I started off the New Year in this column by saying that you need to give yourself a financial education in 2011 if you are to both preserve the wealth you already have and avoid making serious financial mistakes and hopefully improve your position.
Money Express with Jill Kerby in association with Aviva
As with every building process, you need some tools and I listed them in that first column starting with a sustainable individual or family budget; a safe bank account and contingency fund; regular savings and investments that are properly asset diversified; and a recognition of the dangers that exist in the investment marketplace.
These currency manipulation and devaluation, high costs and charges that are particularly aimed at the uneducated and unwary and the risk of inflation.
Let's start with the budget. Few of us have ever done a formal one – a ledger with 'All income' and 'tax' on one side and 'All expenditure' – 'essential' and 'discretionary' on the other side.
Yet this is the first building block to financial control and independence and it just involves slogging through all your financial contracts, bills and bank statements and the little ledger, into which, at least for a few weeks, you've marked down every penny you've spent outside your essential bills. (I devote a short chapter of the 2001 TAB Guide to Money Pensions & Tax to budgeting. See www.jillkerby.ie to order the TAB Guide on-line.)
One of the great developments of recent years is that there are now on-line sources of financal information. Here are some useful tools and contacts you can use to see if you are getting the right price for your mortgage loans, groceries, insurance contracts, utilities, like electricity, gas, mobiles and broadband: www.irishmortgagebrokers.ie www.bonkers.ie ; www.compareireland.ie; www.freetocompare.ie; www.hia.ie (Health Insurance Authority); www.healthinsurancesavings.ie . Two of these, Irish Mortgage Brokers and Health Insurance Savings are fee-based services.
A proper budget lets you know exactly what is income and on-going spending but it doesn't address the wider state of your personal finances. For that there is no quick fix, though you can certainly examine your savings options easily on a site like Bonkers.ie.
Instead, for the bigger picture you need some help to both understand what is at stake and to make changes, if necessary to the level of debt you carry (especially mortgage, credit and personal loan debt, any investment fund(s) you have, say, to help pay for your kids' education, or your retirement or old age.
The first tool you need is information. Sign up for Chris Martenson's free 'Crash Course' on www.chrismartenson.com . This powerpoint course will take some time, but is the best introduction/explanation to money, how it works and how it's been manipulated to all our costs, that I have ever seen.
I also recommend you advance your education by reading up about money and investments.Sign up for the free website, www.motleyfool.co.uk and start exploring their huge archive.
Ditto for the free www.dailyreckoning.co.uk site. I've been reading Bill Bonner's daily essay since 2004 and through it, I now subscribe to the following Agora Financial newsletters and magazines but a great place to start is MoneyWeek.
- Capital & Crisis,
- Special Situations,
- International Living (whose office is based in Waterford)
- MoneyWeek magazine
- The 12% Letter
- S&A Digest from Stansberry and Associates,
- The Fleet Street Letter.
If you are investing in any funds or shares this year that you first take Rory Gillen's excellent one day investing course – see www.InvestRcentre.com. And for the record, I am not employed by, or have ever received, any remuneration from any of these publications or companies, though I'm pleased to say that in my capacity as an Irish financial columnist I've been quoted a couple of times in MoneyWeek.
(Once on the potential disaster of investing in Dubai!)
Readers who are concerned about their pension and retirement would do well to also go onto the Irish Pensions Board's website, www.pensionsboard.ie.
It's a great source of information about the kind of pension you may have, how they work, your pension rights, etc. This is information you need to know if and when you consult a fee-based advisor about how to amend, improve or even start a retirement fund, especially in the next few years when the tax incentives to do so start to disappear and the state's ability to keep meeting its pension obligations to public servants and PRSI pensioners comes under increasingly fiscal pressure.
This is a lot to digest, so get moving. Objective, well informed information doesn't come free. It's not rocket science, but if you want to avoid being ripped off, you need to be diligent and to take personal responsibility for every penny you make, spend, owe or invest.
Next week, Part 3: Addressing and coping with the big money issues for 2011.
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