Recession Proof your Finances
www.itsyourmoney.ie looks at ways to help you manage your money more effectively, so you can get the most out of it.
Our tips will give you options should you run into more difficult times in the months ahead. Don’t bury your head in the sand. Take control of your finances and be in the best possible position to face the recession head on. And remember, recessions are temporary, they don’t last forever!!
What can I do to ‘recession-proof’ my finances?
Save, Save, Save-however little: you may have gotten used to putting a little bit of money away each month if you had an SSIA. Now it’s more important than ever for you to build up some savings, which are readily available, should you need them for some unforeseen circumstances such as reduced income or redundancy.
Try to build up at least three months salary. You can compare regular savings accounts from the main banks to find the best account for you. If you’re not good at putting money aside, you might consider using a standing order to pay into a separate savings account so you’re less inclined to spend it
Reduce your spending: avoid wasting money. Keep a close eye on what you are spending your money on. Try to cut back on some non-essential regular purchases such as the morning coffee or going out, but be realistic! Little savings like this can add up over the long term. Introduce a budget and try to stick to it. This will help you manage your expenses more easily while allowing you to work out how much you can afford to save regularly. Check out our budget planner to help you get started.
Keep debt to a minimum: weigh up the pros and cons of borrowing to make a big purchase now, versus waiting for another year. How will this impact on your future plans? Do you have an outstanding balance on your credit card? If so, pay off as much as you can and consider a loan with a lower interest rate to clear off your bill. Review your loans to make sure you are paying the lowest rate possible on any borrowings you have. Our credit card and personal loan cost comparisons can point you to the best deals in the market place.
Consider switching your mortgage: the mortgage market has become more competitive over recent years and there are differences in the interest rates being offered by the main providers. Switching mortgages could save you a lot of money over the long-term. There are a number of different types of mortgage products available in the market place. If you need further help, consider getting financial advice from an independent advisor.
Get your money working harder, if it is not already: there is still a lot of money sitting on deposit earning low interest rates in Irish banks. Banks are offering competitive rates of interest at the moment for both regular savings and lump sum deposit accounts. So, take a look at your account and see if you could be earning more money. You have plenty of savings and investment options.
Review all your current personal finance products: there are always savings to be made on your banking and insurance products. Why not take this opportunity to do a spring clean of these and see if you are getting the best policy or account at the best price. Our range of cost comparisons can help you. They cover home, motor and life insurance and also credit card, personal loans and bank accounts.
Cash is king- only use your credit card when you have to: otherwise leave it at home when you are out and restrict yourself to cash or laser (debit card)-it’ll help you resist the temptation to buy. If you have to part with your hard-earned cash each time you make a purchase, it’ll make you think, “do I really need to buy this item?”
Make provisions for yourself and your family: there are various insurance policies that provide cover if you become ill, incapacitated or even die. Now is a good time to review your options including life insurance, income protection insurance, serious illness and health insurance.