Mark Coan: 9 tips against inflation from a financial expert – Extra.ie | Vette Leader

Mark Coan is a finance professional and the founder of online finance guide moneysherpa.ie. You can contact him at mark@moneysherpa.ie

Here are my top 9 ways to save money and beat inflation in 2022. These tips together will save the average Irish household over €13,000 a year.

The good news is that saving money isn’t as hard as you think it is. With so many businesses going online and comparison sites doing the heavy lifting for you, big savings are often just a click away.

1. Get all the tax breaks you’re entitled to

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There is a smorgasbord of different tax benefits to which you are entitled as an Irish citizen or resident. The Citizen Information Board is always a good place to start, but to get straight to the point, the big ones are;

● Marriage tax breaks

● Medical or dental tax breaks

● And especially in 2020/2021/2022, tax breaks for working from home

Average tax savings = €1,880

The good news is that there are many online services, with the largest being Taxback.com, which will file tax paperwork for you in exchange for a reduced refund.

Once you’ve overstated the income from your tax refund, the next step is to scale back the expenses. You can do this in two ways.

1. Shop for less

2. Buy less

Let’s start with the simplest, buy for less. Switching suppliers usually pays off because companies know most people don’t bother. This allows them to keep prices high for existing customers while offering sweet introductory offers for new customers.

2. Switch your electricity or gas

electricity
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Your electricity or gas service is the same no matter who you buy it from, the most important thing then is to get the best price.

Many new providers have come onto the market and are tempting to switch with some great savings offers.

Example average electricity and gas savings = €500 per year

The average household in Ireland uses 11,000 kWh of gas (at an average of 12.7 cents per kWh) and 4.2,000 kWh of electricity (at an average of 37 cents per kWh) per year.

That means the average gas bill is now €1,320 and the electricity bill is now €1,554, or a whopping €2,874 combined. The good news, however, is that much cheaper tariffs are still available, with gas as low as 10.9c kWh and electricity as low as 28.2c kWh.

Switching to these lower tariffs would reduce your gas bill to €1,199 and your electricity bill to €1,184, saving you almost €500 over current tariffs.

3. Change your mortgage (even your tracker)

mortgage change
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If you have a tracker mortgage or even an introductory fixed rate, you probably think this isn’t for you, but hold your horses.

With the ECB rates rising, tracker rates are expected to rise to 2.5% to 4%, which is higher than current fixed rates. Now might be time to fix your tracker mortgage.

These rate hikes already signal good news for people on fixed rates, as they make it possible to break your fixed rate to re-fix it for longer and cheaper with no penalty. Check with your current lender to see if you can now deviate from your current fixed rate for free.

Apart from fixed-rate and tracker mortgages, a third of all Irish mortgages, almost 200,000, have adjustable rates averaging 3.5%, the highest rates in Europe. With loans this large, there are huge savings to be made by switching to or rescheduling the available 2% fixed rates.

The process is actually quite simple with a mortgage broker and is usually free to use. So it always makes sense to get him to figure out the numbers and see if it’s worth switching for you.

Example: Average Savings Switching Mortgages Ireland = €2,164 per year

According to the Irish Banking Association, BPFI, the average value of mortgage bills in Ireland last year was €272,000. Switch that amount to a new provider, with a typical

A remaining term of 15 years and a loan-to-value ratio of 90% would save you a whopping €2,164 a year. That’s over €32,000 over the 15 years.

4. Switch your Irish broadband and TV provider

broadband switching
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With streaming services now offering not only box sets but also live TV, huge money savings can be made by cutting the cords from old-school TV providers.

Providers like Sky or Virginmedia usually charge around 25 euros per month for their entry-level TV package, although the same content is available for free elsewhere. Leave your current provider behind and get your sports and live TV from a combination of Free to Air & Streaming. You save hundreds and still get the same shows.

Example average TV savings = €300

Replacing the Sky entry and Sky Sports package with Free to Air for €59 a month while getting your Sky Sports direct from the NowTV streaming service saves you over €300 a year.

Next, there are entire industries and armies of people whose job it is to make you part with your hard-earned cash every day.

The next three top money-saving tips will help you avoid the traps and buy less.

5. Don’t screw it up, avoid the urge to push yourself

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The best way to avoid temptation? Don’t even get in the way of it. Why do companies spend millions to boost their ads and email lists, preserve your data, offer you easy credit, and offer one-click payment options?

Yes, so you will spend more. Dun & Bradstreet found that we are 12-18% more likely to shop with credit than cash.

As a savvy money-saving consumer, you should cut these off at the source. Don’t sign up for marketing or one-click purchases. Delete your cards from your phone and put your money on a standing order each month into a separate savings account that’s hard to get to.

Example average savings by hiding the credit card = €1,270

According to the Central Bank of Ireland, around €11,000 is spent on credit cards per household per year in Ireland. So, according to the Dun & Bradstreet study, switching this spending to cash would reduce it by at least 12% and save €1,270 per year.

6. Skip branded products and go German

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The average Irish household spends over €5,000 a year on groceries. Generic store brand products are usually half the price of the leading brands and just as good, if not better.

Example average savings for own brand = €1,664

Even factoring in the odd luxury in your shopping cart, it’s pretty easy to save a third of the grocery bill by switching to private label or the German discounters. This would save the average Irish household €1,664 per year.

7. Become a DIY Barista & Chef (save €1,521)

barista
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When you buy a sandwich, coffee, or takeout, you’re not just paying for the ingredients, you’re paying the seller’s entire cost of doing business plus the profit the company makes.

According to Irish Coffee House 3fe, of the €3.50 you pay for your regular Americano, only 50c is actually spent on coffee and milk. The rest goes into staff, rent, tariffs, etc.

That makes it an amazing 7 times cheaper for you to prepare your regular latte or macchiato at home. I don’t pick coffee, same goes for any takeaway or meal you can think of, it’s just a great way to save money.

Example average DIY savings = €1,521

Irish households spend just over €1,000 a year on takeaways and eating out. Add to that €7.50 every working day so you can stop by and grab a sandwich, and you’ve got just over €3,000 a year spent on takeaway food and coffee.

We won’t deny you a weekend grab-and-go or lunch spot, but if you cut in half you’ll see a hefty savings of €1,521 that could be put in the piggy bank.

8. Refraining from cigarettes and alcohol

cigarettes
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Known to Irish finance ministers for decades as the ‘old trust’, beer & cigarettes are the go-to source for tax revenue.

This has made it both prohibitively expensive and a smart choice if you’re looking to increase your own income through savings.

The average Irish smoker spends over €2,200 a year on cigarettes and the average Irish drinker spends almost €2,000 a year.

Example: Average Savings on “Old Reliables” = €3,232

On average, by drinking and smoking and cutting the beer in half and skipping the butts, you would save a whopping €3,232 a year. Not to mention the health benefits of reducing both.

Next, let’s cut those interest payments and nail money saving tips 1-8 that will help you get what you owe, buy for less, and buy less. This gives you a lot more financial firepower and blasts the doors open for the last money saving tip.

9. Get debt free

debt free
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Aside from your mortgage or student loans, which tend to have low interest rates, debt is a money-saving black hole that you should avoid at all costs.

Irish households owe an average of €8,000 in credit card and loan debt and pay the fourth highest interest rate in Europe at 10.3%.

The solution is to start paying off your debts, starting with the most expensive ones first, almost certainly your credit cards. This is known as the “snowball effect,” where the savings from lowering the interest rate on one loan can help pay off the next, and so on.

Example average credit card and loan savings = $900

Hopefully, with the money savings from tips 1-9 of over €12,000 and the average Irish household debt of €8,000, you should be able to pay off all your credit card and consumer loans. At an average interest rate of 10.3%, that’s a savings of over €900. Plus a big weight off the shoulders.

What should I do now?

These money savings are based on household averages for Ireland, you will need to take your own case and work out what the saving means for you.

If you want to dig deeper into what you can save and how to do it (and why shouldn’t you?).

Visit moneysherpa.ie to see our other money saving guides and tools including our Inflation Saver Buster tool for switching your mortgage.

Finally, if you are struggling to make ends meet, you are not alone. More than half of all Irish adults say financial concerns pose a threat to their mental health. If you’re having trouble or just need free independent advice, you should contact the state’s Money Advice & Budgeting Service (MABS) for further help.

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