Small changes will lead to huge savings
Ahead of her TV money makeover series, presenter Sinead Ryan has four simple tips for those who just can't understand where all their money disappears to by week's end
When I started filming for the new money makeover series My Money and Me, I had one rule: I didn't want to meet any of the families. Well, not until I had 'met' them through their bank accounts, that is.
You learn an enormous amount about people just by looking at the comings and goings of their finances. Visa card statements tell you whether they like to eat out, buy the latest fashions, travel on business, or pleasure. They also tell you if this is someone who prefers to spend the bank's money rather than their own, making them a 'favoured' customers - that is, someone who never pays off their balance on time, racking up interest and forever paying fees and charges. Banks love them!
The current account shows their income on payday and how quickly it disappears. I can see whether they have children (of child benefit age), and if they're what I call 'unconscious' spenders - dipping in and out without regard to a budget; someone who uses the ATM machine more than three times a week, or buys petrol, but can't leave the garage without chocolate, coffee and top up groceries…
By the time the lovely families came along, it was then a matter of showing where the excess spending is, and finding out their goals, dreams and financial aspirations, and better aligning them. Henry and Rose (see panel, opposite page) wanted a college fund for their girls. Ed and Muiris were trying to get a house deposit together, while Keith and Lorna were worried about their negative equity.
Sometimes, getting in control of your money can seem like an uphill battle; so often it controls us. There's a fear, as there was with many of our families, that their lifestyle would have to change dramatically, their spending cut so that they were practically living on bread and water, and that treats were out the window. Yet, in every single case, it was small tweaks in their spending habits that made all the difference, saving thousands every year with hardly anybody noticing!
My top tips for reducing household spending were often the same small things:
1 Make a budget
This sounds like the boring bit, but because most of our over-spending is unconscious, we actually don't realise where it's going. Pull out last month's bank statement. Can you identify every single direct debit? If not, find out what it's for, and question if you still need it.
2 Pay Yourself a wage
Dipping in and out of the ATM makes it hard to keep an eye on spending. Estimate what you'll need for a week, after all your 'automatic' money goes from the account. Lunches, bus fares, newspapers, coffee etc, and pay yourself cash on Monday. If you're running out by Wednesday, you have a budgeting problem.
3 Review your utilities
If you haven't reviewed your heating bills in the last 12 months, the chances are you're over-paying. Falling oil prices have resulted in lower prices. Use comparison sites like www.bonkers.ie to see if you can get a better plan. It may be worth bundling heat and electricity and you can definitely save money with paperless billing and a 12-month contract.
There is a high probability you are paying too much for house insurance; pointless since you'll only ever recover the re-build costs of the house, rather than the sum insured. To get it right, go to www.scsi.ie which is the site of the Chartered Surveyors who have a handy re-build guide. Car insurance premiums are on the rise. Most insurers run a 'book' of different customer and car profiles which you may not fit this year. The only solution is to shop around or get a broker.
Cross insure with your partner; two (fully licenced) drivers on a policy is cheaper than one. If you're at home all day, or are over 50, there may be a discount. Consider bundling your home and car insurance with the same insurer - you may get a discount.
Health Insurance is a huge bill for most families. There are over 450 plans on the market, among just four insurers (soon to be three). Use the www.hia.ie site to compare, but be aware that the costs really rise when you insist on a private bed in a private hospital. Drop to 'multi-occupancy' and you'll see costs come down. You can insure kids on a cheaper policy, as there are no private hospitals in any event for them.
'My Money & Me' starts on Wednesday, 11th May at 8.30pm on RTÉ 1
Personal finance expert and Irish Independent journalist Sinead Ryan presents 'My Money And Me' with Kathriona Devereux.