The speed of the economic developments of the last 18 months took people throughout Ireland by surprise. First it was the dramatic fall in property prices, then the near collapse of the banks and as a result an increase in job losses. Understandably this has left many unsure about their short-term and long-term security. Up until this point most people have spent the last 18 months simply reacting to events in order to survive, however by putting a well thought out financial plan together, not only can people survive these times but they will thrive.
The first part of any financial plan is a complete and honest review of your current expenditure. This can be simply done by keeping a diary for two weeks and making note of all your expenditure. This process will allow you to identify what you actually are spending your money on and secondly is it necessary? And if so can you get better value for money elsewhere.
Once you have completed your review, the next step is to complete your household budget for the coming year. As part of this budget you should:
a) Start Saving – Although most people have reduced income, it is important that you start saving in order to have money available at short notice to meet unexpected expenditure such as redundancy. It is normally recommended that an individual have savings which is at least 3-6 times your net monthly income. With this in mind it is better to start today no matter how small.
b) Pay Cash – Stop using credit to pay for purchases. By paying cash this allows you to see what you are actually spending and as a result you will think harder about each purchase.
c) Life Cover - Life cover is the cornerstone in any financial plan. This is insurance that will cover you and your family in the event of your untimely death. In general, life cover is becoming cheaper as people are living longer therefore it is vital you ensure that you are adequately covered. At present savings of between 10-20% can be achieved on these premiums.
d) Permanent Health Insurance – This is insurance that provides an income of up to 75% of your current earnings in the event of a prolonged illness or disability. It is imperative to get the right advice as cost and the right cover can vary considerably among providers.
e) Health Insurance – While competition is still limited in the Irish market for health insurance, there are still considerable savings to be made, i.e. 20% - circa. €400 on an average family policy.
f) Retirement Savings – Taking into account people are living longer, it is vital that individuals save for their own retirement to ensure they have a comfortable lifestyle in later years. Although pension values have suffered in recent years, they have bounced back well in 2009 – up 21 percent on average over a twelve month period. Again as like Health Insurance, it is very important people review their current pension and its’ charging structure. For example a 1% difference in a charging structure per annum is a 25% difference over a 25 year period in simple terms.
We at Key Financials offer a free financial review in order to gauge your current financial position and put you in position that will allow you charter these uncertain times with confidence. We search the market and ensure:
a) That you have the necessary products.
b) That each product is the most appropriate for your requirements.
c) That each product is value for money.
Please contact us at 049/4326841 or email info@keyfinancials.ie in order to arrange your appointment for your FREE financial review today.