Disposable income: how to spend less and have more

In our continuing series on Ireland's stubbornly low disposable incomes, a panel of experts advises on ways to increase your disposable income through smarter management of utilities, insurance, groceries and phone bills - Conor Pope

The Irish Times Overspent series began on Saturday with an analysis of Ireland's continuing "private recession", which persists even while the wider economy is improving. The article found that, despite favourable macroeconomic trends, the disposable incomes of individuals remain stubbornly low and show no signs of rising significantly in the short term.

As part of the ongoing series, a panel of financial experts are advising individuals, couples and families on how to minimise their spending, boost their disposable cash and control their debt. Here, the group share their top money-saving tips.


Financial products, tax Food shopping

If you like to go shopping often, rather than doing the one big grocery shop each week, then shop with only a basket in hand. You'll buy what you can carry, and there'll be less temptation to stock up a trolley.

If you go into a shop for milk only, then don't even pick up a basket. Visualise where the milk is in the shop, and walk straight to the shelf and back if you can. If not, you can only buy what will fit in your two hands, and this limits overspending.

Everyday items, such as milk, butter and bread, freeze perfectly. If you find bread is going stale too quickly at home, split the package in half when putting away the shopping. Put half of the loaf into the freezer for later in the week.

The first thing anyone should do is to work out exactly where their money is going each month. Few people actually have a clue about the full details of their finances. Go through all financial products and establish whether or not they represent the best value for money. If they don't, swap them for a product that is better value.

Make sure to get the best-value life and home insurance and the best-value car insurance. This can be done independently or through a broker. It might sound like a chore, but it can save hundreds of euro.

If you have a private pension but are not paying into it up to the maximum allowable, you may be able to use any shortfall to cover the cost of a life assurance policy under section 781 of the tax code. It amazes me that more people don't use this provision.

Another key area in which PAYE earners can maximise their income is through greater efficiency in their tax affairs. An awful lot of people out there are due tax rebates, and the average rebate is in excess of €500, yet people are not claiming it. You can either get someone to check on your behalf or go to the PAYE Anytime website and do it yourself; so much of it is just common sense.

Another thing to do is to consider whether or not you actually need a credit card. The interest rates on a credit card can be higher than 20 per cent, so it might be better to arrange an overdraft on your current account and use your debit card instead. That way, you would see the rate of interest fall and you would not have to pay stamp duty on the extra credit cards either.

Buy only what you need. Check what you have in your cupboards before you go shopping. Make a list of what you need, and bring this with you. If you're the type of person who is forever forgetting lists, then take a photograph of it with your mobile phone before you leave the house. You're less likely to forget your mobile phone. save on food waste and reduce your shopping bill.

Adopt a pick-and-mix approach to supermarkets. At the moment, every major supermarket in Ireland has a range of fruit and vegetables on offer from 49 cent each. What's on offer from week to week varies, which means you can pick the best shop for what you want to buy in the week ahead. Pick what you like, then mix it up when the special offers change.

If you can't resist the lure of all the special offers in supermarkets, consider online shopping. Set yourself a budget, then do an online shop that sticks to the budget.

It's far easier to keep the weekly shop under control this way, as you can take items in and out of the shopping basket with ease. The bonus is that you can do it from the comfort of your own home.


Utility bills

About 85 per cent of Irish people are paying the standard tariffs for both electricity and gas. That means the vast majority are paying hundreds of euro more than they need to, for both gas and electricity.

The discounts the companies offer are in place for a year only, which means that, to avail of them, you have to make the switch every year. When all the potential savings are added up, they amount to €370 million unclaimed each year.

The companies tend to be cute about this. In the first year, all bills carry the standard unit price, with a line underneath indicating the level of discount. Once the year ends, the line about the discount just disappears, and the standard unit price remains the same. Too many people don't notice the change, which is why they are paying over the odds.

Timing matters too. A lot of people switch companies in the new year, but at that point almost half the winter is over. Those who make the switch now, before the winter kicks in, will make the biggest savings over the course of 12 months.


Mobile phones

The big thing now is data, and that is where the new "bill shock" lies. People need to make sure they are on the right plan for their usage habits. If you have been on the same plan for 18 months, the chances are it is not the best option.

Top-of-the-range smartphones now cost more than €700, a very high price. Consider buying a phone from two years ago; the pace of change has slowed, and there is not much difference except for the price.

If you can buy a handset outright for less than €300 and go for a 30-day contract or a pre-pay sim, you will save money and improve flexibility.


Health insurance

Anyone who has not reviewed their cover in the past two years is spending more than they need to. When renewal time comes, people need to call their existing insurers and ask for the closest equivalent plan to what they have now, and insist that all their company's plans are explored. If the company comes back with a plan that costs €100 less, ask if it is the best-value plan. The calls are being recorded, so they have to say yes or no and they have to answer truthfully. At that point, they might say they will post the details, but they should be kept on the phone and made to explain the details of the new plan and how it differs from the old one.

If you are on a budget of, say, €800, you should ring and ask for the best-value plan for that amount. Always put the onus on the company to find the best value and to explain exactly what the plan does. 


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