With so much uncertainty in the world and talk of tariffs, ceasefires and stockmarkets, it is easy to take your eye off the ball and forget the more important financial issues in your life. But where do you even start ?
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. We have come through a huge number of crises in recent months so it is imperative that we do not ignore the telltale signs of any personal financial ill-health.
So here are the top 10 financial questions you should ask yourself or if you have family or loved ones, they should ask themselves to kick-start their financial well-being :
- Is my expenditure greater than my income ? Am I spending more than I am earning ? Not ‘living within your means’ ?
- 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.
- 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 ?
- Can I negotiate lower interest rates on any loans ? Consolidate or negotiate a complete moratorium if possible on my loans (capital and interest) ?
- Am I adopting the sniper approach to debt – paying off the most expensive first ?
- Have I looked at ALL expenditure – every sector of spending, economising where I can and doing without when I must ? Asking those two questions – do I need it, and is there a cheaper or better alternative ?
- 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 savings
- After ensuring my deposit-taker is safe and secure with my funds ?
- Have I a Regular Saver scheme set up ?
- Is there a pension in place ? Have I provided anything for retirement ? Will I be comfortable living off the State Pension – € 289.30 per week at age 66 (… if it is still there …remember auto-enrolment starts next September )? 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 ?
- 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 a Will – see www.moneydoctors.ie/wills.
- Have I planned the next year, 3 years, 5 years, 10 years ? Have I even completed a simple household monthly 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 – eat one small piece at a time. Your very first activity should be to extrapolate all the relevant financial information finding your monthly net surplus 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 !