Tips on improving your financial wellbeing – based on behavioural science
The rising cost of living has emerged as the number one issue of concern in Ireland today. To better understand its impact, our latest Reflecting Ireland report looks at how people are feeling and what they are doing in response to increasing prices across the economy.
Our research, which you can find here, shows that anxiety levels are on the rise as people find their own financial situation becoming more uncertain.
To help reduce this uncertainty and give people more control, we’ve teamed up with behavioural scientist Claire Cogan of BehaviourWise to provide ten tips to help improve financial wellbeing.
WHY YOUR FINANCIAL WELLBEING IS IMPORTANT
Look after your financial wellbeing to protect your peace of mind, it is a key part of your overall mental wellbeing. Your financial wellbeing is all about the relationship you have with your money, regardless of how much money you have. It is about feeling in control of your finances, rather than allowing your finances to control you.
There are things you cannot control like the price of food, fuel or energy, or the interest rate on mortgages or loans. However there are things that you can control, like where you do your shopping, how much energy you use at home, which utilities provider you use and which financial institution you bank with. Focus on what you can control, remind yourself you have choices and that you’re in the driving seat.
10 TIPS FOR IMPROVING YOUR FINANCIAL WELLBEING
- Budget for the basics: think about your essential outgoings like rent / mortgage, food, gas and electricity, insurance and transport. Make a note of how much you need to pay for these and set yourself an essentials budget for each week or month (depending how often you get paid) to ensure you are covered. For each one ask yourself if there’s anything you can do to reduce the burden. Try the SUN checklist:
- SWITCH: can you save by switching supplier? There are lots of online comparison websites available to take the hassle out of comparing prices and deals on everything from gas, electricity, broadband and phones to banking and insurance. Avail of these to see what you could save by switching.
Compare & Switch – Switcher.ie | Bonkers.ie | CCPC.ie | HIA.ie
- USE LESS: can you save by using less? When it comes to food, you can save on bills and reduce waste by creating a meal plan and sticking to it when shopping. It is estimated that an average Irish household could save as much as €700 a year by doing this (1). See what you can do to reduce the amount of energy you use. The SEAI (Sustainable Energy Authority of Ireland) offer tips on reducing energy usage in the home.
Use Less: StopFoodWaste.ie | SEAI Home Energy Saving Tips
- NEGOTIATE: suppliers want you to be able to pay them for their services and will often be open to negotiation to help you do this. Contact suppliers and ask them what they can do to help you.
- Monitor your spending: do this for a month or two to give you a clear picture of where your money is going. You may be surprised! If you find you’re spending more on little extras than you realised, you could decide to cut back to relieve some pressure. There are handy apps that can help you monitor your spending. Try the free online budgeting app from MABS, the Money Advice and Budgeting Service, or money tools provided by the Competition and Consumer Protection Commission (CCPC).
Budgeting Tools – MABS Budgeting | CCPC Money Tools
- Prioritise paying off debt: you pay higher interest on what you owe than on what you save, so it makes sense to pay off debt where you can. If you have several debts, prioritise those with higher interest rates. Now is a good time to reduce how much you owe, as interest rates are set to rise (2). Advisors suggest anyone on a variable mortgage rate should consider switching to a fixed rate, ideally for a long-term period, before interest rates increase as expected this summer (3).
- Game it! If you need to cut back on spending, it doesn’t have to feel like a punishment. Make it enjoyable by setting challenges for yourself and rewarding yourself when you achieve them. If you have a family or live in a shared household, turn bargain hunting into a game, get everyone to come up with creative ideas to save.
- Check your entitlements: check whether you are eligible for social welfare supports. You can find out about social welfare benefits and entitlements by visiting the social welfare section of gov.ie or www.citizensinformation.ie. You may be entitled to a tax refund: check out www.taxback.com where tax experts can help you reclaim any overpaid tax.
Check Your Entitlements – Gov.ie | Citizensinformation.ie | Taxback.com
- Save: if you have money left over at the end of the month, save at least some of it. Your savings will build over time and give you a sense of progress. Label your savings to remind you what you’re saving for and keep you motivated. If you have children, encourage them to build a regular savings habit so they learn to look after their financial wellbeing from an early age.
- Put some money aside for unexpected expenses: did you know that 6 in 10 Irish people face unexpected expenses each year (5)? It pays to put some money aside for emergencies. Knowing it’s there if you need it will give you peace of mind, and help you avoid expensive borrowing costs if something unexpected happens.
- Plan ahead: a little time spent planning financially for future events will give you peace of mind, whether that’s going to college, moving house, changing career or retirement. Though the future is never certain, it helps us feel more in control if we plan for what’s ahead.
- Beat the fraudsters: with financial fraud on the rise, it’s important to do what you can to protect yourself. Don’t provide any personal information including account or PIN numbers, or agree to send money to anyone, unless you are certain they are trustworthy. If in doubt, check with your bank, or with the central bank register of regulated financial institutions (4). To find out more about types of financial fraud or sign up to receive alerts on the latest scams, visit fraudsmart.ie.
Beat the Fraudsters – Fraudsmart.ie
- Reach out: If you’re struggling, it’s really important to reach out for support. Talk to friends or family, or to an independent financial advisor. The Money Advice and Budgeting Service (MABS) offers free, impartial and confidential advice on budgeting and managing debt. You can contact them by phone, online or make an appointment to visit. Charitable organisations such as St. Vincent de Paul offer practical assistance to those in need at local community level. Don’t suffer in silence, a burden shared is a burden halved.
Reach Out For Support – MABS.ie | SVP.ie
The content of this blog does not constitute advice and is for general information purposes only. Readers should always seek professional advice before relying on anything stated in the blog. Some of the links above bring you to external websites. Your use of an external website is subject to the terms of that site.