January 2024 – a good time to formally address your finances and you know you will have financial issues but may not know where to start. Akin to opening the door on your son or daughter’s bedroom and wondering who threw the hand-grenade ? Where do you even start ? John Lowe of MoneyDoctors.ie reports…

When it comes to our finances, we tend to stick our heads in the sand until the problem becomes so obvious that it is nearly too late to apply a solution. With the recent pandemic, lockdowns, restrictions, wars, inflation, interest rate rises, we have come through it all so it is imperative that we do not ignore the telltale signs of any personal financial ill-health. There are 10 essential questions you should ask yourself or if you have family or loved ones, they should ask themselves to kick-start their financial well-being :

  1. Is my expenditure greater than my income ? Am I spending more than I am earning ?
  2. What am I doing to balance my books ? Can I earn more income or spend less ? Or do a little of both ? A budget plan is essential.
  3. Am I claiming all the reliefs and allowances legitimately available on my income and are there promotional or overtime opportunities in the job that might increase my income ?  A second job ?
  4. Can I negotiate fixed interest rates on my home loan ? Consolidate or negotiate a complete moratorium if possible on my loans (capital and interest) or at least just pay interest only ?
  5. Am I adopting the sniper approach to debt – paying off the most expensive first ?
  6. Have I looked at ALL expenditure – every sector of spending, economising ributiwhere I can and doing without when I must ?
  7. Do I have a Rainy Day Fund (RDF – should be ideally 3 to 6 months annual income with a minimum € 5,000) for
    • Emergencies ( expenditure not budgeted for e.g. washing machine breakdown )
    • Sudden loss of income ( bonus dries up or you are put on a 3 day week)
    • Investment opportunity ( saving for that home deposit )

and am I availing of the best investment strategy on any lump sum saved, after ensuring my deposit-taker is safe and secure with my funds ? Have I a Regular Saver scheme set up ? Even a regular stock market saver scheme ?

8. Is there a pension in place ? Have I provided anything for retirement ? Will I be comfortable living off the State Pension at age 66 (… if it is still there …)? Do I need to supplement an existing pension as it may not then be enough to pay for the lifestyle I have become accustomed to ? Additional Voluntary Contributions (AVCs) ?

9. Have I provided for my dependents – education, life cover ( in case I die ) health cover ( for them if applicable, and myself should I be incapacitated plus hospital and redundancy cover) and inheritance ( leaving my hard earned wealth to my loved ones in the most tax efficient manner possible, starting with drafting my own Will and empowering my representatives to apply for the Grant of Probate themselves and save the estate € 000s in legal fees .. see www.moneydoctors.ie/wills.

10. Have I planned the next year, 3 years, 5 years, 10 years ?  Have I even completed a simple annual household Budget ? Email me if you would like this form in a spread sheet format sent to you ( jlowe@moneydoctors.ie )

If you are normal, you will have turned a blind eye to most of the above questions. Family, careers, your own interests take priority when it comes to dealing with your own financial issues. It is also a little like work… boring, tedious and not really enjoyable but as inevitable as the sun coming up, it has to be done. .. and it takes a little time – ideally two hours every month – to be put aside each month to sort it out.

So therefore we MUST address our financial issues. Planning is crucial and for those who cannot afford a financial consultant, they must do it themselves and consult with their family or friends.

Addressing these questions is a little like eating an elephant – one small piece at a time. Your very first activity should be to extrapolate all the relevant financial information so that you can see the BIG picture. You will soon know if you are solvent and what you now need to do to steady the ship.

Like the advert says – just do it !


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