Spring has well and truly sprung now and not before time. The good news is the financial hangover caused by Christmas has, we hope, lifted and the penal cost of your summer holidays has yet to be truly felt. That is why now is the ideal time for a clear-headed, stress-free financial spring clean. While we can’t guarantee it, we reckon there is a pretty good chance you will have saved yourself hundreds of euro by the time you get to the end of this article, as long as you follow the steps we outline, that is. Fingers crossed.
1. The first thing you need to do is to work out exactly where your money is going each month so you can work out what you can do to cut back. There was a time when carrying out even the most cursory of financial audits required sifting through endless sheaves of bank statements, collecting all your receipts and looking over incomprehensible utility bills.
But times have changed and technology is now your friend. So, the first step on your road to financial redemption will see you log on to your online bank account so you can go through the last six months of your transactions. Keep an eye out for all payments or direct debits that look unfamiliar; it doesn’t matter if the payment is substantial or just €2.99 for some online service you have long since forgotten you signed up for. Cancel all the subscriptions to services that you reckon are of no value to you any more.
2. And while you are focusing on your bank account, you might want to pay some attention to your actual bank too. Repeated studies over recent years have shown that Irish consumers who switch their current account from a bad value one – and there are loads of bad value ones out there – to a good value one could save themselves about €150 a year. Despite that free money, the level of switching in the banking sector remains chronically low – less than 1 per cent by the latest count.
Banks profit from this consumer lethargy. We’re not going to lie to you, changing your bank account is a bit of hassle, although not as hard as you might think. But if you can save yourself more than 100 quid while putting manners on your bank, it is certainly worth considering doing as part of your financial spring clean.
3. There are even bigger savings to be made by switching your mortgage from one provider to another, although such a move comes with an important tracker-mortgage shaped caveat or, to put it another way, if you have a tracker, hang on to it.
By switching mortgage provider, many homeowners who have been gouged by their banks could save hundreds of euro a month. Let’s say you are on a 4.3 per cent standard variable rate and have a €250,000 mortgage. If you have at least 20 per cent equity and switch to the cheapest rate on the market and sign up for 20 years mortgage you will save about €250 a month. That is about 60 grand over the life of the loan.
While switching mortgage from one bank to another can deliver big savings – as long as you are not on a precious tracker (we can’t say that enough) – it can also be difficult, which explains why so few people bother with it. If you can find yourself a good mortgage broker and one you can trust, they will do all the hard work for you.
4. The next thing to do is pay more attention to your credit cards. Audit them and work out how much they are costing you every month. Chances are you have not done that for a long time. Last week the Irish League of Credit Unions published a survey which suggested that just under 60 per cent of people do not know the rate of interest their credit card provider charges while even more have no idea how and when interest is applied to their cards. It also revealed that most of us routinely use them for spontaneous purchases.
So don’t be part of the majority. Work out how much your credit cards are costing you and look at how you use them and if there are spending pitfalls you could avoid. If necessary, leave them at home. You can use them for random purchases in Penneys or Arnotts if you are carrying them; if they are inaccessible or hard to get at, you won’t spend as much money on them.
And if you owe a lot on your cards, you really have to focus on clearing that debt. If your credit card balance is €5,000 and you’re paying interest on the debt of 23 per cent, then it would be mad to put money into your savings or buy things you don’t need at the expense of clearing more of that debt.
5. If you have not changed your energy supplier in the past two years, you are wasting money. And there is a very, very good chance you have never made the switch. As many as 60 per cent of Irish consumers have never bothered to change their electricity or gas provider. And even more depressing, 85 per cent of us are paying the standard tariffs for both electricity and gas. That means we are paying hundreds of euro more than we need to. By spending just a few minutes moving from a dear provider to a cheaper one, you can save more than €350 a year.
And, unlike changing bank account or mortgage provider, changing your utility provider is really easy and – unlike switching breakfast cereals – the end product is identical. To make the switch you just need copies of your most recent gas or electricity bill, or both if you’re a dual fuel customer. You also need your Gas Point Reference Number (GPRN) or Meter Point Reference Number (MPRN), so energy suppliers can identify your property. These numbers are on your bills. And, finally, you need a current gas and/or electricity meter reading, so your old supplier can provide you with a final bill and your new supplier can start from that point.
6. We have said this before and we will say it again, if you have not changed your health insurance provider in the past three years, you are almost certainly paying more than you need to. You can make the switch only once a year when your renewal time comes round. When it does come around, call your existing provider and ask for all the equivalent plans it has on its books to the one you have now. Insist that all its company’s plans are explored. If it comes back with a plan that costs €100 cheaper than the one you have, ask if it is the best-value plan. Calls are being recorded, so they have to say yes or no and they are under pressure to tell the truth. Then go onto the HIA website – www.hia.ie – and compare the plans you have with those from other providers. Remember, companies can’t pry into your health conditions and as long as you are getting the same level of cover as you already have, there are no waiting periods to deal with.
7. If you have not got travel insurance and are planning to leave the country at any point in the months ahead, now is the time to take it out. Many claims made by Irish people are down to changing family circumstances or a bereavement and you have no idea when such things will happen. Do not go for the cheapest policy and do read the terms and conditions – or at least some of them – to make sure you are getting the cover you need.
8. And staying with insurance, this month is as good as any to look at all the other insurance products you have and to make some calls. If you can knock just 10 per cent off the cost of your car, home and life insurance by either changing provider or asking your existing one for a better deal, you could be better off by couple of hundred quid after just three or four calls.
9. Mobile phone packages can be hideously confusing and in all the confusion the big loser tends to be the consumer. So have a look at your phone package and make sure you are on the right plan for your usage. There is not much point in paying €20 a month for data if you don’t use that much data or you download everything using wifi. Be wary of your mobile provider offering you an upgrade as your contract term nears its end. Getting a new handset almost certainly will see you locked into a new contract for as long as two years. And if you can buy a handset outright and go for a 30-day contract or a pre-pay sim, you will save money.
10. Television watching is not cheap but much of the money we spend can be saved. The cost of a package that includes broadband, a landline and a television service offering more than 100 channels runs to about €100 each month. Typically companies don’t let you get rid of the landline element of the deal even if the last time you used a landline was when Jesus was a boy but you can get rid of the 100 channels and, depending on your circumstances, you might not miss them all that much.
By getting rid of the television part of a combination package, you could save about €500 every year. If you already have Netflix or Now TV or both and have a smart TV with players from RTÉ and Virgin Media TV on its home screen, you would be covered domestically. The All4 app gives access to Channel 4 and E4 content and you could use a virtual private network (VPN) to get free access to the BBC channels on the television.
Other services can be accessed with Android boxes. These typically cost about €100 although be warned that many such services are in a legally grey area while some others are downright illegal. It is also worth bearing in mind that streams can be flaky and disappear in the blink of an eye. And of course there is Saorview, the national digital terrestrial television service. To get the service, you just connect a suitable aerial to your Saorview-approved TV and tune in to all the free-to-air Irish channels, and, depending on the box, free access to all the UK free-to-air channels too.
11. Your financial spring clean can turn into a physical spring clean too which may generate some cash. Take a day to wander through your house boxing up all the stuff you no longer use or no longer like. Sell the stuff that is worth selling on donedeal.ie and donate the stuff that you’ll struggle to sell to a charity shop.
12. Set some new spending habits for the months ahead. The best way to get a handle on your outgoings is to keep a spending diary for a week or so to get a sense of where your money is going. Simply note, on your phone, every time you spend money over the course of two weeks and you will get a sense of where your money is going. Once that is done give yourself a spending budget to cover everything and stick to it. If you spend less than your allowance, don’t go mad with the leftovers in Penneys; put it into the following week’s pot.
13. The Fianna Fáil Green Party coalition government from way back when is not, to put it mildly, remembered with much fondness. While the Greens were in power (or at least had some of it) they were hardly to blame for the crash and they did do some things well. One of those things was the Bike-To-Work scheme rolled out by then minister for the environment John Gormley 10 years ago. Despite the passage of time, it still remains brilliant.
If you have yet to sign up for it, then spring time is the time to do it. It is very simple. Your employer buys you your new bike and any bike equipment you may need up to a total value of €1,000 and when tax deductions kick in you end up paying only half that. There are more details available from bikescheme.ie.
Not only will you get yourself a bike on the cheap – and spread the cost out over the year – you will also save yourself a packet on commuting costs. Anyone who lives within 10km of their place of work will spend at least €20 a week on commuting if they drive or take public transport. A cyclist spends nothing. If you live in Galway, Cork or Dublin, sign up to the bikes scheme. They are a lot cheaper than cabs. And remember that people who cycle every day live years longer than those who don’t.