By Dave Kavanagh

“Let’s go for a drink?”, “How about a nice meal out?”, “Shall we book a nice holiday?”, “How about an afternoon shopping?”, all questions that are (usually!) met with a positive response. “Shall we have a look through our finances and plans that we have in place?”, not usually met with the same enthusiasm or joy! For many reasons, people put off or avoid having to go through an exercise such as this, despite the fact that it can lead to them spending less and having more money left over each month! So, what excuses do they present to avoid this not-so-desirable activity and what are they really saying? Let’s have a look:
“I’ll have a look at that after Christmas”. This is sometimes replaced with “after Easter”, “after the holidays”, “after the kids go back to school” and a host of others. This is a bit like the “I’ll start the diet next Monday”. What you are actually saying is “I’ll name some time in the future, so I don’t have to face up to it or think about it now”. Let’s face it, you can make time to spend 30-60 minutes even once per year to look at something this important. Every year will have Christmas, summer time, back to school time, etc. Once you do, you’ll be glad that you did. “Our bank has sorted all that out for us”. Your bank may have sorted a few things for you but in most cases, banks are tied to one company’s products which means a fair comparison cannot be done and you may be overpaying. Dealing with an advisor who is not tied to one company and can compare other options is the only way to make sure you are getting the best value for money. “I’m busy at the moment, I’ll give you a shout in a few months”. Let’s face it, going through your finances is rarely on anyone’s favourite activity list. But the fact remains, if there is an activity you like, you can make time for it. Burying your head in the sand is rarely a successful solution to most problems!

If you have time to binge a box set, you have plenty of time for your finances.

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

In a week where I have arranged pay out of another Serious Illness Cover claim, many people are in the “it’ll never happen to me” group, when it comes to planning for events that could potentially impact finances. Let’s face it, nobody wants to think that anything “bad” will happen to them but the reality is, bad things happen whether we like it or not. The three areas most relevant are, Life Cover, Serious Illness Cover and Income Protection. Of course, we would hope that we are not going to die prematurely, we are not going to get seriously ill and accident or illness will not prevent us from being able to work. Sadly, in this small country of ours, about 6,000 people die each year NOT of natural causes (under age 65), over 43,000 new cancer cases every year (the cause of more than 50% of Serious Illness claims) and the average time off work for an income protection claim is close to 5 years! When I do group talks, I often ask the question whether anyone’s close family or friends have been affected by cancer? I have only ever had one person say “no”. When I ask whether the same close family or friends have ever won the lotto jackpot, not surprisingly, it’s (almost) always “no”. Yet with odds of 10.7 million to 1 to win the lotto jackpot, people spend a relatively large amount of money each week on lotto (and Euromillions and scratch cards etc.) believing and hoping that it will happen to them. The same people have a 1 in 4 chance of being diagnosed with one of the Serious Illnesses covered BEFORE they are 65.

I often see that people have their cars insured, house insured, pets, mobile phones, lap tops and jewellery insured but not themselves! It’s not until one of these events happens that people appreciate the financial loss that is suffered. An important detail is that even if people have cover in place from a few years back, they could well be paying over the odds premium wise or it may no longer be most appropriate. Take the time to check what is most appropriate for your specific circumstances.

By Dave Kavanagh

Two important things to consider with 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.

Possibly more important 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

Here we are again at that time of year when, after possible excesses over the festive period, many people embark on making 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 your 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. In addition, keeping these positive changes going, can actually let you save enough to pay for the following Christmas.

By Dave Kavanagh

Traditionally, December is when we tend to spend the most. Is there a way to soften the impact? Of course there is. Firstly, manage expectations: Most people can’t remember what they got 2 years ago, so don’t put yourself under too much pressure for “big” presents. Next, leave the credit card at home: At about 20% interest, adding debt for things you don’t need to overspend on, only starts the new year off in a negative. Be realistic with food shopping: The shops are only closed for 1-2 days, do you really need to stock up so much? In the days/weeks after Christmas, make a list of all the things you bought but didn’t really need or through out, and keep it for next year, so you don’t repeat the same mistakes. Kris Kindle: Talk to family and close friends to agree to pick one person and buy them a present for a set limit, to ease the burden.

There are things you can also do all year round that can save you enough to cover the cost of Christmas: Switch utility providers, the savings can be quite substantial. Compare before you shop for larger items: Just because one store has a sign saying the fridge you want is reduced from €799 to €699, doesn’t mean that another store that does not have a sale on, isn’t selling the same fridge for €649. Take the time to shop around when your car or house insurance renewals come in, it can be well worth the effort. Review premiums that you pay regularly, such as mortgage protection or life cover, especially if they were taken out directly with a bank who could not compare. Finally, go through a few months’ bank statements: we regularly find people paying for things like subscriptions or gym memberships, that should have been cancelled years before or that they simply no longer require.

By Dave Kavanagh

From 1st January 2025, employers can provide up to five, small, non-cash benefits per employee per year, with a combined value of up to €1,500, free of PAYE, PRSI and USC. To qualify, benefits must not be in cash, must not be redeemable (in part or full) for cash, and must be something used to buy goods or services.

So, what type of options/cards qualify to be used for this? Store-specific or multi-store gift vouchers/cards that are used to buy goods/services and cannot be exchanged for cash. E.g. a gift card for a department store, or supermarket, or a retailer. Closed-loop gift cards (cards valid in certain stores or groups of stores) used only to purchase goods/services. Tangible non-cash gifts (e.g. objects, hampers, items) which are similar in value to vouchers, again provided they are used to buy goods/services or are themselves goods. Non-cash benefit cards such as gift cards that are structured so that they are not redeemable for cash or usable like a debit card with direct cash extraction capability.

Options that do not qualify include cards that are redeemable for cash (or partially usable as cash). For example, any gift or “card” that allows the holder to withdraw cash, or exchange for cash. Prepaid debit cards or “spend anywhere” cards if their terms allow the card to be used like cash / cash-equivalent (e.g. ATM withdrawals etc.). If the card is effectively redeemable for or convertible into cash, the revenue rules treat it as a cash benefit and it loses the exemption. Any bonus or benefit provided via payroll or via salary sacrifice. These must be provided outside payroll and not deducted from salary.

With the recent budget not being exceptionally generous to workers, this is a great way to both reward employees without having to tax them further and also benefit employers as gifts are tax deductible.

By Dave Kavanagh

A difficulty that occurs when planning ahead to protect you and your family’s financial future, is the fact that we don’t know exactly what the future holds. Will jobs and income change? How long will I maintain good health? Will I win the lottery jackpot in the next 3 years? The uncertainty of the future means that we often plan for a variety of occurrences. One important aspect of this planning is deciding on a term for things like Life Cover. A life cover plan can either be done for a specific term or it can be done as a “whole of life” plan. One of the problems with the old way of doing these was that the premiums were reviewed after a few years and could result in constant, substantial increases, often forcing people to either cancel them or accept a much lower level of cover. With “guaranteed whole of life” plans, you at least know exactly what the premium will always be and the level of cover but planning that far ahead can be costly. A relatively new method of dealing with this issue was introduced from one of the life companies, and it is an addition called “Life Changes Option”. This option gives the policy owners a number of choices once they have paid premiums for at least 15 years. They can then choose to either; a) Stop paying premiums and reduce the level of cover which stays in place until the cover is paid out, or b) Cancel the cover (if it is no longer required) and take a refund of up to 70% of all premiums previously paid, or c) Continue the plan as it is with the same level of cover and premiums. This option has become quite popular when people are looking to future-proof cover as it offers choices that can suit people’s changing circumstances. If they have cleared loans and have sufficient savings, a reduced level of cover might be ideal. If they have strong pensions and savings, they may no longer have a need for cover and can take back a lump sum. For more information on how this type of cover may suit you, ask your advisor or contact me for a free quotation.

By Dave Kavanagh

During recent claims I have processed for clients (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

When assisting clients plan their finances, a question I have to ask, 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, €800 or €1,000+ 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.

By Dave Kavanagh

Something that crops up when people are planning ahead to protect them and their family’s financial future, is the fact that we don’t know exactly what the future holds. Will jobs and income change? How long will I maintain good health? Will I win the lottery jackpot in the next 3 years? The uncertainty of the future means that we often plan for a variety of occurrences. One important aspect of this planning is deciding on a term for things like Life Cover. A life cover plan can either be done for a specific term or it can be done as a “whole of life” plan. One of the problems with the old way of doing these was that the premiums were reviewed after a few years and could result in constant, substantial increases, often forcing people to either cancel them or accept a much lower level of cover. With “guaranteed whole of life” plans, you at least know exactly what the premium will always be and the level of cover but planning that far ahead can be costly. A relatively new method of dealing with this issue was introduced from one of the life companies, and it is an addition called “Life Changes Option”. This option gives the policy owners a number of choices once they have paid premiums for at least 15 years. They can then choose to either; a) Stop paying premiums and reduce the level of cover which stays in place until the cover is paid out, or b) Cancel the cover (if it is no longer required) and take a refund of up to 70% of all premiums previously paid, or c) Continue the plan as it is with the same level of cover and premiums. This option has become quite popular when people are looking to future-proof cover as it offers choices that can suit people’s changing circumstances. If they have cleared loans and have sufficient savings, a reduced level of cover might be ideal. If they have strong pensions and savings, they may no longer have a need for cover and can take back a lump sum. For more information on how this type of cover may suit you, ask your advisor or contact me for a free quotation.