Once you have all your bills and living cost taking care of you might be lucky enough to have some cash leftover. We all know we need to save money for the future, be it next week, next year or the next decade!  But where do you start….

The main tip here is to automate your savings.  And save on payday.  If you figured out, you can save €300 a month then set a standing order up to save or invest that amount on the day you get paid. So, save first then spend. If you have not figured it out yet it's easy to get a personal budget in place which will help you.

FREE BUDGET TEMPLATE

What accounts should you use? Well, you need a few unfortunately, but it’s not rocket science to arrange this.  So, what do I recommend:

Emergency fund - €1k - €5k in the Credit union

Short term – Revolut and their vault system - amazingly easy to set up and to save for certain short-term events like birthdays, Christmas, summer holidays, annual car insurance etc.

Medium term – again Revolut or a bank deposit account.  If going for a mortgage Bank of Irelands mortgage saver and Ulster bank home saver are good options.

Long term – Investment account.  Zurich’s easy access investment account is a good option.

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3 main concepts to savings
    • Short term (emergency, holidays, Christmas, wedding, births etc. within the next 12 months)
    • Medium (1-3 years – you own wedding, car, house move or first time, babies, major holiday etc).
    • Long Term (usually houses again for many, unfortunately, children’s education fund, house renovations, disposable income – so you may have no goal but want to plan).
Got extra cash should I clear the mortgage or pay a lumpsum off it even?

Not necessarily – you really need to consider if you have all other areas of your financial life square off. Like there is no point in paying €20k off a mortgage interest rate of 2.7% then going back to same bank for a car loan in 3 years and paying 8% interest!  Does not make sense.  Usually I recommend clients not pay the banks back too early when it comes to their mortgage as they will usually need access to capital themselves again in the future.  Instead people should consider investing that money. 

Investing sounds scary?

Investing is the only way to make your money work hard for you! Most investment accounts are linked to the stock markets.  Stock and shares are the best way to make money over the long term. Usually approx. 6% per annum over a 5-10 year period. Then banks, credit unions, post office etc. are all in around 1% per annum. So that means the stock market has the potential to give YOU 6 times the return 😊.  I honestly feel that everyone needs to have an investment account and if that scares you, you need to educate yourself with a good financial planner. (That's Me 😎) 

Example:

Lets look at the children’s allowance.  A regular €140 each month which some people are lucky enough not to need and can save it for 3rd level costs (which are approx. €10k per annum btw)

If you put that €140 per year into the post office for 18 years you will have approx. €33,117 at the end of the term…nice. If you invest that and get 6% per annum (less taxes) you will have €42,209*….much nicer 😉

One of the funds I recommend has achieved 10.56% per annum over the last 10 years!

Just to finish up with this point… earning your money takes a lot of effort.  You will most likely work your back side off to get your wages into your current account.  Spending it can be too easy so do yourself a favour and always make sure you save before you spend.  It will make those big purchase in life easy in the future.  Fail to prepare your money, then prepare to fail with your money. 

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