By Dave Kavanagh

I sometimes get told by people that they don’t have the time, or they are too busy, when it comes to arranging or updating their life cover, serious illness cover or income protection. (it’s not the most fun exercise!) despite the fact it can give them peace of mind, knowing that in the event of a fatality, a serious illness or being off work for a length of time, their family do not suffer substantial financial loss. But what are they really saying? “I’ll have a look at that after Christmas”. Often replaced with “after Easter”, “after the holidays”, “after the kids go back to school” and a few others. What is actually being said is “I’ll name some time in the future so that I don’t have to deal with it now” (a bit like “I’ll start the diet on Monday/in January”). Let’s face it, you can easily find 30-60 minutes once a year to deal with something this important. You’ll be glad you took the time. “We have cover in place already”. Great. That is if it’s been reviewed in the last few months, but on closer examination, it often hasn’t been looked at in years and circumstances have changed and it may no longer be suitable. It’s important to keep things relevant to your current personal circumstances. “Our bank sorted everything for us”. Your bank may have sorted a few things, but in most cases, banks are tied to one life company, so a fair comparison cannot be made, meaning you could be paying way over the odds for whatever the bank has put in place for you. Dealing with an advisor who is not tied to one company and can compare other options is the only way to make sure you get the best value. “I’m busy at present, I’ll give you a shout in a few months”. But the fact remains, if there is an activity that you like you will make time for it. Burying your head in the sand is rarely a successful solution to most problems. Someone once told me that they had no time and in the same conversation told me they had binge-watched 8 episodes of Game of Thrones. (They were also up to date on all the soap storylines!) If it’s important, make the time.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM, LMFM and TV3.

By Dave Kavanagh

Among the things that people in their 20’s, 30’s and 40’s are not over-enthusiastic about considering, is retirement planning. It’s too far away and they don’t want to visualise being in retirement. However, it is a simple fact, that the earlier someone starts planning for retirement, the better financially prepared they will be when it comes. The tax benefits alone should encourage people to get started. For example, someone on the 40% tax band that pays €200 per month into a pension, only actually pays €120 per month as they have full tax relief. The reverse way to consider that, is your €120 each month, instantly grows by over 66%!! (And that’s before any investment growth on your fund). If your future self in their 60’s could give you wise advice, it would be to get into the habit of having a regular deduction to plan for the future, in the same way you get used to having PAYE, PRSI or USC deducted.

With “Auto Enrolment” expected to come into force in early 2025, an estimated 800,000 workers in Ireland who do not currently have a pension arrangement, may find they will be compelled to participate in a scheme. While all details of the scheme are not yet finalised, it is likely that employees and employers will both contribute with possibly an additional contribution from Government. It is likely that any employees that pay for any form of pension through their payroll (whether the employer adds a contribution or not) will be exempt from having to join the new scheme. For most companies, it is relatively straight forward to offer a payroll deduction facility to their staff, which means the employee gets used to the deduction before their net pay and doesn’t think of it as an extra expense that they must pay for when they receive their salary. Whatever stage you are at, it is well worth making the time to consider your own retirement planning.

By Dave Kavanagh

There are very different cover requirements in terms of what stage of life you are at. This is primarily based on the financial loss that may occur in certain eventualities. For those in their 20’s or 30’s, they may have recently purchased their first home, maybe started a family, and are settling into a career. This is the stage with potentially, the biggest financial loss, as their mortgage may still be quite substantial, children are young (so will remain dependant for longer) and savings may not be built up yet (or were used to buy their home.) Planning is so important at this stage, to make sure their is sufficient life cover, serious illness cover and income protection. The good news is that the younger you are and the earlier you plan, the cheaper these types of protection are. The next stage, possible 40’s or 50’s, as children are older or grown up, mortgage balance is lower, and some savings have been built up. At this stage, it is a good time to “future proof” cover, while it is still relatively affordable and also, possible to be accepted for cover. It may be that health issues have occurred, needing you to avail of conversion options that are already in place with existing cover (if you don’t know if your cover has such an option, now is the time to check!) The financial loss may not be as potentially high as the earlier stage so lower amounts of cover are more appropriate. At the stage when people are coming close to, or have reached retirement, it will very much depend on their own, specific circumstances, as some may be mortgage-free and have good pension and savings in place. Others may still have a mortgage to clear and may not have made the same provisions for pension and savings. Either way, the specific, potential financial loss needs to be examined to make sure sufficient planning is in place. This could range from simply making sure things like funeral costs would be covered, up to planning that inheritance tax is cleared from any estate you may leave behind, by commencing a section 72 plan. Whichever stage you’re at, make the time to plan.

By Dave Kavanagh

How often have you reported, for example, a faulty washing machine, dryer or fridge to a store after having it for about 18 months, only to be told “it’s out of warranty”? As a starting point, know your rights and be aware of shop psychology.

Under the Sale of Goods and Supply of Services Act, as a consumer, you have the right that anything you buy should be of “merchantable quality”, that is, suitable for the purpose for which it was designed. So for example, if you buy a fridge and 18 months later it stops working properly, you have the right to have it rectified, by repair, replace or refund (usually in that order). If a shop tries to tell you that the warranty was only for one year, you should point out that the warranty is a manufacturer’s extra and that your contract is with the store, it does not affect your rights under the act. The Retailer is responsible for providing these remedies within a reasonable time.

Keeping your receipt as proof of purchase is important. From the Retailer’s perspective, if a large portion of complainants, simply accept the fob off, they may just buy a new appliance or else pay for a repair. Both good news for the store as they either get an additional sale, or they are relieved of their obligation to provide a repair or replacement.

When you know your legal entitlements and communicate this firmly, it will usually result in a more favourable and correct response. Some retailers, for example Currys, try to refer you to their “Out Of Warranty” team, based in the UK. If you are not willing to hire your own appliance technician to do a report on the fault (as they appear to have none in Ireland) they then try to refer you to a UK arbitration scheme!? Remember, even if a manufacturer’s warranty has expired, the retailer remains responsible for addressing the issue. If a retailer fails to honour these obligations, consumers can seek assistance from the Competition and Consumer Protection Commission (CCPC) or pursue legal action to enforce their rights.

By Dave Kavanagh

There are two important aspects of both having and needing mortgage protection life cover. Firstly, there are those who have had mortgages for a number of years with mortgage protection life cover done in conjunction with it. For these people, it is well worth checking the current level of cover and remaining term on their mortgage protection and the same on their mortgage balance and term, to make sure there is sufficient cover. For example, in 2020 during the severe Covid lockdowns, many mortgage holders availed of a 6 month payment break. During this period, their mortgage protection cover will have continued to reduce, while their mortgage balances may have stayed level, or even increased if interest was capitalised. This could mean a shortfall in the event of a claim, meaning that the mortgage does not get fully cleared and there is a balance owing.

The second aspect to consider, is people who are planning to get a mortgage soon, or in the near future. They have saved regularly to build a deposit, maintained stable employment, avoided taking out new loans (and made sure any existing or previous loan obligations were paid in full and on time), conducted their current accounts efficiently, etc. but sadly, they don’t get to proceed with their house/apartment purchase (certainly not in the time frame they wanted to) because they cannot get their mortgage protection life cover accepted. This could be due to their current or past medical history, or something simple like they have been referred for a test that has not yet been done. It’s why many are arranging their mortgage protection cover well in advance of drawing down their mortgage. Once in place, any new medical issues are not relevant. It can even save them money, as 36 years paying a cheaper premium (before another birthday has passed) is cheaper than 35 years at the higher premium.

By Dave Kavanagh

Most aspects of your life are connected to your finances, yet most people don’t take the time to plan them effectively. A couple of reasons for this: If you have a problem that needs a plumber, an electrician or a roofer, you will know about it. If you haven’t reviewed your finances for a while, you may not even be aware that you have a problem. The other reason is that some of the main aspects of financial planning are viewed as “negative”. I mean who wants to spend time considering potential occurrences like the impact of a fatality, or give thought to having sufficient income in your retirement when you haven’t reached 30 yet? This perception of “negative” is often why people subconsciously avoid the topic, often citing “not having enough time” as a reason. The same reason explains why people spend regularly on things like the lotto, believing they can win the jackpot, at odds of 10.7million to 1. The same people’s odds of being diagnosed with one of the specified illnesses covered, is 1 in 4 (before age 65!) yet they say “that’ll never happen to me”. This is a natural desire for something very positive to happen and for something negative not to happen. However, these everyday occurrences will happen whether or not someone has the right planning in place. One hour is 4% of your day. Spending that much time even once per year can be hugely beneficial. You get the peace of mind that you are up to date with your planning. You get the reassurance that anything you have in place is the most appropriate for your current circumstances. You also get the satisfaction that you are not overpaying for something and are getting the best value. Suddenly, the mystery and uncertainty are removed, along with the stress and anxiety often associated with them. In all my years of doing reviews, I’ve never heard anyone regret taking time to go through their finances, but I’ve heard plenty regret not going through them when something unexpected crops up. Remove “money worries”. Make the time.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can of course also be contacted by you by emailing info@financialcompanion.ie or you can also use the contact form on www.financialcompanion.ie or @Davekav_advice on Twitter and Instagram.

Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM, LMFM and TV3.

By Dave Kavanagh

A question I usually include when helping clients with their finances, is, how long (if at all) their employer will pay them if they are out of work long term due to illness or injury. In some cases, it is standard and can be something like 3 months at full pay, then 3 months at half pay and then a pensionable rate of pay. For many, they are not sure and when they look through their employment contract, it states “at employer’s discretion”. Many people realised how vulnerable they were when the pandemic arrived, dropping some incomes from €600 or €800 per week down to €350 of PUP. Many don’t give much consideration to how they would cope if they suffered a loss of income for an extended period because they think “it’ll never happen to me”. Sadly, many find out the hard way following an injury or illness that keeps them out of work for months or even years. This is where having Income Protection in place, can be the difference between maintaining a level of income that keeps your lifestyle virtually unchanged, or dropping to a level that could force you to use up any savings and also get into financial difficulty.
So how does it work? Depending on your circumstances, you choose an appropriate level of cover. This is based on not exceeding 75% of your salary, less any state income entitlement. You also choose a “deferred period” which refers to how long you are off work before payments commence. The premiums are based on factors like your age and occupation, as some occupations would leave you more at risk of not being able to work. There is also tax relief on premiums paid for income protection, which could mean up to 40% of your premium is refunded by way of adjusting your tax credits. If dropping from your current income to the current state benefit is something that would impact badly on you, perhaps it is time to consider.

Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM, LMFM and TV3.

By Dave Kavanagh

In the last few claims, I have processed (death claims, serious illness claims and income protection claims) there was something that they all had in common. None of them knew what cover they actually had in place. Some were unsure whether there was sufficient cover in place to clear their mortgage (which is often the case. Consider all of the people that took 6 months’ payment breaks during Covid. Their mortgage protection cover continued to reduce while their mortgage balances slightly increased.) Some thought they had serious illness cover because we had discussed it a couple of years back, but they never actually got around to commencing it. It was yet another reminder that most people do not know the important details of plans that they pay regularly for. As people’s circumstances change, it’s important to be up to date with knowing what you are actually paying for. Here is the very least that you should know about any protection plans that you have in place:

Life Cover: How much cover is there? When does it expire? Is it dual or joint? Does it have a conversion option? Is it level, increasing or decreasing? How much does it cost?

Income Protection: What is the deferred period? (The length of time you have to be off work due to illness or injury before payments commence). What level of cover do I have? Up to what age will payments continue if I could never return to work again? How much does it cost? Have I claimed my tax relief? (I.P. premiums are tax deductible).

Serious Illness Cover: A.K.A. Critical Illness Cover or Specified Illness Cover. What level of cover do I have? Is it stand alone or accelerated cover? Is it dual or joint? When does it expire? Do I have the option to extend cover without further medical evidence? If you don’t know those details, it’s time to get out the paperwork and find out. You’ll be glad you did.

By Dave Kavanagh

Capital Acquisition Tax includes Inheritance Tax and Gift Tax. In 2022 in Ireland, there was over €600 million collected in Capital Acquisition Tax. It also includes estates that may have been taxed in previous generations. For example, if someone left an estate worth €1,000,000 to an only daughter, she would (in the current tax year) have a tax bill of almost €220,000. After she pays the bill and puts what’s left in the bank, any interest is taxed (DIRT). Guess what happens when she passes and leaves her estate behind? It’s taxed again! Spouses can leave any amount to each other tax free. After that, the three thresholds are, a) Children - €335,000, b) Other close relatives - €32,500 and c) All others (including cohabiting partners) - €16,250. Everything received above these is taxed at 33%.

So, is there any way to prevent it? There are two main actions that can either reduce or eradicate such a tax bill. The first is to take the time to plan when making a will. Let’s say a value of €750,000 was being left to 2 adult children. (Not a big estate if you combine a house, savings and a life policy). This would create a tax bill of over €25,000. Instead, if €670,000 of it was left to the 2 children and the balance between a few grandchildren, there is no tax bill. The second thing that can be done is for the person leaving the estate to take out a Section 72 plan. This is a type of life policy that is allowed to pay any tax liability without adding to the value of the estate. It becomes particularly important for anybody that does not have children to plan things out, as even other relatives can only receive €32,500 before any balance is taxed. These thresholds are particularly important for anybody in the process of planning or making their will.

By Dave Kavanagh

This time of year, is traditionally when people set out to make some positive changes or improvements in their lives. The most recognisable of these is the ‘losing weight/getting healthier” one. To give people more of an incentive to maintain what they start, it’s worth noting that if done properly, losing weight can have the added bonus of leaving you with more money at the end of each month. So how does that work?? Well, by “doing it properly” I refer to NOT going on a diet, or buying products with magic properties that will make the weight just fall off. Instead, making small, sustainable lifestyle changes. It can be adding some exercise in week 1, drinking more water (and less alcohol/sugar laden drinks) in week 2, reducing portion sizes in week 3, substituting things like chips for wholegrain rice or pasta in week 4, breaking the association of biscuits/cakes whenever you have a coffee or tea in week 5, etc., etc. Doing it this way, makes it sustainable and when weight is dropped slower over a longer period of time, it is far more likely to be kept off. So how does that help my finances?

When I analyse people’s spending budgets, it’s clear that takeaways, alcohol, sweets, cakes biscuits etc. pop up quite frequently. If you keep track of the savings when you cut down on many of these things, it’s easy to see how much you can save. One person I was helping used to enjoy her “treat” of a chocolate eclair most days. When she accepted that she felt bad after eating it and conceded that it was not helping her goal to lose weight, I suggested it was more of a punishment than a treat. I proposed that she put the money into a jar each day and when there was enough, to treat herself to a back massage, which can positively reinforce the good changes someone has made. Make the right choices, one day at a time.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing Dave at info@financialcompanion.ie or use the contact form on financialcompanion.ie or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial well being, positivity and motivation. As heard on RTE 2FM , LMFM and TV3.