A huge amount of the time we spend with our clients is spent building an understanding of your goals in life and developing a financial plan to help you achieve your objectives. A lot of attention goes into your retirement strategy, your investment approach and other such important areas.

One area we never forget about though is the other side of your financial picture – your expenditure. After all, this impacts your level of saving and investment in your future. This has come into sharp focus in 2020, particularly as we emerge from lockdown due to Covid-19. For some people, reviewing this makes sense as they have simply gone through a period of much lower spending than normal. For others who are facing a loss of job or a reduction in income, it is out of necessity. For everyone, there’s an opportunity to save more into the future.

Here are 10 areas which we believe are worth investigating to see if there are opportunities to reduce your monthly outgoings, whether out of necessity or to be able to spend more on the things you like…

1. Mortgage

An obvious place to start if your current mortgage rate is uncompetitive. There are a number of “switcher” deals out there that are attractive and worth investigating. While it is a bit of hassle to switch your mortgage, it can yield significant savings that will justify the effort. Of course switching your mortgage is likely only available if your income has continued at the required level.

2. Credit cards

A really important one… If you have a balance outstanding on your credit card, you are probably paying anywhere from 13% p.a. to in excess of 20% p.a. on this balance, which makes it very challenging to reduce the balance. Look at options to switch to an alternative provider, some of who will offer you a period where no interest will be charged. This will hopefully buy you time to get rid of the outstanding balance. Credit cards are great… but only when they are paid off in full every month.

3. Energy bills

This one drives us mad! Energy companies have great deals for new customers, that are not automatically passed on to existing, loyal customers. They rely on us not bothering to shop around. Check out the deals available and be willing to switch. Comparison sites such as www.switcher.ie may help you to find a better deal. 

4. Phone & broadband

Similar to energy companies, telephone and broadband providers rely on the inertia of subscribers who don’t keep an eye out for better deals. Know when your phone and broadband contract periods have expired. And then start negotiating, either with your current provider or a new one. These services are very easy to switch. 

5. TV subscriptions

As the Coronavirus took hold around the world and countries went into lockdown, people turned to home entertainment in numbers. In the first quarter of 2020 alone, Netflix added 16 million subscribers and this growth probably continued in Quarter 2. Some of us also subscribe to Sky, Amazon Prime and other services. The question to keep asking yourself, particularly as restrictions ease is – are you still using the services? If not, ditch them.

6. Takeaways

Are you a (too) regular purchaser of takeaway food? If you are, I suggest you record over the space of one or two months every single Euro you spend on takeaways. You might be shocked… and this may be an area where significant savings can be made in the household budget. Apply this to both takeaway food and coffees that you buy.

7. Grocery shopping

This is one where savings can be made through a few simple actions. Don’t start planning meals by thinking, “what do we want for dinner?”, instead use what you have at home and eat the food you’ve already purchased. Before shopping, plan your meals and create a shopping list of what you need. Without a list, you are prey to every promotion on display in the supermarket. Then make sure to avail of special offers, loyalty programmes and vouchers that each can further reduce your bill. Finally close your eyes as you get to the tills, that’s where they target you to throw a few more items into your basket!

8. Memberships

Club memberships are great, when they are used. However if you’re not using them, how can you justify the continued spend? Are you using the gym enough or playing enough rounds of golf to justify the ongoing expense?

9. Subscriptions

Check through your bank and credit statements for all of those seemingly insignificant subscriptions that you pay for. Music streaming services, news media, other publications, in-app ongoing purchases – they all add up. If you’re using them regularly, great. If not, get rid of them.

10. Online shopping

Amazon was another big winner of the lockdowns across the globe. So too were the parcel return services. Lots of people bought lots of items that they subsequently returned or kept them and never used them. Online shopping is far too easy, and we all need to be really careful. Buy what you really need and avoid mindless surfing for impulse purchases.

There’s no silver bullet to making savings. However, by looking across a range of areas such as these, small savings when put together can really add up.

As we emerge from lockdown and the world is getting back to some sort of normality, unfortunately for some people the pandemic has had quite a significant impact on their income. We’ve had a small number of queries from clients in this situation who are looking to reduce their expenditure. Some are pausing savings plans and other regular investment products. One or two people have queried whether they should cut back on their levels of life assurance and specified illness cover. 

While we look at each individual case on its specific circumstances, generally we try to guide clients towards making savings elsewhere. We hope they will read our other article this month on that very topic! We remind these clients that these insurances are in place for when that enormous life changing event happens to them and their families. The purpose of these products is to pay claims when needed, so it’s important to have confidence in the claim paying end of the transaction.

To help build this confidence, we’ve taken a look at claims statistics, specifically those of Irish Life as the largest insurer in the Irish market, recognising that these statistic will be similarly reflected by the other providers too.  Irish Life recently announced their claims payment statistics for 2019 and as before, the sums are quite mind-boggling.

Irish Life pay out over €100,000…. every hour

No, that is not a typo, they paid out €104,563 every working hour in 2019, which adds up to €212 million over the full year. This amount was paid to 4,175 claimants, with the average life assurance claim being €73,688 and the average specified illness claim being €62,202. Just over half the claims were paid for living benefits (illness & accident), with the balance being death claims. 

Cancer is still the No.1 cause of death claims

Deaths due to malignant cancer accounted for 44% of all death claims, with heart related reasons being the second most common cause of death. Proving that life assurance is not only for older people, 30% of death claims were paid to people between the ages of 41 & 60. Over 60% of claims were for males and 23 death claims were paid to people outside of Ireland. One claimant had taken out the policy in 1962 – 57 years ago!

With the high cost of living in Ireland, people who are on average incomes need cover in excess of €250,000 to replace lost income as a result of a sudden death. However only 5% of claims were for more than this amount. It is very important to have life insurance in place, but it is equally important to review it regularly and ensure you have enough cover. Seven of these claims were for in excess of €1 million each.

Another very sobering set of numbers were the claims paid as a result of accidents. 4% of all death claims were as a result of an accident, however this jumps to 31% of all claims paid on the death of under 40’s. Accidents happen in greater numbers to younger people. It was also very sad to see that 9 of Irish Life’s death claims were as a result of road accidents and 1 from a workplace accident.

Specified Illness Cover (SIC) claims were significant too

Cancer accounted for 62% of SIC claims in 2019. What might surprise many people is that 60% of paid SIC claimants were aged between 41 and 60. How long people had their policies before claiming varied hugely – one claim was paid on a policy in force less than 6 months, another was paid on a policy taken out in 1989.

The Irish Cancer Society research The Real Cost of Cancer*, states that the average loss of income for a cancer sufferer is €1,527 per month plus hundreds of euros in additional monthly expenses. An average benefit of over €62,000 has made life a lot easier for Irish Life’s SIC policyholders…

We always remember though when looking at these statistics that there are real people behind all of these numbers. People and families who often have gone through incredibly difficult times. We are happy if we can ease the burden at all, by helping people reduce or remove any financial burden heaped on top of grief at these difficult times. It is for this reason that we try and encourage our clients to make savings elsewhere when needed.

Sources: Irish Life Assurance plc 2020. *Irish Cancer Society ‘The Real Cost of Cancer’ research conducted by Kantar 2019.