A huge amount of the time I spend with clients is in understanding their goals in life and developing a financial plan to help them achieve their objectives. A lot of attention goes into their retirement strategy, investment approach and other such important areas.
One area I never neglect is the other side of the financial picture – their expenditure. After all, this impacts on the level of saving and investment in the future. This has come into sharp focus in 2020, particularly as we emerge from lockdown due to Covid-19. For some people, reviewing this makes sense as they have simply gone through a period of much lower spending than normal. For others who are facing a loss of job or a reduction in income, it is out of necessity. For everyone, there’s an opportunity to save more into the future.
Here are 10 areas which I believe are worth investigating to see if there are opportunities to reduce your monthly outgoings, whether out of necessity or to be able to spend more on the things you like…
An obvious place to start if your current mortgage rate is uncompetitive. There are a number of “switcher” deals out there that are attractive and worth investigating. While it is a bit of hassle to switch your mortgage, it can yield significant savings that will justify the effort. Of course switching your mortgage is likely only available if your income has continued at the required level.
2. Credit cards
A really important one… If you have a balance outstanding on your credit card, you are probably paying anywhere from 13% p.a. to in excess of 20% p.a. on this balance, which makes it very challenging to reduce the balance. Look at options to switch to an alternative provider, some of who will offer you a period where no interest will be charged. This will hopefully buy you time to get rid of the outstanding balance. Credit cards are great… but only when they are paid off in full every month.
3. Energy bills
This one drives us mad! Energy companies have great deals for new customers, that are not automatically passed on to existing, loyal customers. They rely on us not bothering to shop around. Check out the deals available and be willing to switch. Comparison sites such as www.switcher.ie may help you to find a better deal.
4. Phone & broadband
Similar to energy companies, telephone and broadband providers rely on the inertia of subscribers who don’t keep an eye out for better deals. Know when your phone and broadband contract periods have expired. And then start negotiating, either with your current provider or a new one. These services are very easy to switch.
5. TV subscriptions
As the Coronavirus took hold around the world and countries went into lockdown, people turned to home entertainment in numbers. In the first quarter of 2020 alone, Netflix added 16 million subscribers and this growth probably continued in Quarter 2. Some of us also subscribe to Sky, Amazon Prime and other services. The question to keep asking yourself, particularly as restrictions ease is – are you still using the services? If not, ditch them.
Are you a (too) regular purchaser of takeaway food? If you are, I suggest you record over the space of one or two months every single Euro you spend on takeaways. You might be shocked… and this may be an area where significant savings can be made in the household budget. Apply this to both takeaway food and coffees that you buy.
7. Grocery shopping
This is one where savings can be made through a few simple actions. Don’t start planning meals by thinking, “what do we want for dinner?”, instead use what you have at home and eat the food you’ve already purchased. Before shopping, plan your meals and create a shopping list of what you need. Without a list, you are prey to every promotion on display in the supermarket. Then make sure to avail of special offers, loyalty programmes and vouchers that each can further reduce your bill. Finally close your eyes as you get to the tills, that’s where they target you to throw a few more items into your basket!
Club memberships are great, when they are used. However if you’re not using them, how can you justify the continued spend? Are you using the gym enough or playing enough rounds of golf to justify the ongoing expense?
Check through your bank and credit statements for all of those seemingly insignificant subscriptions that you pay for. Music streaming services, news media, other publications, in-app ongoing purchases – they all add up. If you’re using them regularly, great. If not, get rid of them.
10. Online shopping
Amazon was another big winner of the lockdowns across the globe. So too were the parcel return services. Lots of people bought lots of items that they subsequently returned or kept them and never used them. Online shopping is far too easy, and we all need to be really careful. Buy what you really need and avoid mindless surfing for impulse purchases.
There’s no silver bullet to making savings. However, by looking across a range of areas such as these, small savings when put together can really add up.