If financial goals were part of your 2020 resolutions, I hope this column can help.
Over the course of the month, I’ll be asking experts for their advice on how to complete major monetary goals, including how to buy your own home, how to protect your family’s finances and how to secure a comfortable retirement.
If you have any other financial resolutions you would like advice on, please write in and let me help.
But for this week, I’m going to look at ways to improve your everyday finances.
Many of us may not have any big issues we need to tackle but would like to get better with money in a more general sense. Many people ‘don’t know where the money goes’ and feel a lack of control or even full understanding of their finances.
If this is you, and you would like to get a better handle on your money, the first thing to do is get a clear picture of your current situation.
The simplest way to do this is to keep a diary of all your spending for a month. Whether you tap or use cash, every time you spend any amount, no matter how small, make a note of it.
It is a tactic strongly recommended by the Money Advice and Budgeting Service, the State’s money advice service.
“We don’t always remember every euro we spend,” MABS points out. “For example, you might pop into a shop to pick up a newspaper or a soft drink; or you might give the children the odd euro to buy sweets.
It is this type of spending that often goes unnoticed, and sometimes we forget about it. And it all adds up! So if you want to control your money, then you first need to know where it goes.
"The spending diary will help you with this and may also help you find places where you can cut spending.”
The service has a diary template free to download from its website mabs.ie, if you prefer a physical diary, or you can simply keep a note open in your phone.
In addition to writing down the money you spend day-to-day, you need to also include all bills, rent or mortgage and other regular outgoings.
Don’t trust your memory for this, sit down with your bank statements and go through every line.
It is easy to forget about items like Netflix subscriptions and insurance payments, so check a full month of your current account(s) and credit card, if you have one, to get the full picture.
The flipside of tracking your spending is having a clear picture of your income.
Remember to include everything, not just wages or salary. You should also include all social welfare payments, including child benefit, and any contributions from all other people who live in the house who contribute to the household income such as grown-up children.
The final step in getting a clear picture of your finances is to tot up all the one-off spending that comes up throughout the year.
These can include, but are not limited to, insurance payments, back-to-school costs, Christmas and birthdays, car maintenance and holidays.
Again, you are better off not relying on your memory. Go through your statements for 2019, there are almost certainly items that you forget about until they fall due, such as property tax or the tv licence.
Once you do this, you should have a much clearer picture of your finances. Maybe you will see an area where you could reduce outgoings or identify old payments that can be cancelled.
In the best case scenario you will see that you have a surplus and can look at savings options.
If this review highlights that your income is not enough to cover your spending, then contact MABS - who offer free and confidential help to people with financial issues.
They can be reached at 0761 07 2000, or you can request a callback by emailing firstname.lastname@example.org.
While it can feel daunting to tackle your finances, having a clear picture of where you are will allow you to make plans and face the future with more confidence.