Top Ten Money Saving Ideas
1) Pay off your bad debt first.
If you have bad debt and savings pay off the bad debt first before you continue saving. Bad debt is sometimes defined as “personal loans, car loans, credit card debt, store card debt”, this can be charged at anything from 7% – 23% (depending on whether you use your credit card to withdraw cash also).
The rate you are getting on your savings will be substantially lower, rates around 3% are common currently for fixed term deposits and some demand accounts, depending on where you put your money and for how long. You wouldn’t walk into a bank or credit union and borrow money at 7% and then walk into another bank and put it on deposit at 3%, would you? But some people who have savings and “bad debt” are doing exactly this sometimes without realising it!
So if you have bad debt, start paying this off first, start with the card / loan with the highest interest rate.
2) Don’t make financial decisions in isolation.
The type of results produced from making financial decisions in isolation of one another can be similar to the example above of borrowing at 7% and having deposits at 3%. Have a financial plan / an overview of your finances to avoid this type of situation.
3) Switch Your Mortgage to Interest Only
If you have a repayment mortgage and you are in financial trouble i.e. you are finding it difficult to meet the repayments, consider extending the term or switching it to interest only. This will help you get control over your short term finances start budgeting for your income level.
4) Switch Your Mortgage Provider.
Although this is becoming increasingly difficult as the banks become less inclined to lend out money, you should check your mortgage rate and ensure that you have got a competitive mortgage interest rate? Do you know what rate you are paying? Consider switching your mortgage, you may have a greater chance of doing this if you have a low loan to value.
5) Start Budgeting.
If you are simply spending too much for your current level of income, rearranging your finances won’t solve the problem. You need to cut down your spending. To analyse your finances and find out what you are overspending on use the following link to some budgeting tools.
6) Save for Luxuries
Try and save for luxuries, instead of borrowing for these items i.e. for holidays, changing the car etc. Borrowing for the luxuries in life will lead to you paying more than you should for your holiday / new car when you factor in interest on the loan etc.
7) Get the Best Deposit Rates
If you have money on deposit with a bank, ensure you are maximising the interest rate available. Check out the rates available on the Financial Regulators website www.itsyourmoney.ie
8) Review Your Insurances
Review your house insurance, motor insurance, mortgage protection policy and travel insurance requirements on an annual basis (or more often if necessary) to ensure the premia are competitive. It’s very easy now to get quotes for insurance and this can help you to judge whether you are getting value for money or not.
9) Claim All Your Available Tax Reliefs
Are you claiming all the tax reliefs due to you? Review this by visiting the Revenue Commissioners website at www.revenue.ie.
10) Review The Charges on Your Pension Plan
Have you reviewed your pension plan and the charges that attach to it? Check the charges on your pension to ensure you happy with the level of charges, these can vary depending on how your pension is set up, your allocation rates, your management charges etc. Management charges can usually be between 0.75% to 2.5%.