In this article I want to share with you five money tasks that I would like you to consider completing this month. They are reasonably simple financial housekeeping tasks to complete, and even if all five don’t apply to you, and only one did, that’s fine as well as long as you follow through and complete it.
1 Review your tax relief entitlements
I wrote last year about the huge numbers of people not claiming tax relief on health insurance premiums which are paid by their employer, and the reason for this was largely down to not knowing they could, and the same could be said of the Home Carer’s Tax Credit.
In a survey carried out recently by taxback.com, they asked respondents 'do you know what the Home Carer's Tax Credit is?' and over 60% responded, 'No'.
So, tens of thousands may be missing out on this extra income. And the amount is significant especially when it was increased in last year’s budget to €1,100 where the home carer’s income does not exceed €7,200. A partial credit is available where the home carer’s income is between €7,200 and €9,200.
The credit is available to those who care for a dependent in their own home. It is awarded to an individual who is married or in a civil partnership that is jointly assessed for tax purposes. So for example, if you get married and you have child but one of you decides to stay home to look after that child, then it is likely you qualify for this relief.
A dependent person is deemed to be a child for whom child benefit is payable, a person aged 65 or over, or a person with a disability that requires care.
You can claim Home Carer's Tax Credit by using PAYE Anytime, which is available through Revenue's myAccount Service. Or you can also complete a Home Carer’s Tax Credit IT 66 claim form.
2 Update Your Insurance
I come across people all the time whose house is insured for the incorrect amount.
There mistake is largely down to insuring their property for its market value i.e. what they estimate they would receive if they sold the property, rather than insuring it for its re-instatement value i.e. the amount required to rebuild the exact same property if it was destroyed.
To find out what your house should be insured for, log onto the SCS’s website (www.scs.ie) because they have an excellent house rebuilding guide, and a calculator that will tell you exactly what your house should be covered for.
In 5 minutes you will know if you are over or under insured.
And for example if you were over insured, the first thing you should do is either contact an insurance broker and ask them to compare quotes for you from the various providers in the marketplace, or you could do it yourself by using an on-line comparison website. If the premium you can get is lower than what you are currently paying, go back to your existing provider and tell them, and if they don’t match the new premium you will move your policy from them. And more often than not, they will match that lower premium.
Also, if you recently bought jewellery or a computer or any other valuable item over the Christmas period, then you may need to have it specified separately on your insurance policy, you need to speak with your insurance provider and ask them what needs to be done to get this in place and how much it will cost.
3 Set up a savings account for your children’s future education
Even though it might be 15 or 16 years before they start college, the earlier you start the better. And if money is tight, don’t let that put you off. Even if you started with €10 per month, the key thing is to start and you can gradually build this amount up over time.
I was doing a financial review for a client recently and one of his goals was to financially help his 4 year old daughter with the cost of going to college, if that is what she decided to do in 14 years’ time.
The amount he would need to save right now I calculated was about €119 per month. But if he was to delay saving until she was 10, then the amount rises to €218.
I come across people all the time who didn’t save in advance when maybe they could have, and are now suffering the consequences because they have and want to help their children through college and this comes from day to day income, or they have to use their existing savings, and or borrow money, and boy does it take a toll on their finances, it really does. So, please start now and even if the amount you can afford to set aside is small, it doesn’t matter, just start.
4 Change your financial passwords
One of the best ways of preventing exposure to identity theft is if you regularly change your money account related passwords. If you could set up a reminder to change your passwords every three months and use different passwords for different accounts and sites you have rather than using the same password for everything.
And rather than having to come up with new password names every three months, there are plenty of sites available that will generate a password for you – I recently changed my passwords and used the site www.freepasswordgenerator.com to come up with new ones for me.
5 Set up a mechanism in your household budget to pay for expenditure that occur every 2, 6 or 12 months
Whenever I ask people to complete an income and expenditure exercise for me, they are always surprised by the end result because more often than not the majority spend more than they earn. And the reason it turns up this way is because I ask them to take account for those things that don’t necessarily happen every month like holidays, birthdays, communions, Christmas, telephone and electricity bills etc.
When you add up the cost of each of these quarterly/annual once off payments and divide them by 12, it shows how much you should be putting away each month to pay for them. It really does focus the mind and rather than getting into debt in order to pay for them, the cost of each should be built into your monthly budget and treated as an expense that you have to pay. And setting up a separate account and having the amount required credited to it each month will improve your finances no end, it really will.