The ‘dog days’ of August are as good a time as any for a financial review. We all seem to have a little more time in which to drag out the file box of documents and insurance contracts, tax slips and mortgage deeds and work out whether or not we’re getting proper value for our outgoings.
If you don’t have a file box, maybe you should pick one up at your next visit to Easons, or Ikea or your local housewares store and use the accordion style dividers to file away the tax slips, bank statements, insurance policies and house and mortgage documents. (It’s important that you keep all tax and relevant documents for at least six years as that’s how long the Revenue can ask for them to be presented if they conduct an audit or your apply for a refund or apply for a certain tax relief.)
Once you have the file box, you need a little ledger or hard-covered notebook where you can set up your personal financial budget and into which you can record annual, gross and net monthly or weekly income and outgoings. The ledger encourages you to hang onto receipts like grocery bills, credit card slips or statements, even ATM receipts though this exercise is also possible with a computerised budget – just key in ‘personal budget template’ and take your pick.
Now it’s time to clear the kitchen table (and the children out of the kitchen) and put everything into orderly piles. I probably keep too many records for too long, but you should keep track of your bank statement, if not in paper form, then by banking via the internet, so that you can get a picture of not only the direct debits and standing order payments you make to pay the mortgage or car loan, or your insurance payments, but also how often you use the ATM machines or how often you pay for other discretionary spending with bank and credit cards.
Discretionary spending, alas, is what usually pushes otherwise solvent people into perpetual overdraft use, and we’ll look at this next week. It is your income an essential spending that you should review first, starting by putting every bit of earnings that come into the house – yours, your partners’ and even the older childrens’ into the ledger. (I’m not suggesting that the teens who earn €50 a week stacking shelves after school should have to contribute to household bills, but it does mean that you don’t necessarily have to feel obliged to pay them an allowance anymore.) Meanwhile, don’t forget to add all bonuses, commissions, bank deposit interest and social welfare payments, like child allowance.
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