023 8820748     financial@mcgfinancial.ie


5 Great Habits to Transform your Finances

There is a lot that you can do yourself to help build a stronger financial future! Here are a few ideas that if you can turn them into habits, will transform your every day relationship with money for the better.

Don’t be a financial drifter

Don’t just drift along spending money in an ad-hoc fashion as the need or desire arises. Instead set yourself some financial goals. Yes some might be big important goals such as retiring early or buying a second property. But they don’t all have to be long-term, big financial goals. Some might be around simply living within your means or building a small nest egg. And then, give yourself rewards along the way, if your goals result in better financial practices. If you achieve your objective of saving an additional amount ever month, treat yourself to a night out or a weekend away. Maybe better financial habits can pay for a winter holiday later in the year? Have a goal, track your progress and work towards it throughout the year. This will help to keep you motivated to continue the new better practices!

Understand your spending

This one probably sounds the easiest but actually is one of the most difficult to implement. If you want to gain a clear picture of your spending habits, you need to record your spending for a month or two. However the key to success here is to record every euro, not just approximate amounts. If you keep just a rough record, you’ll inevitably leave out some items or giving yourself the benefit of some big “rounding differences”! Instead if you diligently record every amount you spend, you’ll soon get a clear picture of where you’re possibly wasting money, and will quickly identify where easy savings can be made. Maybe it will show you how those two coffees a day during work (€7) are costing you €35 per week or approx. €1500 per year. You’ve got to earn €3,000 p.a. just for these?

Spend less than you earn

Sounds obvious but how many of us are living from month to month, dipping into the credit card to get us to payday? While it’s often not easy, we’ve all got to live within our means, keeping our expenses below the level of our income. While this mightn’t result in the luxurious lifestyle we all yearn, living beyond our means is only going to store up a whole host of trouble for the future.

Pay yourself first

With the economy back on track and the recent giveaway budget, hopefully everyone is starting to see an increase in his or her income again. This just might be the opportunity to start saving for the future by saving your increase in take-home pay. To make this happen though, you need to set up a direct debit / standing order for this money to leave your current account immediately after payday, effectively paying yourself first. Otherwise, the increased amount will just disappear, as you loosen your purse strings a bit…

Use your credit card… but pay it off every month.

This one requires financial discipline, so proceed with caution! This idea will only work if you diligently pay off your credit card in full every single month. Did you realise that your credit card can actually help you save money in this new era where free banking is harder to find? Because every time you go to the ATM, use your debit card or write a cheque, you may be racking up bank fees. Instead if you use your credit card for purchases and pay off your bill in full and on time each month, you avoid bank fees. However, this one is only for very disciplined people, as any slippage will result in extremely high interest charges that will quickly dwarf any savings you might have made.

Minimise your tax bill

Of course the biggest bill that we all have every month is a tax bill. If you are a PAYE worker, you don’t actually see it, but trust us, you are getting one every month that your employer is paying on your behalf! So make sure you take every opportunity to reduce your tax bill. Claim all of your medical expenses, understand the tax relief that you get on your pension contributions. Talk to us about the potential for tax effective income protection and life assurance planning. Look for every legitimate way to reduce your tax bill.

Of course there are many other steps that you can take to improve your finances. However we think that these 5 will help you see a real difference in your financial health. Can you afford to ignore them?