The Money Doctor's A-Z of Saving: Part Four

T is for technology

Saving money on technology is twofold.

Do you need that gadget? Sleek marketing and shiny new gadgets have turned us into a nation of magpies, craving everything we see. But think first – do you need a new phone or laptop? Or does your old one still meet all your daily needs?

If you use broadband at home, have a phone line and watch television, you might be able to reduce your home communications expenses by bundling your bills. Check out callcosts.ie, a website from the communications regulator, to see if you can get a better deal.

Do you need a new phone or laptop?

U is for using your head

Saving money is not rocket science. Simple steps, clever choices and very little effort can make a big difference to your bottom line – make the effort.

V is for value for money

Two-for-one offers, 20% discount deals, other special discounts. Before you jump on a bargain, make sure that you need it, and that the offer is what it seems.

It’s easy to fall victim to sales psychology and stock up just because you can, but then you end up with items you never use and a hole in your wallet. If you are going to buy, make sure you are getting real value for money.

W is for wills

Not quite a cost saving, but something to keep in mind. Developing a new frugal approach to cash, saving lots of money and putting it aside for your family’s future is laudable.

But make sure you have control over what happens that money on your death. Make a will. You can keep the original Will too but let the executor/trix know of its whereabouts.

Also, give some thought to inheritance tax, and the most tax-efficient way to pass on whatever wealth you accumulate to your chosen beneficiaries.

X is for X marks the spot

Or so say the treasure hunters. A dream of winning the lottery might seem like a perfect financial plan – but realistically, it is not.

Remember, your financial future is in your hands. Your circumstances may change beyond your control, but how you adjust your budget and how you spend your money is up to you.

Be practical, don’t expect a miracle, and recognise that changing your spending habits takes time.

Don’t bank on winning the lotto…

Y is for yield

When you have built up a savings pot, make sure it works for you and gives you a decent return – difficult at the moment given the rates (KBC Bank have the best demand account at 0.3% – net 0.195% after 35% DIRT tax….)

There’s no point though leaving your money in an account that pays 0.000001 per cent interest when you could enjoy a better return without sacrificing access to your cash. Remember also if you do want any kind of growth, you MUST take some risk – but that risk can be measured.

Your goal should be at least to maintain the purchasing power of your savings. So you want an interest rate that, at best, beats or, at worst, keeps pace with, inflation. Not always possible, especially when banks are scrambling to improve their balance sheets, but certainly worth keeping in mind.

Z is for zero

Not the amount that you want to see in your bank account at the end of the month, but definitely the balance you’d like to see on your credit card bill.

Spend within your means, and always leave some room to manoeuvre – that’s where the Rainy Day Fund comes in (c. 3 to 6 months net income in an accessible deposit account for those emergencies, sudden loss of income or investment opportunities).

John Lowe ©