With the recent increases in the cost of living, caused by, among other things, fuel price increases, rising electricity, gas and heating oil costs and even rising grocery prices, it’s worth taking the time to see if there are any adjustments that can be made in order to offset some of these price increases. To do this effectively, the starting point needs to be increasing awareness of your current financial situation. While most people will have a fairly good idea of their regular income, reality has shown that many do not have an accurate picture of their spending. It’s one thing knowing the total that left your bank account last month, but in order to identify precisely where savings can be made, a bit more attention to detail is required.
Doing an exercise for a month where you track every cent spent, whether cash, card, cheque, direct debit or standing order, where you log the details daily, so as not to miss anything, can be hugely beneficial and help identify the areas where savings are easily made (if anyone would like the free excel budget spreadsheet that keeps a running total as you key in the details, just email firstname.lastname@example.org with “Budget” in the subject line and we will email it back to you, with instructions and tips.)
Another good starting point is to take out 3 months’ bank statements and make sure you can account for every transaction. This is particularly helpful in identifying payments that you should no longer be making (happens way more than people may think, things like gym memberships that are no longer used, or house insurance direct debits when you have switched to a new provider but forgot to cancel the old direct debit!) This is also a way to identify any potential fraud whilst also increasing spending awareness.
So, once you have a more accurate picture of spending, what can you do to improve things? Did you see multiple trips to your local convenience store to purchase items that could have been purchased much cheaper in the supermarket? Are you paying for lunches or coffees unnecessarily when you could have prepared lunch at home or made coffee in the office kitchen? Next are things like utilities. Looking at switching annually things like electricity/gas/broadband providers is a proven way to reduce bills. When things like car or house insurance renewals arrive, don’t wait until the last minute to renew, make the time to research alternative quotes. An hour online or on the phone could reduce annual premiums by over €100.
Long term premiums such as mortgage protection, life cover, serious illness cover or income protection, have you reviewed lately to see if you can get the same or better cover for lower premiums? This is particularly relevant if you arranged any of these products directly with a bank or insurance company, who can only quote for their own products which may be the most expensive, and could not compare with what is readily available elsewhere. Quite simply, I have never, in all the years of recommending such an exercise, seen anybody who took the time to monitor their spending and research regular outgoings, NOT reduce their monthly spending. The key factor is to make the time.
Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing email@example.com or use the contact form on www.financialcompanion.ie or phone 087-6414570. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, financial advice, positivity and motivation. As heard on RTE 2FM LMFM and TV3.