BY JOHN ELLIS, FINANCIAL ADVISOR
The start of a new year, much like any other, brings its own mix of challenges and opportunities. Now is the time to reassess and realign your budgeting and debt management strategies. Ignoring the incoming Christmas bills will not help. You need to take charge. Use some or all of the following practical steps toward your financial stability and peace of mind.
Review Your Finances: Begin by getting a clear picture of your current financial situation. Review your income, expenses, and outstanding debts. Most importantly, specify your goals for the coming year, for example, paying off that loan, starting a savings account, or planning a family holiday. If you have a clear goal, you will keep your focus.
A great resource for getting started is the Competition and Consumer Protection Commission (CCPC) website. They offer useful tools like a debt checklist, financial planning spreadsheets, but especially try the spending calculator (sobering!) — all free at www.ccpc.ie.
Create A Precise Budget: An effective budget reflects all areas of your family’s life both fixed and variable expenses. See saving as essential as even a small amount set aside regularly will grow into a significant emergency fund or contribute toward education or retirement. Consider using budgeting apps to simplify the process and gain insights into spending habits. The MABS online app, “My Budget,” is a secure tool to track your expenses and contrast them with your income with your information staying private.
Deal with high-interest debt first: Debt is a major strain especially after Christmas for many families. Focus on paying down high-interest debts like credit and store cards. These can mount up if left unchecked. Consider combining debts or negotiating lower interest rates with creditors. You could opt for a term loan to amalgamate your debts, but you need to be disciplined: immediately cut up those paid-off credit cards!
Should you get a windfall such as a tax refund or a bonus put the majority toward reducing your outstanding debts. Progress will seem slow at first but persist as each payment brings you closer to financial freedom.
Be or become prepared for the unexpected. Life often throws the unexpected at us so build an emergency fund. Plan to save three to six months’ worth of living expenses as a shield against unexpected challenges like medical emergencies, car repairs, or job loss. Should the worst happen be careful how you use your savings. Do not rush to pay off whoever “shouts the loudest,” instead, manage your obligations wisely and talk with your creditors, most are understanding and willing to work with you during tough times.
Teach your children financial literacy: Financial planning is for all the family so involve your children in age-appropriate discussions about budgeting and saving. Teaching them about responsible spending sets them up for a lifetime of good habits. So, as we move on and out into 2025, with wise saving, sensible spending, and careful planning you will set the foundation for a year of financial security with resulting happiness. Hopefully this time next year you will have 12 months of progress to celebrate.
So, here is to a prosperous and stress-free 2025!
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