Have you planned your financial future? These tips might help
New research indicates that 59 per cent of Irish people don’t plan ahead financially - maybe it’s time to start?
Mairead Ronan: Like everyone, it’s hard to find the time to plan for the future, but with a young family it’s good to have a backup plan.
AIB research has revealed that financial planning is an activity that 59 per cent of people in Ireland put on the backburner. This figure is higher than those who delay exercise (44 per cent), healthy eating (37 per cent) and responding to a text message (26 per cent). In other words, financial planning, one of the most important elements of life, is also one of the key factors in life that Irish people put off.
One thousand people were surveyed by AIB, and of those 59 per cent who delay financial planning, claim they have never received financial planning services in the past.
In terms of why people don’t put more focus on their future finances, 25 per cent said they didn’t have time and 20 per cent said they found the process too complex. 9 per cent felt that they were too young to plan for the future.
So, how do those 59 per cent plan to get around the fact they’ve put no time into their financial planning? In a surprising series of responses, 41 per cent stated they hoped winning the lottery would help them prepare for the future. 15 per cent were banking on investing in an antique, which they could sell on for a larger amount at a later date. 9 per cent had hopes of raising a child prodigy to ease financial concerns, while 2 per cent were relying on inheritance to support them in the future.
However, 20 per cent do have financial planning as part of their intentions for a future stage in their life.
TV and radio personality, Mairead Ronan, is working alongside AIB as an ambassador as they seek to promote financial planning across Ireland. She herself relates to the struggles of financial planning and wants to help others to realise the importance it plays in securing a family’s future. “I can definitely relate to finding an excuse to putting off things to another day and it’s good to see that I’m not the only one who is convinced I’ll win the Lotto some day,” she said. “Like everyone, it’s hard to find the time to plan for the future, but with a young family it’s good to have a backup plan.”
On the back of the AIB research results we’ve come up with five top tips to help you prioritise in your financial planning:
1 Protect your family
Giving financial protection to your family should you become ill protects your loved ones if such a setback should occur. Life insurance gives the security that liabilities and repayments can be met should you not be around to provide for them. As well as being a prudent use of income, it’s also a relatively inexpensive expenditure that can make a huge difference to your family’s future.
2 Don’t delay your pension
Retirement and a pension may seem a long time away but the earlier you start saving the better. Ensure that both partners are saving for this period in your life now – not later. By thinking early about the golden years you can be sure you get the most out of them.
3 Plan for the unexpected
Start an emergency fund. Things often go wrong in life - and also in finance - and you need to be prepared for that. No matter how much you owe, or have to pay off on your credit card, having an emergency fund is key. Put aside a small amount every month; this reserve will help you out if you find yourself in unexpected difficulty and need money immediately to rectify that. Treat it as a non-negotiable expense rather than a luxury so you don’t find yourself sneaking out of putting it away.
4 Plan for family planning
If you are in the stages of planning for a child an educational piece of financial advice is to practice living on one income for six months. Bank the income you expect to drop for the six month maternity period and rely on the other salary for that period. This will help to give you a real understanding of how it will feel economically once you welcome a new child into the world.
5 Plan to live your life
Open a fun account. These funds can be reserved for enjoying the finer things in life without a need for guilt as the money is reserved specially for just that. You can then focus on spending the rest of your income on the essentials, while also having a space for luxuries in your life.
AIB’s financial planning service is available through the AIB branch network and over the phone. Appointments can be made online, on the phone or in branch. The service is confidential with no obligation or cost and takes approximately 45-60 minutes. Allied Irish Banks plc is tied to Irish Life Assurance plc for life and pensions business.
Allied Irish Banks plc is regulated by the Central Bank of Ireland. Irish Life Assurance plc is regulated by the Central Bank of Ireland.
Visit www.aib.ie for further information.