Reviewing your finances, at any time of year, will set the foundations for a positive financial journey while checking whether you are on track to fulfil your ambitions and dreams.
So, let’s get started!
1. Understanding where your money goes
Budgeting is at the heart of any financial plan. It gives you an overview of your finances for the year ahead.
- Make a list of your income – include your salary, allowances, bonuses or other work payments and all your essential outgoings - include utilities, insurance policies, rent or mortgage payments, loans, etc. It helps to have at least 3 months’ bank statements and receipts at hand to help you get a really honest picture.
- Next, identify areas that you need to focus on - for example your spending habits or your level of debt. If you have a little extra left over each month, use it to bulk up your savings for upcoming life events – retirement, children’s education.
- Lastly, create a third list, one that highlights upcoming events - birthdays, anniversaries, weddings, holidays, Christmas. Set a budget for each of these events. This puts you in control of your finances knowing you’ve got it covered.
The 50/30/20 budgeting rule can help guide you to make best use of your money.
2. Reviewing policies, utilities and tax benefits
It is very tempting to leave policy renewals and utility renewals to roll over automatically, however you may miss out on savings if you do. When renewing your policies and utilities, set aside time to shop around.
If an existing policy or utility plan already provides good value, it’s equally important to ensure that you have the right level of cover and the right plan in place to meet your needs for the year ahead.
Check out what tax benefits you may be eligible to claim, which might give you an opportunity to increase your savings. Check out our article, Do you have unclaimed tax benefits? to find out how to identify what tax reliefs and welfare benefits you may be entitled to.
3. Saving into a rainy day account
Ideally, you should be working to build a “rainy day” fund, equal to 3-6 months of living expenses, so that you are covered if you suddenly have to pay for an unexpected event, like a boiler breakdown, car repair, or replacing a large household appliance.
If you have a little extra left over each month, set up a direct debit or standing order to pay into a savings account after you get paid.
4. Borrowings
Review your current level of debt each year, getting an overview of your loan(s), credit card(s) and mortgage so that you are confident in managing repayments for the year ahead. If you feel that this may be a struggle then you need to talk to your lender to agree a financial action plan.
At Bank of Ireland you can talk to an expert by booking a full financial wellbeing needs review appointment here. You can speak to us over the phone, or in person, at a time that suits you.
5. Staying on track
Make sure you check back on your financial plan a few times during the year. Update it each time an event has passed or a goal has been achieved. Repeat the budgeting activity at least once a year so you can update your sources of income and hopefully any reductions in your outgoings.
Lastly, and more importantly, take time to recognise when you reach one of your goals and acknowledge your success in becoming financially resilient and protecting your long term financial wellbeing.
