Do you need to start saving a little bit more?

The first thing to do is record ALL your spending by writing it down in a notebook for one month. If you don’t fancy the ancient art of writing it down there are plenty of Budget Tracking Apps you can download to your smartphone that will do the same thing. It’s like keeping a food diary only you’re recording your spending habits. It will give you a better understanding of what you’re spending your money on and where you can afford to make some savings. For example, €2.80 on a cup of coffee over 5 mornings adds up to €14 per week. That’s over €670 annually. We’re not saying don’t have that cup of coffee. We’re saying be aware of how and where your money is going.  Maybe cut down, rather than cut out.

Our rule of thumb for effective budgeting and financial planning is 50/20/30.

Budgeting isn’t about limiting yourself, It’s about making the things that excite you possible. With that, the 50/20/30 rule is a good base from which to start:

• 50% of your income should be earmarked for essentials. These include your mortgage, utility bills, food, children’s education, medical insurance, income protection, etc
• 20% of your income should be earmarked for pension contributions & savings, including debt payments – credit card, rainy day fund, investments. Don’t forget the valuable tax relief that you will earn on your pension savings.
• 30% of your income should go on personal needs and enhancing your life, so things like entertainment, hobbies, interests, improving your home, etc.

Money management is about knowing what you have coming in, what you have going out, and developing a workable financial plan that allows you to say yes to the things that are important to you. It’s about knowing the best way to make your money work for you. It doesn’t matter how much money you have, everyone needs to have good money management skills.

“Earning a lot of money is not the key to prosperity, how you handle it is “

 – Dave Ramsey

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