Business Personal Finance

Tuesday 24 April 2018

Six reasons your wallet is worse (or better) off as 2017 comes to a close

Are you ending the year on a worse financial foot than you started it on?

This year has become more expensive than last for many
This year has become more expensive than last for many
Louise McBride

Louise McBride

This year has become more expensive than last for many people.

Rents, already prohibitive at the start of this year, have continued to soar. House prices across the country rose by more than €50 a day, according to the property website Daft.ie. Many families are facing higher electricity and heating bills due to a series of price hikes which kicked in over the last couple of months.

Although some changes in 2017 have made a big difference to people financially, higher prices in a number of areas could see you ending the year on a worse financial foot than you started it on.

Here are six things which changed your finances for better or for worse over the last year.

1) Luas and bus hikes

Since the start of this month, the cost of travelling on the Luas and Dublin Bus has become more expensive for most passengers. The price of the Luas Taxsaver tickets have increased by a tenth - from €1,000 to €1,100 for the annual ticket and from €100 to €110 for the monthly ticket. Luas cash fares also rose by up to 5pc this month. Dublin Bus fares for mid-range journeys increased by about 5pc. Some Irish Rail and Bus Eireann fares also rose this month. A number of public transport fares have remained the same as last year while some others have been reduced.

To avoid the worst of public transport fare increases, get a Leap card (if you're travelling in an area where you can use one) and if using public transport to commute to work, choose an operator that you can take the Taxsaver scheme up with. The Taxsaver scheme, which gives tax relief on the cost of commuting on public transport, could knock more than €1,500 a year off your fare.

Price hikes this winter will make it more expensive for many families to heat up their homes.
Price hikes this winter will make it more expensive for many families to heat up their homes.

2) Higher pump prices

In recent months, oil prices hit a more than two-year high of over $60 per barrel - far from the lows of January 2016 when the price of oil sank to $27 a barrel. This has in turn pushed up Irish petrol and diesel prices this winter, making it more expensive for drivers to fill up their tanks.

The Organisation of Petroleum Exporting Countries (Opec) expects demand for its oil to increase in 2018 - mainly as a result of a stronger world economy. This could see oil prices continue their upward trend into the New Year. Oil prices are notoriously difficult to predict. David Flynn, chief investment strategist with Baggot Investment Partners, believes that oil prices could drop by between 10 and 15pc by March. However, should oil prices get higher in the New Year, prices at the pump are likely to go up again.

The best way for motorists to limit the impact of higher fuel prices is to buy a more fuel-efficient car, or to change to an electric or hybrid model. Taking public transport to work instead of the car should also help to cut commuting costs - assuming you have public transport near you. Be sure though to take advantage of the Taxsaver scheme if commuting on public transport.

3) Heat and electricity

Six energy companies have increased their prices since the start of November and this has made it more expensive for many families to heat up their homes or use electricity. This winter also marks the first time in a number of years that many of these energy suppliers have raised their prices - and could well be a signal that more price increases are to come.

SSE Airtricity and Bord Gais Energy increased their electricity prices by about 6pc on November 1.

Bord Gais also increased its gas prices by 3.4pc last month. Since the start of this month, Energia increased its electricity prices by 3.9pc while Flogas raised its gas prices by 3.3pc. The prepaid meter provider Pinergy has increased the amount it charges for a unit of electricity by 5.6pc. The December price hike from another prepaid meter provider, PrepayPower, has pushed up a customer's annual electricity costs by 3pc. Electric Ireland will increase its electricity prices by 4pc this February.

The biggest energy price hike of the year came from the State: last October, the Government increased the public service obligation (PSO) levy by almost a third - from €80 to €105 a year. So that levy now accounts for between an eighth and a ninth of an average electricity bill, depending on the rate the customer is being charged for their electricity. Everyone must pay the same PSO levy, regardless of the amount of electricity used - so bar living without electricity, there is nothing you can do to reduce the impact of that charge. As most of the energy suppliers have increased their prices, it's difficult to escape supplier price hikes too - however, you can limit the impact of the more expensive energy by becoming more energy efficient.

Switching to a cheaper supplier for your gas and electricity could also save you hundreds a year, particularly if you've been with the same supplier for more than a year.

4) Being your own boss

Up until this year, the self employed have had a raw deal when it came to social insurance benefits. For many years, the self employed were not entitled to the free annual dental check up, free eye tests and other dental, eye and hearing care available under the State's Treatment Benefit Scheme. Employees, on the other hand, were able to claim the benefits as long as they had paid enough PRSI - though much of the benefits available under the Treatment Benefit Scheme were cut during the recession.

However, earlier this year, the Government started to reinstate some of the benefits which had been chopped and it also made the benefits available to the self-employed - as long as they have paid enough PRSI. March 2017 marked the first time that the self-employed could get a free annual dental check up or a free eye test. A number of other benefits under the Treatment Benefit Scheme were restored in October 2017, including free glasses and a contribution towards the cost of a pair of ordinary contact lenses.

The self-employed can now take these benefits up for the first time. This could easily could save the self-employed, (as well as employees), hundreds of euro on dental treatment and eye care. Furthermore, since the start of this month, the self-employed have been able to get long-term sick pay for the first time. This is because the invalidity pension - a weekly payment to people who cannot work due to a long-term illness or disability - has been extended to the self-employed, as long as they are covered by PRSI.

5) Childcare digouts

Many working parents got some much needed help with their childcare bills in September when Minister for Children Katherine Zappone's new childcare subsidies kicked in.

The subsidies - which are worth as much as €7,500 a year to some parents - are part of the Government's More Affordable Childcare Scheme. The scheme offers two types of subsidies: a universal subsidy and a means-tested subsidy. The universal subsidy is worth up to €1,040 and the means-tested subsidies can be worth thousands.

6) Budget tax cuts

The tax cuts announced in last October's Budget will start to make their way into people's pay packets in a few weeks time. Under the Budget changes, a person can earn an extra €750 in 2018 before getting hit for the higher rate of income tax.

The cuts in the Universal Social Charge will also allow most people to take home more pay after tax. Many however believe that the tax cuts don't go far enough.

The Budget tax measures will only put an extra €5 or €7 a week back into the pockets of a lot of people. For example, a married couple earning €55,000 will only take home an extra €33 a month in 2018 than they did in 2017 - assuming one parent stays at home to look after a child. Furthermore, any boost in your take-home pay under Budget 2018 could easily be wiped out by the higher prices of 2017.

Sunday Indo Business

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