The cost of living crisis is causing us to hoard money on deposits – €143bn at the most recent count – which, as the entire personal debt in the country is only €110 billion, makes little sense in economic terms; But a lot if you’re scared about what’s ahead.
Irish consumers become more concerned about broader ‘macro’ approach [this year]”, KBC said in its latest economic paper. “Seven out of ten expect the Irish economy to weaken in twelve months’ time, while almost half expect unemployment to be higher”, it adds ominously.
While 12 percent of consumers say they can handle an unexpected financial emergency with current income, many households have limited ‘safety nets’. People are very nervous about household finances but there is no point in the reaction.
We are committed to ‘saving’, often just for ourselves. However there is clearly a group of people who have nothing left, and conversely families with large cash reserves (eg first time buyers who have deposits they cannot afford, or pensioners in lump sum They are afraid to release or invest), the fact that we are afraid of things getting worse.
Bank of Ireland research pointed to evidence that people with liquid savings would not consider investing because they are afraid of ‘losing money’, don’t know where to start and are wary of ‘advice’. However, a guaranteed way to lose money is to leave it on the deposit. Your €100 in 2021 is worth €94 or less today, and less than €90 by the end of the year.
Here are a few ways you can enhance household finances in the short term, to make long-term decisions a little more palatable:
While it is sensible and prudent to have an emergency fund, finance guru John Lowe says three months is enough, or six if you have a mortgage, kids, and a car to drive. “If you’re in a permanent relationship, you should both have access to this fund. One-third should be accessible immediately, with the rest on notice for withdrawal. State savings still accrue tax-free interest, even though Be that very little. Even breaking the contract early means you lose interest, the capital remains intact, so you have nothing to lose.
Cash is completely useless if you don’t need the money at all within 5-7 years. Talk to a financial broker for independent advice on your options. Right now people want low-risk returns, and there are hundreds of prudently managed funds to choose from.
Be ruthless about infidelity! Download the app from every supermarket and take advantage of them all. Once the algorithm takes hold so you’re no longer shopping in the same place every week, the offers become more attractive. Penny’s favorite methods of pinching grannies still work best: Make a list and stick to it; bulk purchase non-perishable; Use your brand where possible and don’t shop when you’re hungry. For big-ticket items like furniture or clothing, consider Klarna, the interest-free purchase now pay later app to spread payments over three months, but only if you don’t spend much.
If you think you feel cheated before pay day begins, chances are you’re a bad money manager. Downloading a budgeting app can help you be more disciplined about where your cash is really going. AIB customers’ MyMoneyManager spreads and displays the spend after knowing your pattern. Mint and Spendee are also good (later links to AIB, BOI, En Post and Avant). YNAB (you need a budget) has a 34 day free trial (after that at $14.99). CCPC.ie has a great budget planner and spending calculator. SpendingTracker is in the pound in the Apple Store but has great features.
Cutting fuel and energy costs is the big ticket item for 2022. It’s nearly impossible to control what’s next, so ignore utility providers saying they’ve cut the price of fuel or ‘green’ rebates – this is essentially nonsense. Instead, go for the gimmick. They want your business, so claiming your free Hive, Climote, cash back or supermarket vouchers will make all the difference.
If you are on ‘Level Pay’ then your payments are spread over 12 months and you can get credit at the end of the year, especially if the government repeats the ‘free €200’ credit. Keep your thermostats on a summer schedule with water and radiators at low temperatures. Be humble in your needs. Stop using high energy appliances like tumble dryers and cut back on the number one culprit: high pressure pump showers. Electricity alone costs €128 per year for 12 minutes per person per day.
According to EnergyD, turning off the water when you apply the soap yourself saves €96 and running it at a lower temperature in May – October saves €16.
It’s possible to pay more than €1,400 a year with just a TV subscription, according to Newscock’s tech reporter Jess Kelly. If you’ve been watching just one series, or have been flipping mindlessly between Prime, Now, and Netflix, it’s time for a proper review.
get that tax back
Sometimes it can feel like tax is a one-way street, all uphill, but it’s a dual carriageway, and there’s a lot of cash back coming the other way if you look for it.
The revenue allows you to return the claim for up to 4 years in most cases, through a vast array of tax credits and reliefs that can be payable to you. If you don’t like the paperwork, hire someone to do it for a deduction or a fixed fee. Taxback.com, Redoak.ie and TaxAssist.ie are all good and should easily pay for yourself with the money you get back.
The most commonly overlooked refunds are:
– Health expenses: from GP visits to medicines (including expenses incurred under the drug payment plan €80 PM), some medical aid, food items (eg for celiac, diabetics, etc.) and no extras. Anything not covered by your private health insurance can be added to your claim. You don’t even need to send receipts (though you’re obligated to store them).
– Home Carer Tax Credit: If you are a home partner for caregiving purposes (children or dependents), and jointly assessed for tax, an additional 1,600 credit is available.
– WfH Tax Credit: Only 10pc of those entitled to it have availed this relief. You can waive 30 pcs off your gas, electricity and broadband bills for working days from home. Not claiming this is insane, especially at this point in time.
The cycle of action plan has been increased to €1,500. Get on yer bike!