Steps to guarantee you make budget savings - Money Times Jill Kirby
THE 65,000 new jobs created in the past 18 months are a mixture of full-time, self-employed and job scheme places. The 4.5% surge in growth in GDP and GNP announced last week for the second quarter of the year is mainly due to the continuing strength of the export sectors (including agri-business and FDI - foreign direct investment companies), but is very welcome nevertheless. It certainly bodes well for more jobs, investment and spending in the domestic economy.
Until then, however, we may all want to keep our expectations of next month's Budget, which is primarily a domestic economy event, in check.
Even the smallest adjustment in our high (52%) marginal income tax rate, in widening the income tax bands to take people out of the top rate, or in reducing the hated USC tax will quickly eat up the c€500m to €1 billion that many commentators believe Michael Noonan can afford to refund on October14.
The question is: would getting an extra €5, say, in your pay cheque every week send you out on a spending spree, especially if the €260 windfall was then absorbed by the new water charge in January? I think the best way to approach the next Budget is to expect it to be the first cost neutral one of the great downturn.
No more taxes, no more levies, no more sneaky charges. We could call it "The Great Sigh of Relief Budget 2015" that would prepare us for proper 'recovery* budget in subsequent years.
And the best way to welcome it is to make sure that your own finances are in the best shape you can get them.
If you are still employed, but have experienced an income reduction or salary freeze since 2008 (and that goes for pensioners too) then you've probably already implemented a number of the following savings and income suggestions.
They're still worth reviewing and are certainly worth adopting if you've just secured one of those new jobs: cutting out wasteful expenditure, shopping around for high value goods and services, claiming tax relief and staying out of debt is a must if you want to avoid personal finance problems ... for life.
Jill's Top Saving Tips
• Pay off expensive debt first and with low yielding savings (or spare income.) There is no point in sitting on a 23% credit card balance if you have -2% yield on savings in the bank or post office.
Nor should you pay off a 13% overdraft, a 10% personal loan and certainly not a 1% tracker loan if you have 23% interest bearing credit card debt.
• If you haven't done so already, SWITCH: Amarach Research recently found that the average household that has not switched contracts before now can save €2,000 by shifting to cheaper electricity, broadband, mobile phone, car insurance and bank current account. Check out www.bonkers.ie and www.nca.ie
• Save over €1,000 by switching long-standing, high cost health insurance contracts (like VHI Plan B, Laya Essential Plus, Health Manager)to corporate equivalents or new providers. See www.totalhealthcover.ie.
If you have added family members to your company health insurance plan you must reclaim the 20% tax relief yourself (ie. €200) from the Revenue (up to a maximum of €1,000 worth of premiums.)
•Open a pension, save 41% of the contribution in top rate tax relief. If you earn €50,000 and save 10% towards your pension you will receive €2,050 a year in income tax relief. Consult a good financial adviser. Save another 41% on life insurance (@€300 a year = €123) buying it via your pension.
• Give up smoking (save €3,467.50 @ €9.50 a pack), reduce your drinking in half to the price equivalent of half a pint of beer a day (€16 p/w), and one bottle of wine (€10 p/w) and save €1,352 a year.
• Buy a thermos cup and take your own coffee to work (5 days a week x 48weeks) and save the equivalent of €10 a week or €520 a year.
• Stop buying that €1 bottle or water, bag of crisps or chocolate bar and save another €240.
• Claim your 20% health and dental tax relief. A family with €1,000 worth of dental and medical bills not covered by private insurance can save €200.
• Claim your DIRT relief: If you are over age 65 and your income is under €18,000 (€36,000 per couple) make sure you ask your bank to claim your DIRT exemption from the Revenue. €100,000worth of savings earning 2% gross means a savings of €820.
A version of this article also appeared in the below publications: