A Guide to giving your Personal Finances a belated Spring Clean this Summer!
So we have just passed Phase 3 of Ireland’s Roadmap for reopening society and business and now look ahead to Phase 4 and what that may bring?
Will the ‘wet pubs’ be allowed to open?
Will our kids get back to school in September and if they do, how will that look, full-time, part-time or for all parents the dreaded suggestion of School Online?
Each step of the way, we have regained some of our freedom and with it a feel-good factor as we get to resume some of the activities from which we derive fun, headspace, and connectivity.
Over the earlier Lockdown period, we were allowed the space to review our daily habits in both home and work life. For many of us, it was an opportunity to stop practices that no longer served us, continue those which continue to add benefit and start new ones which add value and improve our way of life.
One of the common pieces of feedback we received from clients in the earlier part of Lockdown was how their spending habits had changed, they noticed their personal cash flow situation had improved and they had more money than month. Their main outgoings were on food shopping with the odd bottle of craft beer / bottle of vino thrown in to maintain some degree of sociability along with other consumer online shopping.
So, what about your own finances?
Would this be a good time to do a belated financial spring clean?
Here are a few ideas to get you started.
Take a Day
Set aside a day to do your financial housekeeping. If you can make this a weekday, it may be easier to make phone calls and work uninterrupted.
Make a Fresh Start
Ever calculated your net worth? Although this may be daunting at first, it is a helpful starting point to see where you are financially and to see if you have achievable financial goals. It is not difficult subtract all of your liabilities (home loans, car loans, credit cards etc.) from your assets (what you own, home, pensions, savings etc).
Next write down your financial goal for the 12 months (book a holiday, new car, improve your net wealth). If it is a reduction in short term debt, funnel money towards one specific debt, the one with the highest interest rate. Review this very 3 months to see how you are getting on.
Sort Out Your Savings
Let your financial goals guide you here, review any savings plans you have (including pensions), shop around, are there any better offers from which you can take advantage (better fee structure etc.)
Get Your Bills in Order
Review regular out goings to make sure they still fit your needs. Review your utility, phone, internet bills, check the billing breakdown to see the services for which you are paying
Use comparison sites online to see if there is a better deal out there. While you are doing all of this why not go paper free.
Be Good to Yourself
Home Loans, Utility Bills, Car/Home Insurance, Pensions etc. may not be the most fun way to spend your money and reviewing all of the above may not be the most exciting but it can make a difference to your future wealth creation if managed efficiently.
If I can however leave you with two tips.
1. Save a little each month, the amount is not important it is the savings habit that is important.
2. Reduce your debt. Think of it this way, once your debt free, all you have to work for is you and your lifestyle.
And finally, take some of the savings you have made above and spend them on yourself, your family or whatever makes you happy.
Simon Thompson CFP
and Life and Money Ireland