Quick ice-breaker: I don’t know about you, but the first pint I had in a ‘real pub’, after lockdown I took a photo and lashed it up on facebook! titled ‘Good to be back!!!’
It was such a relief to get out and see life return to normal. Well, somewhat normal! After a year of lockdowns, cancelled holidays, and missed celebrations, we were all excited to enjoy life again. Let’s hope we can put these next few weeks behind us and avoid another lockdown. Make sure you stay safe, mask up and protect yourselves and those around you.
Anyway. I’ve been speaking with a lot of clients during the last 6 months or so and I began to see a pattern. I noticed some are experiencing household budget surpluses due to staying home and are looking to maintain the savings habit. Not only maintain it but generally get better value for that hard earned money.
These tips should help you manage your enthusiasm and money flow so that you don’t do any long-term damage to your financial planning.
- Review current expenses.
Any time your cash flow changes is a good time to review your budget – or start making one.
Before you reward yourself with new expenses or big-ticket purchases take a look at what you’re already spending each month. With extra money coming in, you might have an easier time paying for a new subscription (you never use), but that doesn’t mean you should keep sinking money into those things. Perhaps economising in some areas will allow you to spend more money on things that you’ll enjoy more, like a couple extra date nights with your better half (lads) per month or a family trip.
Would you feel better about your long-term financial outlook if you were making larger monthly contributions to your children’s education fund or your pension? Most clients I have asked that question don’t even think about it anymore. They give a simple answer – yes.
Remember, keeping a budget isn’t just about cutting back. It’s about making sure you’re getting the most out of your money. If you feel the time is right for you to start a savings habit, you should take our savings quiz.
2. Do the Sums if making a New Purchase
If treating yourself to a shiny new TV or a holiday you missed during the pandemic isn’t going to throw off your budget or drive up your credit card bills, then by all means, have some fun. We all deserve a treat (now and then).
Where lifestyle inflation can really hit hard is when people just assume their new cash flow can cover new repeat expenses, like takeaways every week, monthly charges for a couple new streaming subscriptions, or higher monthly payments on a new car. Often the less dramatic the lifestyle change, the less the person is aware of the excess money they’re spending. They might not realise just how out of control their budget has become until their credit card statement arrives. Paying a slightly higher insurance premium on a new car might not seem like a big deal until you realise you aren’t putting as much money into your emergency savings account as you used to. Remember to do the sums and if you can’t do them, we’ll do them for you.
One reason we resist crunching the numbers on new purchases is that we know the numbers might say “No” or “Not right now.” But the joy you feel from pulling the trigger on an impulse purchase will be short-lived if you’re digging into your emergency savings or even putting yourself under pressure to pay your mortgage/rent!
3. Support your future self
The lifestyle that we all want in our retirement years is usually the furthest thing from our minds when we’re thinking about booking a spur-of-the-moment holiday or a buying a new car. But all the seemingly small financial decisions you make today add up and compound over time.
Spending often leads to more spending. And if that spending makes it harder for you to contribute to your pension every year, the stuff you buy might be putting the safety and security of your 66-year-old self at risk.
We want you to get the best life possible with the money you have today, tomorrow, and well into the future. If you think you need to look at your spending and get better value out of your hard earned money, then you should book in a consultation with us. In fact if there is anything you’ve just read that makes sense to you and you want to do something about it, email jonathan@castlecapital.ie.
You can book in a meeting with me by clicking here.
One more thing… 37 more sleeps to Christmas – very excited!!!!