Research from KBC Bank Ireland has revealed almost one in four (24%) people claim to be financially savvy. But 71% of respondents would like to change that, so I asked some financial experts where people should start.
Blogger Caitríona Redmond had to learn and adapt when her family’s income was hit hard in the recession and she shares recipes, tips and advice at wholesomeireland.com. She believes that taking control is the first key step.
“Write it all down. Keep records of what you have spent and when. Write down how you felt before and after you spent the money. By using a notebook/diary you’ll begin to realise how much money you’re spending and how much your spending is influenced by how you feel.”
Naturally Mark Whelan of comparison site bonkers.ie is a big fan of shopping around.
“When it comes to personal finances, my number one piece of advice for anyone feeling a little overwhelmed is to simply review your current account statement.”
Taking a good look at your recent spending will help you identify areas where you could make savings, be it by cancelling old direct debits or switching supplier.
“Sitting down with a cup of coffee for half an hour on the first Saturday of every quarter isn’t a big commitment, but it can bring a lifetime’s worth of peace of mind.”
Nick McGowan, a broker who blogs about life insurance and related issues at lion.ie, is adamant that financial savvy starts with protecting your best asset — yourself.
“If you had a money making machine in your kitchen that printed thousands of euro every month, would you make sure it had the best insurance possible? You are that machine, and income protection is the insurance you need.”
Despite working in finance, Nick is in agreement with the 71% who feel they have a way to go. “Financially literate yes, financially savvy, eh no! We bought our house in December 2007, I think the bottom fell out of the market the next day. We did lock in a tracker so it’s not all bad.”
Stefanie is tackling the thorny subject of finances in a new show. “I recently met a financial advisor for the documentary series I am making for RTÉ Player called How To Adult. The information I got from the financial advisor turned that episode into more of a horror film. At 29 I should really be saving for my future because it’s unlikely there will be such a thing as a state pension when I reach retirement age. Terrifying!
“She also went through the reality of mortgages and just how much they cost. I can barely commit to an 18-month phone contract. How am I meant to commit to a mortgage or a pension?”
Finances can seem scary but Caitríona believes taking emotion out of your spending will help with decision-making. “‘Go on you deserve it’ is a common advertising tagline and it’s easy to justify a purchase because you know it will make you feel better. However, in the long term, it’s not the best way to manage your finances and you may end up regretting it.”
What has been her smartest financial decision? “Renting an allotment from my local authority on an annual basis. For a tiny rent of €200 per year for 200 sq m, we grow our own food. It forces us to spend time outdoors, working together as a family towards a common goal. All of this is priceless in the greater scale of things.”
Mark’s best move was to arrange his debits to all go out at the same time, just after pay day. “Getting all of my essential costs out of my account in one go ensures I stay within my means while also giving me a clear idea of how much I can afford to spend on the things I really want.”
And Stefanie’s? “My best financial decision was making my first holy communion. I made more money on that day than I have in any single day since!”