Get yourself financially set for 2021

Well 2020 will certainly live long in our memories, as we saw the arrival of Covid-19 on our shores. For some people, this has left a very difficult legacy of bereavement, sickness or job loss. For others who haven’t been as directly touched by the virus, the memories of lockdowns, social distancing and uncertainty will linger long into the future.

While of course some people have been very challenged financially by the Covid restrictions as it impacted their jobs, for many people this was not the case. Holidays and social lives were very curtailed, resulting in lower levels of spending than before. So, what are the positive points we can learn from our changed spending habits that can help us be financially fitter in 2021?

1. Recognise where you spend frivolously
One of the comments we hear most often is how little cash people are using these days. Paying for everything by card has become the norm. One of the real benefits of this is that it is much easier to keep track all of your spending, even the very small amounts. If you carefully review this spending using a banking or spending app, or even a good old-fashioned spreadsheet, you will quickly identify areas of potential saving. “Do I really have three takeaway dinners each week” or “How many feet do you have for all of those new runners” are two comments we heard recently!

2. Credit cards are great (but also lethal)
The convenience of a credit card is nigh impossible to beat, once you are disciplined. And by this we mean paying it off in full every single month, without fail. With interest rates ranging from approx. 13% p.a. to 23% p.a., it’s not hard to see how paying interest for even one or two months of the year undoes all of your good work and ends up costing you money. If you can’t afford to pay off your card every single month, you can’t afford to have the card – get rid of it.

3. Minimise the tax you pay
First of all, claim everything that you are due. Make sure you claim all of your eligible medical and dental expenses and if you are working from home, claim your eWorking tax relief. Carefully consider all other possible tax reliefs and credits that might be due to you - the Revenue website is a good place to start for information. However if you have some added savings, now might be the time to use these tax efficiently by topping up your pension contribution or by starting to pay regular Additional Voluntary Contributions (AVCs). Increasing your contributions from January 2021 could help to unlock a really nice retirement down the road!

4. Always have a reserve fund
While fewer of us want to leave our money in the bank these days as we anticipate actually being charged for the pleasure of leaving it there, we still believe in the importance of having an easily accessible reserve fund in case something unexpected happens. Many people thanked their lucky stars that they had access to an emergency fund in 2020. Talk to us about the options available to you here.

5. Have a plan and a budget
Have a plan for your money. Whether this is saving for retirement, paying down debt, investing for the future or funding your lifestyle, it needs to be planned. Set clear objectives and a budget to achieve them. And then review your plan regularly to keep it on track.

Hopefully 2021 will deliver real progress in the eradication of this wretched virus. However take the positives from your changed spending habits in 2020 and get yourself set for a year of financial success in 2021. 
Contact us for your 2021 financial review!