Most of us make major resolutions this month to exercise, lose weight or quit smoking in 2013. With more taxes on the way and no real sign of any green shoots of recovery, the New Year is also a timely opportunity to take more control of your finances.
So what practical changes can we make to ensure that we are making the most of our money?
1. Review all of your outgoings
If you are serious about getting your finances in order you need to lay all of your cards on the table – know your starting point. Write down all of your expenses; study your bank and credit card statements to see where your money is actually going. Pay particular attention to direct debits, especially annual ones: What are they for? Are they are necessary? Once you have a proper understanding of your outgoings you will be able to budget more realistically.
Draw up a budget that includes all of your income and all of your necessary expenditure – make sure you include everything. But make your budget realistic – don’t go “cold turkey” making promises you know you cannot keep.
Once you have a budget it is important to review it to see if you are keeping to it, and to identify any areas where you are overspending – keep all of your receipts for a couple of months to see exactly where your money is going.
3. Time to haggle!
Check that you are getting value for money on essential outgoings, such as telephone and broadband bills, car and home insurance and healthcare cover. Often a quick phone call to a few different providers can save money on your annual bill. Be armed with competitor quotes when talking to your existing providers – the chances are you will get a reduction. But always be careful of the small print, as cheaper is not always better.
4. Take control of your credit – don’t let it control you
Make this the year you tackle any credit card debt. You should always aim to pay off the most expensive debt first. This will generally be credit cards where the interest rate can be well over 20% per annum. Shop around – there are providers offering low or zero per cent introductory offers on transfers for up to 12 months (see www.nca.ie or credit card comparison websites for current deals). If you do go for one of these deals you should look to reduce your balance as much as possible during the interest free period.
Are you regularly going overdrawn or exceeding your limit and incurring unnecessary additional charges? Some banks charge very expensive referral fees and surcharge interest. These additional costs can be avoided by agreeing a more appropriate overdraft limit with your bank and ensuring you work within that limit.
If you find your account is constantly overdrawn or if you are unable to pay off your credit card balance, it may be worthwhile consolidating these expensive debts into a personal loan where rates are usually much cheaper. If you do go this route you need to ensure you don’t end up rebuilding the debt – it might be time to get rid of the credit card.
5. Review financial policies
Financial policies such as life cover, serious illness cover and income protection provide an income or lump sum at the time you or your family need it most. If you have policies get them reviewed by an independent financial adviser. You will get impartial advice on whether the policies you have meet your needs and whether you are getting good value for money. If you don’t already have cover consider getting some – for a small monthly payment some provision can be made, and the younger you are the generally the cheaper the cover will be – so being young is not a good reason not to be covered!
6. Make the most of your savings & investments
Always ensure you are getting the best possible rate of interest on any savings you have. Leaving excess money in a current account when it could be earning interest on deposit is a waste. If you are fortunate enough to have surplus money left over each month you should consider setting up a regular savings account. Saving is a habit and you may well be surprised at the amount you can put away when you discipline yourself. Many deposit accounts have minimums and maximums and there a number of other savings products on the market so you will need to do a little research or speak to an independent financial adviser.
The above are only a few basic ideas as to how you might save money and improve your financial position. Remember that it is always advisable to talk to an independent financial adviser before making any significant changes to personal financial products.
If you do find yourself in financial difficulty it is crucial that you don’t ignore the situation. If you are struggling to pay the essential bill, such as rent, mortgage or energy bills, you should seek debt advice immediately – don’t be embarrassed or put off seeking help.
For further information contact MLMG Financial Advisors, St Helens, St Oran’s Road, Buncrana, Co. Donegal. Tel +353 (0)74 9321420 / Fax +353 (0)74 9321421/ email@example.com
McLaughlin McGonigle t/a MLMG Financial Advisors are authorised to undertake investment business services in Ireland by the Association of Chartered Certified Accountants.