I THINK the last few months have really opened people’s eyes up to their individual financial situations: people have lost jobs, people may still lose jobs and people have taken pay cuts.
This all occurred with an abruptness that caught even the savviest by surprise. Whatever your situation is financially, it is always worth sitting down and reviewing things from time to time. Now more than ever, we need to be clever with our money, so here are some things worth considering if you are looking to save money.
Firstly, take a look at your mortgage. I know there are some people who are stretched to the limit when it comes to their mortgage. However, regardless of whether you have put a hold on your mortgage repayments there are a few tweaks that you can make to get better value and save money in the long run.
If you bought your house during a period where house prices were low or if you have done work on your house and are not in the middle of a fixed rate mortgage term, it might be worth considering getting your house revalued. In some cases, it could lower your Loan to Value (LTV) ratio, perhaps moving you from an LTV variable interest rate of around 3.15% if your LTV ratio is over 80% to 2.95% if your LTV ratio is between 50-80%.
The valuation report will cost about €150 which you have to pay yourself but consult your bank for a breakdown of the process.
Another thing that is worth considering is to see if you can pay off more of your mortgage each month. If you are putting money into a savings scheme sit down and work out the return on the savings investment versus the saving involved in reducing the term of your mortgage by increasing the repayments.
I’m not saying don’t save anything because that’s important too but even an extra €50 a month onto your mortgage is worth investigating. For example, take a simple calculation based on a mortgage with a remainder of €180,000 to be paid over a 30 year term at 3.5% APR. If you were to increase the repayments by €50 month it reduces the cost of the credit by €15,472.92 and reduces the term of the mortgage by over three years (mortgage calculators available from ccpc.ie)
When it comes to savings for the future it can be a tricky one to figure out. There are numerous financial advisors you can approach about getting advice on where best to invest your money or look at the various banks for the highest interest savings schemes.
There are 3, 5 and 10 year National Solidarity Bonds available via An Post that give a good return for your money, the only problem being that if you desperately needed that money in the morning then you cannot access it before the end of the term of the bond.
In terms of budgeting, it is not rocket science, but it takes time. In our house we use a simple excel file that looks at income and outgoings and we sit down from time to time to go through the variable spending costs like extracurricular activities, holidays, renovations etc.
We also use the AIB Money Manager to keep a check on things. This is a great way to get an overall view of where your money is going, you’d be surprised how much adds up on things like a trip to the shop for bread once or twice a week where you end up buying a few other bits or in places like Zara (although that one was no surprise to me but it was a surprise to my husband!).
There are also various apps you can use, one I have started using lately is Olivia which is an intuitive, interactive app with Irish Life that can link all of your accounts, including Revolut, and makes lots of suggestions as to how you can save money based on your own individual spending habits.
This last point isn’t necessarily about savings or spending but it is worth knowing, especially perhaps for parents or couples. If you and your partner both have separate bank accounts, should your partner pass away their account will automatically be frozen. That may come as no surprise, but if the person who passes away is in charge of paying any or all of the household bills any direct debits coming out of the deceased persons bank account will be suspended.
It would mean, on top of dealing with a death you could have to touch base with your service providers, like electricity, insurance etc to organise an alternative form of payment to avoid being cut off or services suspended. Given how many of our bills are now paperless it could be further complicated by those bills could be going to the email account of the deceased. So, for some, it might be useful to have a joint account to deal with bills going forward.
And finally, a good resource for people looking for financial advice with regards to budgeting is MABS — they have some online tools for helping you set out a budget and lots of resources for money management.