MoneyTimes - January 2, 2013

Posted by Jill Kerby on January 02 2013 @ 09:00



Now that the 12 Days of Christmas are just about over (if you agree that the last day of the holiday is January 6) perhaps it’s time for the 12 Resolutions of 2013, something you can aspire towards every month of the New Year to put your personal finances into order.

This isn’t the definitive list by any means – anyone renewing health insurance should make comparing plans and providers their absolute first priority (see www.healthinsurnacesavings.ie or contact a good specialist broker).

While it would be wonderful to adopt all these good money habits and aspirations in January, spacing them out and tackling them one at a time is more doable.

January, Resolution 1: There are two resolutions: the first is to start Christmas shopping now when the best sales discounts are available. (Or put away a few euro a week for next December). The second, longer reaching resolution is to take back control of your spending: cut up or cancel, expensive, out of control credit cards or switch to zero interest ones (for 6/12 months) to reduce your balance. Arrange a direct debit to pay off the card balance every month or at least to pay a set amount. Set a weekly cash spending budget.

February, Resolution 2:  This is the month of love, so love yourself – and pay yourself – first. You can never get out of a financial hole without capital or savings. No matter how small the amount, save it: start with a jar for spare coins. Then start adding small notes. Then open a proper savings account in the credit union (from which low cost capital can be borrowed some day) or an equally safe deposit account. Eventually, you may have enough savings to start investing and ideally (and with some luck) beat the low returns/high tax/inflation hit of deposit accounts.

March, Resolution 3: Set up a local property tax (LPT) savings account. If your house is worth €200,000 your annual tax is €360, but you need to save €45 for four months to meet the half-year payment in July. From August onwards you only need to put away €30 or about €1 a day into your LPT account every month.

April, Resolution 4: April is a good time to spring clean your finances. Review your utility bills and mobile bills with the likes of www.bonkers.ie. Have you compared the different broadband/satellite TV packages? Also, Take out all your accounts, contracts and policies, including under-used gym, club and hobby memberships or subscriptions. Check out charges and costs at www.nca.ie. Do you have too much or too little life insurance? The new gender directive means that the cost of life cover for men should decrease slightly (and increase slightly for women.) A good broker can review these policies for you.

May, Resolution 5: Make sure you are properly registered for the Local Property Tax, the first payment of which falls due next month. The Revenue Commissioners, who will collect the tax, have produced a Q&A site: http://www.revenue.ie/en/tax/lpt/lpt-faqs.pdf  Details of the new Insolvency process should be available.

June, Resolution 6:  The children are finally out of school so no better time than to encourage them to become more financially independent. Take time to teach them good money habits and to find part-time jobs. You will do them a big favour by imposing a ‘family tax’ of 20% on their earnings. It’s also never too soon for teens to learn about investing, see ‘Seeds of Wealth’ by Justin Ford.

July, Resolution 7:  Take a break. Enjoy some financial off-time.

August. Resolution 8:  Back to school means big expenses. Check out big savings at second hand book offers and sites (www.schooldays.ie). The back to School Clothing and Footwear Allowance has been reduced by €50 in Budget 2013 , details at www.citizensinformation.ie. Third level students need to get applications for grants in as early as possible. Details will be posted on www.studentgrants.ie. Grandparents who want to help out financially can avoid higher capital acquisition tax can gift up to €3,000 tax-free a year.

September, Resolution 9:  Pension changes announced in the Budget (to reduce total funding) apply from January 1, 2014 but for this year, at least, top rate tax relief on contributions is available. Get your pension reviewed by a good, fee-based advisor. Students are looking for accommodation. Why not join Rent-a-Room scheme and earn up to €10,000 tax free?

October, Resolution 10:  Interested in making money from investments? Educate yourself. Check out www.GillenMarkets.ie for a one day investment course and read his book, ‘3 Steps to Investment Success. Also, Ben Graham’s ‘The Intelligent Investor’, ‘The Gone Fishin’ Portfolio’, by Alexander Green. They all advise low-cost value investing and patience.

November, Resolution 11: If you’ve spent the last month taking an investment course and read up on investing methods, techniques and pitfalls, you may be ready to set up a ‘virtual’ dealing account – see www.tddirectinvesting.ie /gettingstarted 

December, Resolution 12: Budget 2014 is scheduled to take another €2.5 billion out of the Irish economy in taxes and spending cuts. If you’ve enacted these resolutions, you should be ready for anything.

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