Financial security is a “mental health issue,” according to an author and industry expert on saving money.
On Lunchtime Live today, John Lowe from shared his five-step plan on how to reassess your finances this January.
It includes advice on budgeting, saving, pensions, debt, and having fun. Mr Lowe said there was no better time of year to start.
"There’s a mental health issue with this as well, financial well-being is very much in vogue right now," he said.
"A lot of companies are now bringing in experts to help their staff with financial wellbeing and it’s hugely important.
“It’s a brilliant time of the year to address your finances - new year, new you.”
Keeping record
The first step involves jotting down all outgoings and incomings, according to Mr Lowe.
“All of your income is going to be on the left-hand side and the right-hand side will be your expenditure,” he said.
“All of your categories will go there like transport, medical, food, utilities and subscriptions.
“When you’ve done that exercise you will run through the list and say to yourself ‘Do I need this?’ as you go through it all.”
Savings
Mr Lowe said “everything is about planning” when it comes to step two – savings.
“You shouldn’t go to the credit union or use your flexible card to pay for the likes of Christmas, anniversaries, or birthdays,” he said.
“What I do is get all those costs bundled together and divide the total cost by 12 to save for them on a monthly basis – now it’s painless.”
Pensions
Next up was pensions which is “the best investment in Ireland” currently, according to Mr Lowe.
“If you’re under the 40% tax rate, for every €100 you put into your pension the Government is giving you back €40 – you’re up €40 before you even start,” he said.
“We’ve also got an aging population in Ireland and in 20 years we will have something like 1.8 million people aged over 66 – so it’s important.”
Debt
Mr Lowe said tackling debt, the fourth step, must be done correctly.
“You look at the most expensive debt you have and pay that off first,” he said.
“After that, you chip away at the rest as there’s a great sense of relief once you pay off your most expensive debt.”
Have fun
Mr Lowe said his last piece of advice is not to be afraid of using money “to have fun”.
“You need to put a little bit of money away for fun as well and not be afraid to spend it – but don’t get into debt.”
“Lifestyle debt is not a good thing, funding your lifestyle by going into the bank or credit union to borrow is not the way to do it.”
You can listen back here:
Main image: Close up of a mother and daughter holding a piggybank. Image: Aleksandr Davydov / Alamy Stock Photo
