12 IN 2012:Getting a grip on personal finances will be top of most people's resolution lists. Here, a money coach tells CONOR POPEabout how to give your wallet a new lease of life
IF PEOPLE were to look at their finances forensically and adopt a few commonsense measures they could easily save hundreds, if not thousands of euro. The trick is to be proactive, optimistic, willing to make a few calls – and chance your arm by haggling.
Although the economic gloom is undoubtedly oppressive there are still things people can do to ease the pressure. The habit acquired in the boom years of spending a fiver a day on coffees with complicated names is costing many people in excess of €1,000 a year. A coffee plunger and a year’s supply of good quality ground coffee will cost half that amount.
The energy market has suddenly become competitive and people can save more than €200 each year by moving from the dearest provider to the cheapest while greater savings again can be made by switching credit-card balances from high-interest accounts to zero-interest options.
And then there is the money we throw away on insurance. By making a few calls and shopping around, many people will be able to knock hundreds of euro off their annual spend on car, home, life, motor and health insurance. Earlier this month the National Consumer Agency found price differentials of more than €1,000 on almost identical motor policies. By switching from a high-interest credit card to a zero-interest option – EBS, MBNA and Tesco all offer zero rates on balance transfers – a person can save themselves hundreds of euro this year.
Many people will have cut all they can and it would be glib to suggest that savings of thousands of euro are available to everyone but they will be available to a great number of people in 2012 if they choose to take advantage of them.
And please don’t forget to spend any vouchers you were given. The industry is worth €300m each year in this country but nearly a quarter of all vouchers are never redeemed. That is around €75m which we have been given as presents but don’t spend. If you resolve to do nothing else this year, resolve to spend those vouchers.
THE EXPERT
Financial adviser Frank Conway does not have much by way of new year cheer for cash-strapped consumers looking to get a handle on their personal finances in 2012 and, try as he might, he can’t find any magic bullet to kill our debt monster.
He highlights five things that will up the ante for many people next year: the pressing need for people to fund their retirements through private pensions; the higher cost of college; reductions to child benefit; VAT hikes; and changes to hospital charges that could see some health-insurance plans increase by as much as €1,400 annually.
It is very easy to tell people struggling to keep on top of their bills to shop around but, for Conway, that is just scratching the surface. “We must all do more to get to the bottom of how efficiently we spend our money,” he says
“While we are developing a culture of shopping around we are still poor at carrying out a forensic analysis of our spending.” He cites the example of the person who assiduously seeks out the cheapest energy provider only to subsequently allow much of their energy to seep out of their home because it has never had a BER rating and is poorly insulated or the person who unthinkingly pays high health insurance premiums for their young children without realising that there are no private hospitals for children in the State.
He also points to the person who changes insurance provider regularly but does not take a step back and ask themselves if they have the appropriate level of cover for themselves or their family. He does not believe many people “actually analyse the line item components of their insurance policies” and he says those who want to get their finances in order in the new year “need to know and understand exactly what it is they are paying for and review the need to pay for it.”
According to Conway, while there are lots of people moving between insurance providers, some ostensibly proactive canny consumers “still pay policies that are designed for boom-era replacement costs on the property”.
He recently came across an extreme case of a mortgage protection policy where the policy holder reduced their monthly premium by more than €700 per month by asking the right questions. He accepts that few others could make such savings “but lots of people may be paying for protection and insurances where they could get a better deal without compromising quality”.
Like most money coaches, he says the first step to financial wellbeing is tracking spending. To do this you need to keep a spending diary covering everything from the big ticket items to the everyday incidentals, and then work towards plugging the gaps. His moneycoach.ie website has 101 money-saving tips. This is “good personal budgeting”, without which no one in financial difficulty can hope to get on top of their personal debt crisis.
- itsyourmoney.ie The National Consumer Agency's resource for information on consumer rights, financial products and money help.
- hia.ie A guide to the maze of competing health insurance policies.
- callcosts.ie Compares the cost of mobile-phone and broadband packages.
- mabs.ie The Money Advice and Budgeting Service's site is filled with useful information.
- askaboutmoney.com An excellent bulletin board system that uses the group mind of the internet to answer almost any question.
- fatcheese.ie A cashback website that almost seems to good to be true but isn't. If you access the online shops and services such as Tesco and ebookers and a host of other online retailers via this site, it will give you cash back
