#Get your financial Sh*t together for 2019

Updated: Sep 23, 2019

If you visit a Financial Advisor one of the first things they will need to do is find out as much as possible about you in order to provide the best plan and get the best understanding of your overall goal in order to help you achieve it. Do you want to save for your wedding, a house deposit, go traveling, return to college and study a different career path, or maybe to start your own business? This is why the first step is so important to actually take the time to think about.

Step 1. #GamePlan

You must take time and think about what your ideal goal is so you can start planning for exactly that, and put small stragetgies in place to achieve them within a realistic and achievable time frame, for example; 1-3 years.

"If you are not investing towards your ideal goal, it is just a dream." - Sallie Krawcheck.

More often than not people will say a vague goal when asked what they are saving for like "A rainy day" rather than being more specific like a "holiday fund" or "house deposit" or even "Start my business". Studies show that the more specific you are towards your Financial and Lifestyle goals the more likely you are to succeed in achieving them.

The best thing to do:

  • Write down your goal

  • Create a vision board to help keep you motivated and to stay inspired

  • Tell people your goal so they know what you are working towards

Step 2. #AuditYourself

Now that you have some plan in place and wrote down exactly what you are working towards, you need to start by basically auditing yourself. You need to write down all the money that comes in and out of your bank account by going through the last months bank statement and plan for the next month by writing down exactly all the fixed expenses you are going to have each month. Then plan for any extra expenses you might have in the coming month like if your car tax is due or you might have a friends birthday or wedding.

It pays to be aware of everything that is going out especially on a month to month basis sometimes you will be surprised to see you are still paying for a monthly subscription you thought you had cancelled or that the initial 12 months offer you signed up for has now increased and you are paying more than you originally thought.

There are some bills like your virgin or Sky that you might not be getting the full value out of that if you considered switching to just a Netflix account it might suit you better or you might be able to phone up and look for a better reduced plan to suit - Tip: shop around it’s a competitive market and if you tell them you are cancelling they will try to offer you a better plan to stay.

Nowadays it so easy to spend our hard earned cash, especially with contact less card payments and apple pay which both have great advantages mainly - convenience, but it also means that you are not appreciating the full value of that purchase, all those taps under €30 can add up over the weeks.

Studies have shown that if you physically hand over cash at the till you are more inclined to take notice of the value and amount you are spending and find it harder to part with cash (especially when you see how quickly you can go through). With contactless I certainly am guilty of not even checking the total once it is within the contactless amount I just tap without thinking or even checking the receipt.

What to do:

Set yourself a monthly budget to stay on track so after all you fixed expenses have been taken out of your paycheck. Then you can have a realistic idea of the actual amount of money you have to live off and for spending on things you enjoy. Ideally you would set aside some of your monthly paycheck to your savings. The below is a general guide when it comes to how much you should divvy up your payslip.

The 50/30/20 Rule: 50% of your paycheck should go to needs such as expenses like rent and bills, 30% should go to your wants like going out for cocktails or dinner with friends. 20% should go to savings. This is just a general guide and will differ but if you can start putting anything away to "pay yourself" the compound effect in the long run will be worth it.

Step 3. #PayOffDebt

We all can have some sort of debt whether we took out a small loan, overdraft, or the most dangerous of all a credit card. It is best to get on top of these now so we can start investing our money towards those important life goals.

Try to pay off these as soon as possible if you feel you could increase your monthly re payment it is definitely a good idea as a bank will usually be charging interest on top of what you owe so you end up paying back more, the longer the period of repayments. If you feel you can not afford to do this maybe you might consider looking for ways to increase your income like a part time job, babysitting, ask for a pay rise at work, start a side hustle or decrease your spending on areas you feel you can afford to like shopping.


Step 4. #EmergencyFund "FU Fund"

Having an emergency fund is so important and if you can make a start on building up yours, reasonably three months of fixed expenses would be enough, however this can differ from individuals and their monthly expenses. There is security in knowing if something unexpected pops up and you need to take time off work or your car breaks down and the costs to repair will effect your living for the month. Having the emergency fund to dip into will give you a piece of mind.

An emergency fund can also been know as "FU Fund" which is a type of fund that will set you up in order to leave that job you hate, or maybe go back to college to study a different career path that you have a passion for, or you have decided you want to travel the world for a year and take time off.

All of these are very much things that more and more people are wanting to do , especially if they find they have been pinned to one specific area or job after they finished college and are not happy.

This is why, by putting money aside to invest in yourself and your happiness is so important and money well spent. If we can try to use money for good investments decisions rather than just spending on maybe impulse buys it will help us to build wealth later and become financially healthy.

"your spending habits will make you rich, not your salary".

You would be surprised when comparing two individuals, one on a much higher salary but has made bad investment decisions like a lot of monthly expenses coming out or bought an expensive car and the costs of running it, in comparison to someone on a lower annual salary who has a good money mindset and might live more frugal, on top of making some good investment choices like to start saving money each month from an early age instead of taking out that car loan or signing up for a higher contract bill pay phone in order to buy the newest iPhone on the market. The individual on a lower salary might actually have a lot more savings and less debt than the person on a higher salary who may "look rich" from the outside.

So lets start making some good #Moneymoves.



© 2020 Femmefinancial.ie