Managing Your Money

Managing your money is crucial for your success at saving, but what does it mean?

Do a search for ‘spending diary’, or ‘what I spent this week’. I would argue that out of the 790,000,000 or so results your search engine will turn up, you’ll get a lot of figures, but very few helpful diaries.

Why do I question the usefulness of many of these diaries?

Their purpose is primarily to satisfy curiosity, not help people with budgeting & saving questions. People are endlessly curious about other people’s money, and how they spend it.

Even diaries from the UK, our nearest neighbour, can be too socially & geographically different to give any useful comparative data to someone in Ireland. Our taxation systems, and even housing crises, are still very different.

Fundamentally, these diaries are not YOUR spending diary. They lack all context, and the specifics about your spending that will help you save.

Resources:

There are several spreadsheets and spending diaries you can fill in online, and I recommend any of them, in as much as you have to start somewhere. The one thing most of these diaries miss are areas for more detailed information.

A diary entry for two weeks ago says you spent €12 on lunch. Do you remember what it was? Why you spent that much? ‘€12’ is also a suspiciously round figure. Was it really €11.59, or €12.20? These amounts are trivial, but not if it means that your calculations are out by 41¢, for example. If this happens every week, €21.32 has disappeared on you in the space of a year.

What if your entry was detailed? You’d know you spent €11.59 exactly, where you spent it, and what you bought. You’ve automatically ‘found’ potentially €21.32 this year. This is the beauty of accuracy.

Reasons for Spending:

The next level of detail involves what, and why. You rarely spend this much on lunch, so why was today different? Meeting a friend, forgot your lunch? Or maybe it was a particularly stressful day, and you really needed something to treat yourself. By remembering what you purchased, you can evaluate whether it was worth it.

Meeting a friend isn’t a bad reason to spend a little more. If work is horrible, make sure that the treat that gets you through the day is worth it, and not an expensive, tasteless distraction. And if the reason is that you just forgot your lunch? There’s always the next day to do something different.

When your spending diary includes details of suppliers, whether it’s shops or utility companies, you can begin to track who’s giving you better value. Fundamentally, the money is yours, and you deserve maximum reward when you spend it.

Equally, there are plenty of times when spending has an emotional trigger. It could be an event you’re not particularly looking forward to, and you overspend to compensate. You might find yourself needing an inexpensive pick-me-up purchase when you’ve had a particularly hard day at work.

Tracking your spending in this detail isn’t to make you feel bad, or guilty every time you make a purchase. Understanding how you spend money, and feeling control over your choices will enable you to spend smarter. This all leads to more money for your savings.

I’m asking you to do one thing, essentially: become a nerd about your own money. You earned it, you have a right to control where it goes.

The Best Mortgage Protection Policy 2019

Which is the best policy?

There’s no simple answer to the question, but here’s how the policies we offer compare. You’ll find the best choice for you.

Greenway Financial Advisors currently arranges policies with Irish Life, New Ireland, Royal London, and Zurich.

Online quote calculators take into account basic details, and provide a standard price. Here are how the insurers compare for their minimum premiums. (Remember these figures can change based on individual details in your application)

Cheapest Possible Mortgage Protection Premium Per Month:

Cheapest Possible Mortgage Protection Premium Per Month:

In joint first place: Zurich – Min Premium €10 per month

In joint first place: Royal London – Min Premium €10 per month

In second place: Irish Life – Min Premium €13 per month

In third place: New Ireland – Min Premium €15 per month

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A good price is important, but it’s not the only factor. Each insurer has different features to their policy, and knowing what they are can help you make the right choice for you and your family.

Mortgage Protection Policy Features:

Royal London Policy Features

Royal London offers Dual Life cover. This pays out for each life insured, but Royal London keep the price the same as their Joint Life policy, and children are covered for up to €5,000.

Their conversion option is also the cheapest, at an extra 5% (this allows you to convert the plan into a life insurance plan without additional medical questions). They offer a 15% discount to the market best premium (price-match premium).

Royal London also offers the Helping Hand range of supports, at no additional cost.

Irish Life Policy Features

Irish Life will allow you to change and adapt your policy without requiring a new application for the first 5 years of the plan. This means you can reduce your cover, or increase by up to 20%, or extend your term.

Irish Life also offers the Life Care range of supports at no extra cost, and from January 2019, all protection customers have access to premium membership and rewards with their MyLife health app.

Irish Life covers children up to €5,000.

New Ireland Policy Features

New Ireland offers a convertible Mortgage Protection policy, at a 10% increase to the premium.

They also offer a Reinstatement option for lapsed policies. With their Guaranteed Insurability, they will allow an increase to a maximum of €500,000.

Children are covered for up to €4,000.

Zurich Policy Features

Zurich offers Waiver of Premium, as an automatic additional benefit. If you can’t work due to illness or disability, Zurich will pay your premium after a period of 13 weeks has passed.

They will also reinstate your policy up to 90 days after the first missed premium payment.

How Tax Reliefs Can Help You Save

Savings can take a while. Don’t become disheartened, tax reliefs could be a way to increase your savings quicker.

If your savings are building slowly, don’t be tempted to spend €4 on a lottery ticket. Revenue might be able to help you supercharge your savings account. Reducing your personal tax liability isn’t just for rich people.

What are Tax Reliefs?

Tax reliefs directly reduce the income on which you pay tax. They may result in you receiving a refund of the tax you’ve already paid. The amount of relief you receive depends on the rate of tax you pay.

If you were paying tax at the higher rate of 40%, your income would be reduced by the relief amount. Then the balance is taxed at 40%. Otherwise it will be reduced by the relief, and the balance will be taxed at the standard rate of 20%.

Here’s an example:

In 2018, Celine had medical expenses of €1,630. She doesn’t have health insurance, but the HSE reimbursed her by €240. All of Celine’s medical expenses qualified for tax relief in this case.

Medical Expenses:€1,630.00
Less
Recovered from insurer:€0.00
Recovered from HSE:-€240.00
Unreimbursed medical expenses:€1,390.00
Tax deductible expenses:€1,390.00

Celine will be entitled to an income tax rebate of €1,390 x 20% = €278

What can I claim for?

There are several surprises on the list, which you can see here. Acupuncture, for example, would be an easy one to miss, and it’s quite a popular therapeutic treatment. The biggest surprise goes to something called Flat Rate Expenses.

Flat rate expenses:

Some professions have flat rate expenses associated with them. The list is here, so you can check if your job is there. Some of the occupations are quite surprising. Shop workers, for example, are entitled to claim €121 in flat rate expenses each year. When I worked in retail I was totally unaware, and with average retail wages, this could make a big difference. The €121 will be deducted from your taxable income, and your tax owed will be recalculated, so €121 x 20% over 4 years = €96.80 is your potential rebate.

You can also claim for your medical expenses over the past 4 years, and even if you’re missing receipts, these receipts can be easier to request from your GP’s office. Remember every time you choked at the cost of your medical letter for work? The cost of your prescription? All these receipts are potentially deductible.

Food as a Medical Expense:

Did you also know that if you are diagnosed as coeliac or diabetic, with dietary restrictions, the food you eat forms part of your medical care? With a doctors letter, you could be able to use your supermarket receipts to claim for the food you need to stay healthy. (This will only be applicable for diabetic and coeliac specific food items.) Special dietary needs can be expensive, make sure you’re not paying more than you need to.


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How do I claim Tax Reliefs?

 


  1. Go to MyAccount on Revenue.ie
  2. Login using your details or register if you don’t have an account.
  3. Select ‘Review your tax 2015-2018’ (you’ll get access to the previous 4 years only)
  4. Choose the relevant year, and select submit for Form 12
  5. Choose ‘Add Tax Reliefs & Credits’
  6. Remember, if you’re jointly assessed with a spouse, you’ll need details for both of you, including P60s
  7. You’ll need receipts for reliefs related to expenses too
  8. Take your time, and make sure you have what you need in front of you

Is it worth it?

The average refund due can be €1,000. While it can be time-consuming to research your tax reliefs, it’s worth it in the end. As a nation, we under-claim. Specialist Tax Rebate services exist to help you, but they will either charge a fee, or charge based on a percentage of your rebate.

How to manage your taxes in the future:

  • Know what you can claim, from the available reliefs
  • Keep all your relevant receipts, using a receipt tracker, like RevApp from Revenue.
  • View keeping your receipts as part of your monthly and yearly budgeting
  • Don’t put yourself under pressure to understand ALL taxation, just YOUR taxation
  • If you get overwhelmed, ask for help from a rebate service or accountant
  • Remember, you will never regret gaining control over your finances.
  •  

Contact Greenway with your financial planning questions!


Financial Planning for Millennials

How Financial Planning can help cash-strapped Millennials:

There are plenty of times when we wonder if we’ll ever feel like adults. Financial Planning is a thing that makes us all feel like kids not sure of what we are supposed to do.

If you’re part of the 22-37 age range, you’re officially designated as a Millennial. According to a 2018 millennial survey from Deloitte, less than half of us expect to be financially better than our parents’ generation.

We’ve also been told that drinking coffee and eating avocado toast will somehow mean we will never be able to buy property. (Thanks! That was helpful!)

Many of the oldest Millennials entered the job market in the time-period covering the 2008 Global Economic Crash. The youngest Millennials have always existed in an economic climate dominated by the changes left by the crash, namely in employment, housing and social protection.

Feelings of a lack of control and fear about planning for our futures lead us to live for today. We don’t plan, because change happens so quickly around us. Unfortunately this is only making the situation worse.

Registered Employment 2008 - 2017 Full Time & Part Time www.cso.ie
Registered Employment 2008 – 2017 Full Time & Part Time www.cso.ie

How can financial planning begin to make you feel more in control?

Step 1: Stop looking back

Stop comparing yourself to previous generations, especially older friends and family members. It’s tempting to compare what your parents were doing at your current age, but it won’t help you to make changes or set realistic goals.

Step 2: Think of what you want

Instead of aiming to be financially better off than your parents, friends and family, aim to be financially better off than you are right now in a year’s time.

Step 3: Make an honest list of current spending

Don’t be afraid of figures. Taking an hour or so honestly to look at your spending will not make a listicle of fun things to do on the weekend.

It will tell you where you can make substitutions if you want to start saving. You’re also a Millennial, so plenty of apps are marketed directly at you to help with this.

Look at your online account statement to see what you have spent money on in the last 30 days. Try to separate your purchases into needs and wants. Ask yourself each time: did I really need to make that purchase.Try to avoid the bargain and sale traps. It maybe have been a great deal, but did you really need it?

Step 4: Start with small goals

Set realistic small financial goals. If you don’t have any savings now, short of an unusual event buying a house is not goal #1.

Let’s try ‘having savings,’ and go from there. For your first goal pick an achievable amount to save in this month. It doesn’t matter how small it is, lock it away somewhere safe.

Planning for the unexpected. Savings might be able to cover an unusually large expense 5 years from now, but the €150 you’ve got in your Credit Union won’t go far if something happens tomorrow. Protection products, like Income Protection, can start building your security.

Most importantly, start now.

Any change, no matter how small, will begin to give you more financial control. There is no such thing as a trivial amount to save per month.

Contact Greenway with your questions about Financial Planning for Millennials, we can help you to get started.

Explaining Income Protection And Long-Term Renting

Whether you think rent is dead money, or a mortgage is lodestone around your neck, the chances are you’ll spend a long time renting. A recent article in the Independent says renters are incredibly vulnerable, post-banking crash. Can Income Protection help?

If you spend a lot of time on Daft.ie as a renter, one of the best ways to torture yourself is by making comparisons between the cost of your rent, and an equivalent mortgage. It’s a depressing calculation.

Renting Vs Owning

A mortgage holder has the option of serious illness insurance, and mortgage protection insurance, in case of serious illness and death. A renter may have no safety net in the result of a life-changing event.

The age profile and demographic of renters has changed considerably over the past decade. The media may portray long-term renters as young, but many of us are renting with families and responsibilities.

Recent reports show that some of us are paying up to 60% of our income on rent. Anything that affects our ability to work and fund that rental could be catastrophic.

Income Protection & Its Uses

Income Protection is a key strategy to ensure a long-term illness doesn’t derail your family, and future return to work.


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Income Protection is also known as Permanent Health Insurance. It’s a policy that pays out a benefit if you’re unable to work due to an illness or disability, and you don’t have a second job.


Your benefit starts paying out after the ‘deferred period.’ You select this period at the time you apply for your policy, so it’s typically 4, 13, 26 or 52 weeks. The shorter the period, the higher your premium will be.

For example, if your deferred period is 13 weeks, you must be unable to work for 13 weeks before the income protection payments begin. To decide your deferred period, check if your employer offers sick pay, and if so, how much and for how long.

How To Decide On Income Protection?

Is Income Protection the right choice for you? Well, if you:

  • Are self-employed;
  • Won’t receive sick pay from your employer;
  • Don’t have ill-health pension protection;
  • Have dependents who rely on your income;
  • Have no other source of income;
  • Don’t have sufficient benefits to replace your lost income or cover your expenses,

then yes, I think it’s worth looking at.

Before You Apply…

Some employers will offer access to a group Income Protection scheme, but you can take out an individual policy. The cost of your policy will mainly depend on the level of your cover (percentage of income), the deferred period you choose, and the term of your policy.

Aside from the usual factors of age, health, medical history and lifestyle, your job will also affect your premium. Different types of employment are defined as classes between 1 and 5, as some jobs are riskier than others.

For an example, Sinead and Simon are both renting for €2,500 per a month. Like many people, they’re spending over 30% of their income on rent.

Illness Lasting Less Then 6 Weeks

Income Per YearSineadSimonTotals
Full Time Job€36,000  
Full Time Job €30,000 
Total Income  €66,000
Annual Cost Of Rent  €30,000
Cash Remaining
(€3,000 per month)
  €36,000

Sinead earns €36,000 p/a, and Simon earns €30,000 p/a. If Sinead was to become ill and unable to work, she would receive 6 weeks of illness benefit from her employer, and the state illness benefit of €198 per week. (This is deducted from her illness benefit from her employer).

Illness Lasting Longer Then 6 Weeks

After the 6 weeks, Sinead’s employers illness payments would cease. This would leave Sinead and Simon’s annual combined income of €40,296.

Income Per YearSineadSimonTotals
State Illness Benefit
(€198 x 52 Weeks)
€10,296  
Full Time Job €30,000 
Total Income  €40,296
Annual Cost Of Rent  €30,000
Cash (€858 per month)  €10,296

Their rent per year is €30,000, leaving €10,296 for all other bills throughout the year. That’s a scary €858 to live on per month.

Neither Sinead, nor Simon, have family in the county, so moving in with their parents will prevent Simon from working, and Sinead from taking up her job again after her illness.

With Illness Protection In Place

If Sinead has an Income Protection policy, she can insure up to 75% of her earnings.

She pays PRSI, so she is eligible for State Illness Benefit of €10,296. If she insures an income of €20,000 for 20 years, after a deferred period of 8 weeks, Sinead and Simon will have a combined income of €60,296 p/a.

This will leave them with a monthly income of €2,524, a jump of €1,666.

And the cost to Sinead per month for this policy can be as little as €41.27 per month, if she is accepted on standard rates.

Income protection for renters is a sensible choice. Especially if you have no other accommodation alternatives like been able to move in with family.

Everyone should explore the expense & benefits of insuring the cost we all pay each month for our homes. This applies equally whether you’re a renter or a home owner.

Contact us today to find out how Income Protection can protect your rental home.

Changing Your Mortgage Protection – Is It Worth It?

Can changing my Mortgage Protection really make a saving?

It can. When the newspapers advise you to make a switch, they mention savings of €2,000 to €7,000 over the life of the policy. Obviously, these are averaged figures, with some people saving a little, and others a lot.

But I’m older, won’t that make a difference?

Age DOES cause the standard quote to increase, BUT, if your remaining mortgage amount and term have both decreased, this can still reduce the quote you’ll be offered by the insurers.

As an example, a new quote for a couple, both 30, non-smoking, for €300,000 for 35 years, is between €25 and €28 per month.

By contrast, a 50 yr old couple, looking for cover on €100,000 for 10 years, are quoted between €21.50 and €26 per month.

As older policies can sometimes be more complicated than modern mortgage protection policies, not only could you be paying for extras you don’t require, you could make an even greater saving by switching.

I’ve had some health issues though, won’t that make it very expensive?

It’s true that insurance companies will take details of your current health, and may apply a loading. This loading will be an increase of 50%, to 175% in rare cases, on your quoted monthly premium.

In a recent case for Greenway Financial Advisors, a couple in their 60s were quoting for €60,000, for 5 years. They had both experienced recent health issues, in the past 5 years, but the quote they received was substantially lower, so they decided to proceed with the application.

What happens next?

I made them aware that the quoted price was unlikely to be the final offer made by the insurer, and took their details. Both of my clients required a PMAR (Private Medical Attendants Report) from their GPs, which the insurance company sent, and paid for.

When the reports were finally received, and evaluated by the insurance company underwriting teams, a loading of 50% was applied to each of my clients. This increased their quoted monthly premium from roughly €25 to €50, but still left my clients with a saving of just over €200 per year, or €1,000 over the remaining 5 years of their mortgage.

That seems complicated.

An application that requires more information, or a PMAR, does take more time, and more work. Importantly, this is work that your broker does on your behalf. I can make the calls to doctors to remind them, and check with underwriting teams to give you estimates of the loading before you even apply.

If you’re changing your mortgage protection, I’ll make sure you know not to cancel your existing policy until my work is done. You’ll be covered while this is happening. If you want to discuss your options for switching your policy, contact me today. In the meantime, try our quote calculators to see if your policy could be working harder for you and your pocket.

Co-Habitation and Mortgage Protection

It’s fine to not get hitched…

Weddings are extremely expensive. You and your partner made the right choice not to do it. You’re building a life that isn’t just about one day, and you’re very committed. You even have a house together!

With all this in mind, let’s have a quick check and make sure that your financial arrangements are as sensible as you are! Because you’ve got a house and a mortgage, you’ve got mortgage protection, right?

What is Mortgage Protection?

Why do you have mortgage protection? It’s fine to say ‘because the bank told me we had to’, most people start the same way.

But if you’re unsure what it covers, like a lot of people:

Mortgage Protection is an insurance policy against the loan you took out to buy your house.

It DOES pay off the loan in the event of your death.

It DOESN’T keep up payments on your mortgage if you’re unable to due to illness.

Ultimately it protects the bank against loss, and your dependents against debt and loss of their home if you die.

What effect does co-habitation have on Mortgage Protection?

And now we’re back to the marriage question. If you’re a co-habiting couple, an off-the-shelf joint mortgage protection policy could be a drastically wrong choice for you, and here is why:

As you have a jointly held mortgage, you probably assume that you each own half your house. With a joint mortgage protection policy, if one of you die, the bank will receive the money to pay their loan, so the property will be paid off.

However, if you aren’t married, and particularly if you have no children together, you’re strangers in the eyes of the law. If you both have wills, and are each other’s beneficiaries, you can leave each other your half of the property. Now is the time to join the 30% of the population who have wills. There’s never a better day than today.

I don’t have a Will!

If you don’t have children, your parents will receive your share of your home. It WON’T automatically go to your partner, no matter how sensible that might seem.

If you have no will, but DO have children, they could get your share, rather than your partner.

Death and Taxes

What will make this potentially worse is the inheritance tax. For taxation purposes, a co-habiting couple are treated as strangers, and the threshold for these inheritances is €16,250.

This means that any inheritance you receive from your partner, including their half of the home you own together, is taxed at 33% above €16,250. And it’s been a very long time since anyone purchased a house in Ireland costing €32,500.

This could put you in the very unenviable position of owing a large tax bill on a property that should, theoretically, be paid off outright at a time of need for you or your family.

To prevent a Revenue-related mess, you need to fix this situation now, by doing a few things:

Write a will. Immediately. It’s never too early, and you can find a link to tell you more here.

Fix your Mortgage Protection

The second thing is to look at your mortgage protection policy, and do two things:

Increase the amount to cover each of your tax liabilities, eg, if your mortgage is worth €300,000, and you each own 50%, then you would leave each other €150,000. After your €16,250 threshold, you would each still owe 33%, or €44,138 on the remaining €133,750.

So the answer in the example above is to increase the amount you’re insured for, to cover this tax liability. It’s easier to so this on a policy you own individually, rather than the group policy your bank offers you when you apply for your mortgage. If you both have individual means, and separate bank accounts, you can arrange single life ‘life of another’ policies, where you each pay for a policy insuring each other.

The third thing you’ll both need to do, depending on how many assets you have, is to effect a Section 72 policy, on a single life basis, nominating each other as the beneficiary. Section 72 policies are specifically for the purposes of paying off tax liabilities.

Or you could already be planning on getting married, just to avoid these potential pitfalls. No matter which course of action you choose, the only unacceptable one is doing nothing at all. You can run quotes for Life Insurance and Mortgage Protection below. If you have any questions at all, please contact us.

Mortgage Protection Guide Cover

Download your free mortgage protection guide now

Whats Included:

Different types of mortgage protection policies.

Where to buy mortgage protection.

Features of each seller & much more.

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