As the cost of living crisis continues, we are constantly looking for ways to reduce our outgoings, and as we are fast approaching 2024, we are entering into the ‘New Year, New You’ mind frame.
One of the most common New Year’s resolutions is to manage money better. This week we will look at ways of better money management for 2024.
Prepare a Budget
To prepare a budget, you will need to calculate your total income. Look at the net income on your payslip and this will show you your take home pay for every week/month, add this to any social welfare payments, rental income payments, or other income received. You will then need to calculate your outgoings.
Firstly, regular expenses: These include your regular outgoings such as electricity, phone, life cover, health insurance, car expenses, food shopping, childcare costs, TV package, etc.
Secondly, debt: These include your mortgages, car loans, credit cards, personal loans, etc.
Thirdly, occasional expenses: These include clothes, holidays, TV Licence, back to school costs, birthdays, Christmas, home heating oil, socialising etc.
If you have any money left over the first thing you should consider is paying off any debt, especially shorter-term debt with high interest rates such as credit cards and unsecured loans. The next step to take is to build an emergency fund. You should also study your outgoings to decide if you can save money or cut back on any of your expenses, especially your everyday expenditure.
Set Financial Goals
If you set realistic tangible financial goals, you are more likely to stick with and achieve them. There are short-term, medium-term, and long-term goals.
A short-term goal might be paying off a credit card, saving for Christmas, saving for a holiday, or building an emergency fund which will be available for any unexpected expenses.
A medium-term goal may be saving for your children’s education, saving to pay a lump sum off your mortgage or saving for home improvements.
A long-term goal may be paying into a pension to save for retirement, paying off your mortgage early or saving for long term financial security.
You can also adopt the “save first “approach where you transfer money into your savings account on payday instead of waiting until the end of the month to save. As the old saying goes, “Do not save what is left after spending, but spend what is left after saving”.
Shop Around and Save
Shopping around for all products such as electricity, phone contracts, life cover, health insurance, serious illness cover, etc. can potentially save you money each year. It may also be beneficial to get multiple quotes from other providers when shopping around and ask your existing provider if they can match any lower quotes you have been offered. You can also review the charges on your current account, investment products and pension products to see if it is possible to save money there.
By proper planning, budgeting, shopping around and perseverance it is possible to save money each year and as we come towards the end of the year now is as good a time as any to start preparing for next year.
Adrian Kelly QFA, is a Qualified Financial Advisor. You can contact him through John F. Loughrey Financial Services Ltd by telephone on 074-9124002 or by email on adrian@jfl.ie
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