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Top tips for better budgeting and saving

Experts offer sound advice for would-be savers

Once you are an established saver you’ll be surprised how quickly your nest egg builds up

Once you are an established saver you’ll be surprised how quickly your nest egg builds up

 

The first thing you need if you want to start saving is the spare cash at the end of the week but that’s easier said than done if you don’t know where your money goes in first place. The solution to this problem is budgeting and this needn’t require a degree in economics or astrophysics – it’s simply a question of knowing what you have coming in, where it goes, and having the discipline to stick to plans once made.

Know how much you can afford to save

“The first thing you need to do is look at your income and expenditure each month and decide – realistically – how much you can save each month after living expenses,” advises Petrina Grady, head of current accounts, savings and investments with KBC Bank Ireland. “Try to clear any existing expensive debts, such as credit cards, to minimise the amount of interest you’ll pay.”

Conduct a financial review

Grady also advises a thorough review to weed out the unnecessary expenditure. “There are lots of savings to be made by examining where your money goes and tracking your day to day spending – and that includes those lattes, takeaway dinners and clothes. Freeing up extra cash allows you to save more for that rainy day. KBC offers a free financial planning service. People can drop into one of our hubs to arrange a meeting with one of our mobile advisors.”

Set clear goals

Saving for the sake of it may be alright for some but most of us need clear objectives to aim for. “You should quantify what you need, when you need it and what steps you need to take to get there,” says Colm Power, senior financial planning specialist with Davy. “Retirement will be at the forefront of most people’s minds, a goal might be to be able to retire at 65 with an income of €30,000 or €40,000 a year. Then there are other goals such as children’s college fees and so on. Once you have set the goals you will be able to see what you need to put away and where you need to put it to achieve them.”

Save regularly and start early

The savings should become part of the budget and this can only happen if you save regularly. “It’s all about getting into the savings habit,” says Brendan Barr, head of marketing with Standard Life Investments. “And the earlier the better. Our research shows that a person starting to save €200 a month towards their pension at age 35 would have to save €1,000 a month if they waited until they were 50.”

Transfer on pay day

Waiting until the end of the week or month to put money aside into savings is a recipe for failure. “Set up a standing order or direct debit to transfer money to your savings on the day you get paid,” says Petrina Grady. “The easiest way to save is to get used to not having it in the first place.”

Take independent advice

Once you are an established saver you’ll be surprised how quickly your nest egg builds up. As soon as you have a significant sum put by it is important to get the right advice. “Different savings and investments products suit different people as they go through life and their goals change. When a saver has built up some money they should take independent face-to-face advice. The research shows that people who take advice do better when it comes to the performance of their savings and investments.”

Shop around

“Don’t be afraid to shop around for the best savings plan and interest rates and to make sure you’re getting the best deal on bank charges and so on,” Grady adds. “You’d be surprised how much it can add to your savings at the end of the year.”

Save in comfort

And finally, all the experts advise that you should only save what you can afford to. If you are saving so much that it makes life uncomfortable in other areas you will probably quit the habit before you have a chance to get into it.