Making Cents: Plan your Limerick 2023 financial calendar (Part 1)
WITH THE New Year firmly upon us, I thought it would be helpful to map out the year ahead with some suggestions that may help towards improving your finances in 2023.
I’m going to give you a month-by-month guide with some ideas about what you should be doing in the year ahead. And you don’t have to follow the order that I’m suggesting, any which way that works for you is fine with me.
Having one task to complete each month is better, I think, than being overwhelmed and trying to complete four or five in just one month. So, spacing them is a good thing, and they’ll keep you motivated because there’s nothing better than saying okay, task completed this month, and that wasn’t so bad, what do I have to do next month?
January
This is typically the month people begin making resolutions and begin thinking about what they’d like to achieve in the year ahead. Which is all good, however the mistake some make and the reason why their goals don’t materialise are I think down to two things (a) they are too vague with what they want and (b) there is a lack of awareness regarding what their starting point is.
And on that last point, my advice is not to rush into making resolutions without first knowing what you’re up against. You need to have the data about where your money is going and what it is being spent on. That’s your starting point and when have that information to hand, you can then make whatever changes are necessary and then begin to intentionally re-direct money away from areas you may be overspending on, to areas that are more meaningful to you.
February
This is the month, I think people should be setting their financial goals, rather than January.
And, if for example you want to save more money in the year ahead, it’s not enough just to say you want that to happen, it’s much too vague.
You need to say something like this: On the December 12th, 2023, I’m going to have €10,000 in my savings account.
You now have a specific target amount, set within a clearly defined time frame that you can measure progress against during the year.
And if you set yourself a big goal like saving a certain amount, I would recommend you break that goal down into a series of much smaller goals, which will help you reach that bigger goal.
Setting yourself one goal of saving €10,000 can seem overwhelming but setting yourself 52 goals of saving €192 every week may not be.
And when you figure out the numbers, you’ve then got to ask yourself, what do I need to do to make this happen?
You need to figure out what daily tasks or actions you need to make, to ensure you can save €27 every day. And only you will know if it’s too big an ask, or if it’s possible? And you’ll only know for certain if you know exactly what you’re spending your money on each day, week, and month.
March
There is never a bad time to create and follow a monthly budget. If you do, it will be one of the best things you’ll do in 2023.
And it’s directly linked to the previous two months. In fact you could easily put this ahead of the tasks I set in January and February or do it alongside each of them. But for the moment, let’s leave it in March.
I always tell people that regardless of their age or income levels, if they want to make progress and get their finances under control, knowing what they spend their money on, could be the key to achieving both. I meet people all the time who make a lot of money but they’re struggling every month, and it’s not the amount they earn that’s the problem, it’s how the manage it.
But when they commit to starting a budget and more importantly, commit to sticking to one, things begin to change and make much more sense to them in a short period of time, because they can see what the problem or blockage was and what they need to do. And that might be spending less, getting better value for some of their fixed expenses or earning more.
There are many different tools available to create your spending plan i.e. write it down, use an excel spreadsheet or use an on-line tool. I personally like using an excel doc. It’s easy to record, easy to follow and easy to see which areas you are doing well in and which you need to pay more attention to, but if writing numbers down on the back of an envelope and that works for you, that’s absolutely fine.
April
This month I’d like you to review your insurances.
Re-shopping your car, home, life, and health insurance every year could save you a lot in monthly premiums over the long and short run, so I would suggest you use on-line comparison websites to review costs.
And when it comes to life and income protection cover in particular, some don’t see its value right now because they may not get benefit from it for years or maybe never, and as a result they lose sight of how important insurance cover actually is.
And when the need arises and they need that cover, they can’t just buy it then, it’s too late.
Don’t let that happen to you.
May
This is a good month to review your pension portfolio to make sure (a) you’re saving enough and (b) the structure of your fund and its risk rating continues to be aligned to your personal risk profile.
You may not have checked up on how your fund has been performing in a while so now is a good time to do so. And yes, it might be a boring task to complete, but it’s very important because research has shown that how your fund is set up i.e. the % you invest in different asset classes, has a greater impact on your investment returns than the specific investments you select or how well you time the market.
Markets have performed poorly in 2022 so you want to make sure your asset allocation is right for you and will continue to reflect your appetite for risk during the year ahead. Markets may continue to be choppy in ’23 so you want to set yourself up so that when things turn round and they will, you’re set up to take advantage of that. And remember the goal with any pension fund is to make money when times are good and lose less money when times are poor.
June
This is the month, I’d like you to check in with your partner and have that chat about your finances.
Obviously, Valentines’ Day falls in February, and talking about money isn’t very romantic so I would recommend you stay loved up in February and set aside some time in June instead.
You need to tell your partner about how you feel about their saving and spending habits. Are they spending too much? Too little? Share with them in a non-judgemental way what you’re feeling, what worries you, what you think they should be doing etc.
Do you know what your partners financial goals are? Do you know what yours are? Have you ever told them? If you haven’t, now is the time to have that chat.
Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at [email protected] or www.harmonics.ie