In this issue of our Client Connect we will discuss the topic of spending habits. It is a vitally important pillar for maintaining prudent long term financial planning. Consider the following…
There are currently restrictions on the water supply in Dublin and many other surrounding counties. The reservoirs in Dublin are currently 70 million litres lower than they should be. The water restrictions are not due to a lack of rainfall, they are due to millions of litres of water leaking away from an antiquated system. In a similar way, you may well have a good income but it could be leaking away in ways that you never anticipated. This can happen in a variety of ways – too much money being spent inappropriately, paying too much in tax, paying unnecessarily high interest rates on loans, and a lack of efficiency when it comes to your savings and investments. If you really want to be in control of your finances, you have to stop the leaks.
The Importance of a Household Budget
PFP are strong advocates of putting together a budget in order to measure and track spending. Very often it is something that most of us will resist doing because we believe we know where we spend our money and to be perfectly honest, it is not the most exciting thing to spend your time on. However, it can be very instructive and informative to actually see where our money is being spent. Very often it throws up more than a few surprises and a person’s idea of where their money is being spent is very different from their actual expenditure. The famous business management guru Peter Drucker is quoted as saying “you can’t manage what you can’t measure”. Without measuring and tracking
expenditure over time, it will begin to drift. This simple exercise will give you great clarity on how and where you spend your money. You can then decide whether you need to make any amendments.
If you don’t have a budget or you haven’t monitored your spending in any great detail, we can help you with this. As part of our annual review we can help you put together a budget. At each subsequent review, we can analyse how closely you are staying to your budget. This is not a case of dictating what or how you spend. It is simply the case that given our human nature, we are often guilty of letting things slide and not acting in our own best interests. We can often benefit from a third party which provides accountability for our actions.
This content is a preview of a Client Only communication – to obtain the full documents please contact the office on 01 498 0007.