in big cities, but always carry at least €20–€50 in cash. New regulations are on the way, potentially mandating that businesses accept electronic payments to reduce tax evasion and modernize the system.
Understanding German Credit Cards
German credit cards function differently than American or British versions. Most operate on a charge-card model: you spend through the month, then the full balance is automatically debited from your bank account on a fixed date—no minimum payments or revolving balances. This setup virtually eliminates credit card debt but requires careful budgeting to avoid overdrafts.
True revolving-credit cards are less common and come with interest rates. Initial credit limits tend to be modest (often €200–€500), but responsible use and timely full repayments can boost your limit over time. Consider applying for a free basic credit card early—even occasional use signals good behavior to lenders.
The Necessity of a German Bank Account
Without a German IBAN, you can’t receive your salary, pay rent, or set up utilities. Luckily, opening a bank account is now straightforward thanks to digital banks like N26. With N26, you can open an account entirely in English via your smartphone in minutes.
Beyond standard banking, N26 offers flexible eSIM mobile plans, so you manage your money and data in a single app. This convenience saves you time on paperwork and hoops you’d otherwise jump through at multiple providers.
Navigating Taxes in Germany
Even though income tax is deducted at the source, filing a tax return is essential—especially if you moved mid-year, paid for relocation, or have deductible expenses like work-from-home equipment. Many expats leave hundreds of euros unclaimed each year by skipping the voluntary tax return (Antragsveranlagung).
Tools like Taxfix or Wundertax guide you through the process in English. Don’t forget to review your tax class (Steuerklasse): married couples can switch between combinations to optimize monthly net pay, and single earners should confirm they’re in Class I. A simple form to your Finanzamt (tax office) can yield significant monthly savings.
The Reality of the TV Tax
Germany’s public broadcasting fee (Rundfunkbeitrag) applies to every household—TV, radio, or not. At about €18.36 per month per residence, this isn’t optional. Ignoring the fee triggers warning notices, fines, and possible debt collection.
When you register your address (Anmeldung), you’ll receive a notification from the Beitragsservice. If you share your flat, one tenant registers and others reimburse their share. Splitting the cost typically means each roommate paying about €6–€7 monthly. Plan for this mandatory expense in your monthly budget.
Comprehending Germany’s Pension System
Contributing to the German public pension (Deutsche Rentenversicherung) is automatic if you’re employed. After five years of contributions, you qualify for pension credits, which may entitle you to future benefits based on Germany’s treaties with your home country. If you leave Germany early, check whether you can transfer or withdraw your contributions through bilateral social security agreements. This can make a big difference in your long-term retirement planning.
Investing for the Future
Germany favors long-term, low-cost investment strategies. Day trading and high-risk speculation aren’t common. Instead, locals invest via ETFs, mutual funds, and robo-advisors. Platforms such as Trade Republic and Scalable Capital offer English interfaces and automated tax handling for capital gains and dividends.
Starting with a simple ETF savings plan (Sparplan) can help you build wealth steadily. Remember to declare your investments on your annual tax return, and use the annual capital gains allowance (Sparer-Pauschbetrag) to shelter up to €1,000 per person from taxes.
Conclusion
When your money, credit, and taxes are organized, you’ll unlock more freedom to focus on life in Germany—enjoying local culture, travel, and personal growth without financial stress.
• Actionable takeaway: Open a German bank account today, request your free annual Schufa report, and set up one recurring savings plan to start building credit and wealth simultaneously.