13 March 2023
6 Financial Tips that will help you in 2023
We are well into 2023 and inflation has not gone away. Mortgage interest rates are rising quickly and people are under increasing pressure managing the household budget.
If you have not sat down and reviewed your household budget this year yet , now is the time to do it. Make a financial plan for your household that works and that can be maintained. A good financial plan and properly worked out household budget can help in reducing some of the financial pressures that many families are experiencing.
Psychologists often find that for a high percentage people, money was a significant source of stress.
Improving your finances in the coming few months can benefit your overall health by reducing your worries over being in debt or not having enough in your savings account to cover an emergency.
If you only do one thing from this list, make sure to create that emergency fund. This should be your number 1 priority.
1. Start an Emergency Fund
An emergency fund is an important financial tool that can help deal with unexpected expenses, such as home or car repairs.
The New Year is as good a time as any to start your emergency fund. In general, experts recommend saving three to six months’ worth of living expenses. Start by opening a separate and dedicated emergency savings account. After that, consider these four tips:
- Evaluate your spending and look for areas where you can save.
- Set a savings goal.
- Set up a direct debit every week or month to this account.
- Try to increase your contributions over time.
2. Think about using the 50/30/20 rule to make your budgeting plans in 2023
Elizabeth Warren, a bankruptcy expert from Harvard, coined the phrase and it became very well-known from her 2005 book “All Your Worth: The Ultimate Lifetime Money Plan “. This rule has helped many people evaluate how they manage their finances
This rule splits your income after tax into portions: 50% of your income should go to needs, 30% goes to your wants and 20% should go to a savings plan.
This rule is very simple and realistic and is generous on how much you can spend on wants (30%) , maybe this a lot for some , but it may then make it more sustainable to stick to the rule.
If you're ready to give yourself a financial audit and try to tackle your financial situation, this simplified version of the 50/30/20 could be a good starting point, if only because it will force you to look at the way you spend.
3. Start saving for retirement
A pension scheme (or pension plan) is a long-term savings plan that helps you save for the future. A pension plan allows you to make regular payments and/or transfer one-off lump sums into a fund for retirement. The amounts saved into your pension are called ‘contributions’.
The money you save into your pension plan is invested so that your fund can grow over time; this is why the earlier you start a pension plan, the more time your retirement fund will have to grow and the bigger your pension pot will be.
Unlike a regular savings account, money invested in your pension can earn important tax breaks. And when you retire and look for access to your fund, the benefits of your pension can be available in a tax efficient way. If you pay tax at 40%, then a €300 monthly contribution to your pension after tax relief will cost you €180. Now that makes cents !!
Talk to an Irish Life advisor with no obligation on how you can start a pension plan: Make an appointment here: Irish Life Referral Scheme
4. Make sure to Switch or get rid of it
- Switch your mortgage to a lower interest rate if you are not on a fixed rate interest rate - talk to a local mortgage broker or to your mortgage provider
- Switch utilities every year without fail. Switching energy supplier can save you up 100s of Euro in one year and it only takes a few minutes.
- Buy Less. Every time you cut out a cake or a beer or something else - stash that saved cash somewhere. Use this extra cash to build up that emergency fund.
- Take a look at all your subscriptions - gym , TV , apps ,magazines, newspapers, Netflix, Amazon Prime, etc. If you are not using them fully - just cancel them.
- Make a deal with yourself to cut out impulse buying - especially online. Wait a week to decide on any purchases over €20. ( sounds small but these €20 add up quickly)
- After you have enough money saved to cover emergencies - consider starting or increasing pension payments or start an investment saving plan
- If you do have health insurance don’t just stick with the same plan at renewal.
- Treat your savings, investments and pension payments as a fixed expense that are deducted as soon as you get paid. Increase your savings when you have a rise in income.
- If you a credit card debt or other expensive debt, use our Switch and Save loan to make a plan to get these paid off quickly with a term loan.
5. Get informed about savings and investment products
People do not like engaging with things that do not understand. Who would put their hard earned money into something that do not understand? Beat that fear by getting informed about shares, bonds and other types of investments.
If you want to find out more about investing your money, your Credit Union has an arrangement with Irish Life Financial Services. Irish Life Financial Services is an insurance intermediary that can review your protection, retirement, savings and investment needs, and offer a full financial review with one of their Qualified Financial Advisers. See full details here about our arrangemnt with Irish Life Financial Services.
6. Family time - Make a will
Time is short. Spend it with people and things you care about. That same realization that life is short should be a call to make sure your finances are in order. Making a will can help to ensure that your death will not cause hassle or problems among the ones you love.
Make an appointment with a solicitor and make a will with your partner so that there is no ambiguity in the case of your demise.
Making a will doesn’t mean that you are thinking of dying anytime soon , it just means that you are organised and care about nearest and dearest. It adds peace of mind to you and your family
In Synergy Credit union in Fermoy, Watergrasshill and now Cork city , your credit union, you can nominate someone (or as many as you like) to receive your savings in the event of your demise. The precedes your will and can be used to cover expenses immediately as it does not have to go through probate
Cook more meals at home
Put more money back into your wallet by cutting back on restaurant and take-away food. Think about batch cooking and having meals ready in the freezer for those times that you don’t feel like cooking from scratch.
Many people will have received cookbooks for Christmas. Now its time to start using them. Cooking from home can be more fun if you are attempting meals you normally wouldn’t make.
To get the most for your money, peruse your local grocery store ads and create meals around what’s on sale in a given week. At the start of each week create a meal plan and you will be surprised at what you don’t buy. Having a meal plan speed up shopping and stops you getting buying food you don’t need
Although you may feel like you’re not saving more than a few euros each week, it is a start to creating a saving habit and you will be eating much less processed food.
Would you like a Free no obligation Financial review in 2023?
Irish Life Financial Services is an insurance intermediary that can review your protection, retirement, savings and investment needs, and they offer a full financial review with one of their Qualified Financial Advisers.
This can be done online or over the phone at a time and place that suits you, taking just a few minutes of your time. There is no obligation to purchase and all information you provide is private and confidential.
Book your FREE FINANCIAL REVIEW HERE now. Financial planning helps to give you peace of mind and helps you take care of the things that matter.