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As discussed by Lisa Loughrey in her article on budgeting last week, many of us have been hit hard financially due to the global pandemic. The following tips expand on what was discussed last week, providing some additional information to get you started on your budget planning this year.

1.Basic Steps to Preparing a Budget

In order to prepare a budget, you will need to calculate your total income. If you look at the net income on your payslip this will show you what your take home pay is every week/month and add this to any social welfare payments, rental income payments etc. that you receive. You will then need to calculate your outgoings which include the following.

• Regular expenses: These are your regular outgoings and include such things as electricity, phone, life cover, health insurance, fuel, food shopping, childcare costs, TV package, eating out (otherwise known as take-aways in the current climate), socialising (that day will come again!) etc.
• Debt: These are your mortgages, car loans, credit cards, personal loans, etc.
• Occasional Expenses: This includes clothes, medical costs, holidays, TV Licence, back to school costs, birthdays, Christmas, home heating oil, car insurance, car tax, car servicing, tyres etc.

If you have any money left over the first thing you should consider is:

• Paying off any debt, especially shorter term debt with high interest rates such as credit cards and unsecured loans.
• Building an emergency fund.

You should also study your outgoings to decide if you can save money or cut back on any of your expenses, especially your everyday outgoings.

2.Set Financial Goals

If you set realistic tangible financial goals you are more likely to stick with and achieve them. There are short-term, medium-term and long-term goals.

• A short term goal might be paying off a credit card, saving for Christmas, saving for a holiday or building an emergency fund which will be available for any unexpected emergencies.
• A medium term goal may be saving for your children’s education, saving to pay a lump sum off your mortgage or saving for home improvements.
• A long term goal may be paying into a pension to save for retirement, paying off your mortgage early or saving for long term financial security.

3.Shop Around and Save

Shopping around for all products such as electricity, phone contracts, life cover, health insurance, serious illness cover, etc. can save you money each year. You can also review the charges on your current account, investment products and pension products to see if it is possible to save money there.

As Lisa mentioned last week, “if you have a budget you are less likely to succumb to random spending, as you will be aware of whether you can really afford it or not. You will know where your money is going which provides a sense of control and in turn, can make you happier and more relaxed."

Marie Carr MSc BBS QFA RPA is a Qualified Financial Advisor and Retirement Planning Advisor. You can contact her through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on marie@jfl.ie