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Future-proofing your finances means taking action now


THE economic developments of the last 18 months took people throughout Ireland by surprise.

The dramatic decrease in property prices and the value of pension funds have left many unsure as to their short-term or long-term financial security.

More and more people are arriving at the realisation that planning for the future and for the unexpected is a priority.

Budgeting and debt management, meanwhile, have become increasingly important.

The reintroduction of third-level fees and cuts to social welfare payments, among other measures, are adding to the hardship facing families.

We are urging people to look at the changes to their financial situation and to budget accordingly -- with the primary objectives being to control all expenditure and meet larger expenditure items such as mortgage or loan repayments.

This should help most people to put aside some income for savings to ensure future financial security.

Looking towards the future

People need to solve their long-term financial issues by engaging in the day-to-day management of their expenses.

Writing down a detailed list of all income and expenditure and using this as a base for a budget plan can be very effective.

It is important to be totally honest when preparing this household budget and to list everything.

Working through the budget allows people to see where changes can be made.

Although it may take some time, it might be useful to review your expenses to see if there are better deals available.

Credit cards, insurance, phone and utilities are common areas in which people can make significant savings.

While providing for our basic living expenses and repaying debts are a priority, people should also be looking at bringing themselves to a point where they can also put some money aside as savings.

Debts should be prioritised and expensive short-term loans or credit card debts are often the initial focus.

Importantly, if credit card or overdraft balances are cleared, we would urge people to consider halting the use of these facilities -- at least until they are comfortable financially.

If you are experiencing difficulty in clearing your credit card every month, it's time for it to go.

Experiencing significant financial difficulty

It is unfortunate but many families are experiencing some financial difficulty as a result of the downturn.

We are advising those who feel that they may be unable to maintain loan repayments, etc to immediately communicate their predicament to lenders. They should then arrange to meet with their lenders to discuss how the repayments might be restructured.

Falling into arrears can happen very easily but it will be to the detriment of your credit rating further down the line.

Building a relationship to access credit facilities

The reintroduction of the savings habit into the lives of Irish families has brought about two considerations; firstly, people are concerned for the safety of their money and secondly, the feasibility of access to credit.

The revised government deposit protection scheme announced in September 2008 has successfully bolstered people's confidence.

Because financial institutions are increasingly shy about lending, relationships with the local credit union or bank and gaining access to credit is often a deciding factor for people when choosing a home for their savings.

Having, or establishing, this healthy financial relationship can go a long way to ensuring efficient and effective financial management.

People are more likely to discuss their financial difficulties with people and institutions with whom they are familiar and with whom they share a mutual trust -- and consequently are they are more likely to work through any problems.

We would urge people to take as proactive and positive an approach as possible to their finances.

As we have learned in recent times preparing for the unexpected can save a lot of stress and worry in the long run.

n Kevin Johnson, CEO of the Credit Union Development Association

Irish Independent