Develop strong habits to ensure that best for your finances in 2015 and beyond, writes Mark Channing
January is a time for self-improvement – especially when it comes to your finances. From switching providers to investing smarter, we give our top tips for a financial detox.
Setting goals and plans to achieve them will be vital to get the most from your money say experts.
David Quinn, Managing director of Investwise, an adviser in Dublin, said: “Making a plan can be hard because it means looking at what you want from your finances for next year, or the next 20 years. What do you want for your kids, retirement and how do you plan to clear your debits?”
Oonagh Casey, a partner with adviser Fagan and Associates, said now is the time to get organised.
“Use this as an opportunity to review where you’re at financially,” she said. “Have your circumstances changed over the past year? Have you got married, had a child or come into an inheritance?”
A survey by Bank of Ireland found that 73% of people plan to save regularly in 2015.
Brian Vaughan, the bank’s head of savings and investments, said: “Establishing a discipline of saving is the best way to achieve a savings goal.”
Nationwide UK (Ireland) pays 4% interest on savings of €100 to €1,000 a month. The rate drops to 1.05%, however when the balance in the account exceeds €15,265.
KBC Bank pays 3.5% on savings up to €1,000 a month, with a bonus of one percentage point paid until June for those who open a current account before the end of March. The maximum balance you can earn at these rates is €50,000.
Saving is less rewarding, however, because returns have fallen over the past decade while deposit interest retention tax has doubled from 20% to 41%.
BANISH BANK FEES
Current account providers are changing their fees to encourage customers to pay by card rather than cash. KBC charges 30c for ATM withdrawals but nothing for debit card payments. Bank of Ireland will increase the cost of ATM withdrawals from 20c to 25c from February 23 but halve the cost of debit card payments to 10c.
Simon Moynihan of price comparison site bonkers.ie said: “Banks have been gradually increasing fees and making free banking waivers harder to attain. They seem to have hit a ‘fee sweet spot’ as people still aren’t switching.”
SAVE ON UTILITIES
The fall in the price of oil and has resulted in new deals from energy suppliers that can save you money. Moynihan of bonkers.ie said: “The reductions are only being passed on to active customers. If you don’t do anything, you’re not going to get any benefit. Standard prices are not going to come down.”
Energia offers the cheapest dual fuel deal where you get electricity and gas from a single supplier.
The deal expires January 31 and switchers must pay by direct debit.
According to bonkeers.ie, the cheapest electricity only deal is Electric Ireland’s ValueSaver tariff, which saves the average household €156 a year. The cheapest gas-only supplier is Flogas, saving the average household €158 a year.
IMPROVE YOUR CREDIT RATING
Mortgage lending is set to get tougher as the Central Bank prepares to implement new rules aimed at curbing riskier lending.
Your credit rating is used by lenders to assess what risk you might present based on the size of your debits and your track record in making payments on time.
You can check your credit report by paying €6 to the Irish Credit Bureau (ICB), which maintains a register of people’s credit histories.
The ICB records all the credit that is available to people in the form of cards and loans, as well as any missed or defaulted payments.
The Irish Mortgage Holders Organisation, a debit charity, said: “If any errors are present on your report you can request that the record be amended. However, your lender must request that the change is made, you can’t do it yourself.”
WRITE A WILL
Only a third of Irish people have made a will according to the charity group mylegacy.ie.
Financial planning experts say an up-to-date will is a vital part of organising your finances. Failure to plan means people are falling into the inheritance tax net because property values are rising while the amount that can be inherited tax-free has been reduced.
Casey said: “The decrease in tax free thresholds along with the increase in property prices means you have to look at your will from a tax perspective. For some people it may be possible to plan now to minimise the tax liability.”
Most wills cost less than €100 plus VAT to draft, according to Brophy Solicitors in Dublin.
This is an excerpt from a longer piece that appeared in the Sunday Times on 11 January 2015