Wednesday 11 December 2019

Be your own finance minister

Knowing how to be financially savvy with the money you've got may seem daunting... but the basics are easy to learn. Here's how to laugh all the way to the bank (well, kinda).

The closing date for paper-based filing of tax was 10 days ago
The closing date for paper-based filing of tax was 10 days ago
The basics of money management are easily learnt

Tanya Sweeney

Oscar Wilde famously had a soundbite up his sleeve for every occasion; sure enough, this is what he had to say on the green stuff: "When I was young I thought that money was the most important thing in life; now that I am old, I know that it is."

Yet even he'd be at a loss to quip about just how central it is to our lives. So how do we get our hands on more of it, and how do we stay a bit smarter with what we have? We asked a battery of experts, who are much more canny with the humble dolla dolla than we are, about the whys and wherefores of personal finance.

Without further ado, here's everything you wanted to know about money… but were waiting on someone else to ask.

I have a great idea for an app. How do I get my hands on some money for that?

Says Bryan Clark, MD of web-based start-up service Nubie (www.nubie.com): "As a techie, this is a question I get asked all the time. My typical approach is the following; warn them that it is not as easy as you would think. There are hundreds of thousands of apps and only a fraction of them ever make any money. If still they want to continue, then I typically advise them to follow a lean process.

"Develop the idea out (use something simple like Powerpoint to draw out the screens or get a wireframe tool like Balsamiq - very reasonable price and easy to use). Getting the idea on paper is a great way to see exactly what the idea is and how much it might cost to build. Then, take the wireframe and validate with potential users (more than your family and friends). You can use tools like Survey Monkey etc to get feedback on the idea. Most people are afraid to share their ideas. I find that the opposite is true: if you hold true to your idea, getting feedback at this stage can make a huge difference.

"Get the idea right before ploughing your hard-earned cash into it. It is much cheaper to make changes to the app before it goes into development than after coding starts. Select a platform and stick to it. You can develop in iOS, Android or hybrid application (this is an web app that has uses an iframe to deliver the same functionality across platforms). Know your market and monetisation route.

"If you have a market segment that will never pay for anything but is willing to listen to ads, then pursue that route. However, if your app delivers a specialist service to a small market, then a paid app would be better. Now, look to get your app developed. There are a myriad of options: local freelancer, agencies or off-shoring. The local freelancer can be reasonably priced but can let you down, a good freelancer is busy but not overstretched.

"The agencies can be expensive and changes in scope can be costly. Above all, there's no point is spending all your money on development if you have no money to market. Apple didn't bring out the first smartphone, but they were arguably the best at marketing it."

I still don't know what a tracker mortgage is. Derp.

Bob Quinn at The Money Advisers (www.themoneyadvisers.ie) breaks it down thus: "Basically, the European Central Bank set interest rates for Eurozone members. Any lender that offers a tracker mortgage is basically saying that in order to borrow, they will charge you the same margin for the lifetime of the debt, plus whatever the ECB rate is.

"Oftentimes the tracker rate is around 1pc, so if the ECB rate is .05pc, the loan stays at a rate of 1.55pc, even if the EBC moves its base rate. The reason you hear so many people now say, 'thank God I have a tracker' is because it gives a sense of control to the borrower. If a bank decides to increase its interest rates, a tracker isn't affected."

Be sure to check in and see if your original mortgage was a tracker, and you could be in for a windfall:

"I've been reinstating tracker mortgages for people who didn't realise they should have been moved back onto one after changes; one couple got a refund of €90,000 after they got reinstated."

How much should I put into a pension? I want to keep living in the lifestyle to which I've become accustomed.

Back to Bob Quinn for the no-nonsense answer on this one: "If you are earning more than €32,800 and aren't at least putting 20pc of your gross salary away as a pension, you're a bit of a moron. Yes, you have a lot of things to pay for before you retire - childcare, education, mortgages - but you have to ring fence your assets for when you're not earning. If you're now 25 years of age, you need to focus on putting a smaller amount away, but you need to get used to the discipline of saving pension money.

If you're at 50 and have no pension, you're already putting yourself under tremendous pressure in the future."

I've got a massive credit card debt - no matter how much money I throw at it, it never seems to go away. What's up with that?

Michael Culloty of the Money Advice & Budgeting Service (www.mabs.ie) suggests that first things first, struggling folks shouldn't enter into denial about their mounting debts.

"Write to creditors rather than phoning them. MABS offers sample letters for downloading via our website, but what you're doing is putting your hands up and telling them you're in difficulty."

Sit down, do up a budget, and work out your income and outgoings: "Whatever is left after those outgoings should be used on credit cards and unsecured loans," says Culloty. Changing credit card supplier (with an introductory, interest-free offer) might give you some breathing space, but after that, it's time to look into paying that amount off. "If you're in good standing with the bank try and secure a loan, or try your credit union. Alternatively, start talking to your credit card supplier to see what options are available."

What about starting up a small business? How do I get the funds for that?

"The first thing to do as budding start-up company is to contact your Local Enterprise Office (LEO) for advice," says Mark Fielding, CEO of the Irish Small and Medium Enterprises (ISME, www.isme.ie).

"The initial funds need to come from yourself, to show that you are confident in your project and that you are willing to risk your own money. Other funders will look for the owner's investment before they will commit loans. SMEs may also be able to raise finance through the Back to Work Enterprise Allowance and the Employment and Investment Incentive or through the Seed Capital Scheme, which is currently being rebranded as 'Start-up Relief for Entrepreneurs'.

"Microfinance Ireland provides loans of up to €25,000 to start-ups or micro-enterprises. They are very good at cutting through the usual red tape and are down-to-earth and helpful. Peer-to-peer funding is a growing phenomenon in Ireland and may suit your purposes, while Intertrade Ireland can help connect you with 'Business Angels' who may wish to invest in your project and can also provide advice on accessing European Funding.

"Dare I say it, go to your local bank and talk to one of their 'relationship managers' to see what they might offer, but be ready for an inquisition. If you go to the bank ensure that you make a 'formal' written application, as informal ones seem to 'disappear'."

I do like a Friday evening binge shop. Nothing wrong with that, is there?

Um, well. Shopaholics can be broken down into types: there's a compulsive shopper, but there's also the trophy shopper (who needs the perfect accessory at all times); the bargain shopper (who get a thrill from the hunt); the collector shopper (who have many variations on the one item); the impulse shopper (who buys and returns); and the image shopper (who likes highly visible stuff).

In Ireland, Debtors Anonymous (www.debtorsanonymous.org.uk) meetings are held weekly in Dublin, while hypnotherapists and neuro-linguistic programming (NLP) experts are also of some help to those affected. "NLP might help a person re-pattern their thoughts," says author/counsellor Cathy Breslin.

"When they're bored or sad, people go shopping looking to be fulfilled. NLP interrupts that thought process. Other therapists will look at how people can fulfill themselves or self-care in other ways, like meditation, going for a walk, meeting friends, taking up a vhobby; essentially caring for themselves by not going outside of themselves."

I've got €20 until payday. Help.

First things first; if you are very short of funds, you'll only really be shelling out for the basics, like food and heat. This shopping list, clocking in at less than €12.50 (via Tesco.ie), will give you a week of healthy dinners (plus leftovers for lunch the following day): one whole chicken (€2.99), two tomatoes (22c each), a clove of garlic (49c), a bag of carrots (99c), a bag of onions (69c), spaghetti (98c), two cans of beans/pulses (€1.23 each), broccoli (€1.14), feta cheese (€1.79), one lemon (50c), two avocados (75c each) and a packet of pitta breads (62c).

Have roast chicken with potato and vegetables for Monday, use some of the chicken in a spaghetti, tomato and feta dish on Tuesday, try a bean pitta with avocado and feta on Wednesday, pasta with feta and broccoli on Thursday, and a chicken and vegetable soup on Friday. Et voila: wolf has been kept from the door and starvation staved off.

Irish Independent

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