First things first I will admit I am not the one who controls the purse string in this household, my husband is and he is good at it so I trust him to make the decisions (after running it by me obviously, both parents should be involved in financial decisions in each household even if you don’t earn any or much money!) for us. And secondly, it goes without saying that we are not financial advisors so if you have money to invest etc then go to the right people for the right advice. The purpose of this post is to maybe get you thinking about simple ways to save money that perhaps you know already or perhaps you don’t.
It also goes without saying that money is a very personal thing and every single one of us in a different situation so I’m not here to divulge ours nor am I here to say this is what you should or shouldn’t.
Anyway that’s enough caveats for one blog post!! So the first bit of advice we (I’ll say we because while I might be writing this its my husband who is basically dictating it to me!) would give is that everyone should have the equivalent of 6 months cash reserves in savings. In the event that you lose your job you should sit down and work out how much money you need to cover bills and to live (take our the cost of transport and lunches etc) and go from there. I know for many that’s unlikely but you just never know so squirling away a little bit of cash into a ‘just in case’ fund is no harm.
Next thing I would suggest is to look at your mortgage. And yes I’m more than aware that some people are stretched to the absolute limit when it comes to theirs so to everyone, no matter how little or big your mortgage is here is something worth considering if you bought your house when the house prices were lower than they are now or if you did work on your house over the last while which has increased the value of it. It might be worth considering getting your house revalued and in some cases it could put you into a different Loan to Value band with your bank. The lower your LTV the better interest rate you can get and over the lifetime of a mortgage that can be significant. The valuation report will cost about €150 which you have to pay yourself and then submit to the bank along with a Mortgage amendment form. It’s really quite simple and worth doing if it pushes your interest rate down.The banks have also introduced a Green Mortgage recently which is a 2.5% fixed rate for 5 years so you need to sit down and assess whether you think going into a fixed mortgage is for you, I guess you’ll have to decided whether you think the variable rates are going to go up or down over the next five years. If you have a BER of between B3 and A1 you’re eligible for that interest rate.
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 each month sit down and work out the return on the savings versus the cost 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 and I’ll talk about that too but even an extra €50 a month onto your mortgage is worth investigating. Here’s a link to a simple calculation based on a 25 year mortgage at 3.5% APR, increasing the repayments by €100 month results in an €18,000 saving on interest by reducing the life of that mortgage by 3 years.
When it comes to savings for the future it’s a tricky one to figure out. There are 3, 5 and 10 year National Solidarity Bonds that give the best return for your money the only problem being that if, god forbid, you desperately needed that money in the morning then you cannot access it before the end of the term of the bond. Bank of Ireland have a Young Savers account that gives one of the best returns on an account where you can access the money should you need it. At the moment the rate is 2.5% variable if you maintain between €1 and €5000 in the account, however I did see that variable rate is changing in March to 1% so I need to investigate myself whether that applies to all accounts or all accounts opened after that date. In terms of budgeting it’s not rocket science but it takes time. My husband has created a simple excel file for us with the list of fixed bills each month and we sit down from time to time to go through what I know is coming up to be paid, like extracurricular activities, holidays, renovations etc. We also use the AIB Money Manager to keep a check on things. I have to say this is a great way to see where your money is going, like you’d be surprised how much adds up on things like bread in Centra (which is usually bread and milk and eggs and a magazine and a bottle of wine!) or Zara (although that one is no surprise to me but it was a surprise to my husband!). We both currently have separate bank accounts but we are going to change that. I shared an article recently that opened my eyes to the fact that if my husband were to pass away (jesus touch wood and all that!) his bank account would be frozen and considering he pays all the bills (some of which I probably don’t even know about) it would be an added headache for me to have to figure who I need to ring etc especially in a world where all our bills are paperless. This will cut down on bank charges that we both pay and lets face it I will probably never shop in Zara again if he’s watching that much more closely, that at the end of the day is almost certainly a good thing!
So hopefully those are some useful tips, I’m sure there are lots more but I think mortgages, savings and budgeting are the biggest concerns for a lot of us. Pension is my other big concern given that I am at home. I pay a voluntary PRSI because I am earning a small amount each year, I’ll link the details here so you can see what position you are in if you are at home working. Depending on your situation you can sign on for stamps at the social welfare office so if you are not currently paying into any pension scheme look at the options and put something in place.