11 Aug 2022

Making Cents: Part two of Twelve Pillars credo

Making Cents: Part two of  Twelve Pillars credo

If you choose to save €0 today and every day, it will always be €0 in the future

AS PROMISED last week, I’m following up with my final six pillars for achieving financial success.

7. Prepare for the unexpected
How prepared are you for redundancy? How prepared are you if you suffered an illness? How prepared are you, if, you need four new tyres for your car?
These are questions you need to know the answers to, so you can plan accordingly.
Ensuring you survive a partial or complete loss of income and have the resources to change direction when and if your situation requires is critical to your long-term financial wellness.
And this is where having an emergency fund comes into play, because it buys you time and lessens any problems when your finances are impacted. If, for example there was a change in employment, and a transitory period before you next get paid, that’s where your emergency fund kicks in.
There’ll be other reasons, you can’t readily think of right now where you’ll need access to money quickly, and that’s where having that emergency fund will be so invaluable. It prevents you from getting into debt, asking parents or siblings for money, and or having to move back in with them.
It’s not very exciting advice and you’d probably prefer to be investing monies elsewhere rather than a boring emergency fund but if Covid showed us anything from a financial perspective, it’s how quickly our lives can be turned upside down, and how important having an emergency fund in place is.

8. Invest in yourself
Saving and/or cutting back is a great way to get ahead, but it’s an incomplete strategy if you’re not trying to earn more by enhancing your career.
Your career is where most people get the vast majority of their income from, which is why you need to never stop focusing on your personal development, so you can maximise your earning potential.
And there is only so much you can reduce your outgoings by. There is a floor to how much you can spend, but there is no limit to the amount you can earn, none. And that’s why you need to always focus on personal development. You need to widen the gap between your outgoings and income, and that means you need to earn more.

9. Save, save, and then save some more
If you choose to save €0 today and every day, it will always be €0 in the future. But even €1 invested, you’re giving it the chance to become €2 or €3 or perhaps €10 in the future.
So, start with saving as much as you can, whatever that amount is.
Saving each month will become a habit that you’ll soon forget about but over time, when you check back in and see how your savings have grown, you’ll find ways to save even more.

10. Avoid debt if you can
Paying off debt each month makes it very difficult to save and every time you borrow money, you are eroding your future income.
Of course, avoiding debt altogether can be a big ask, I get that, and I understand there are things we can’t have with getting into debt i.e. borrowing money puts the roof over our heads, it’s the car that gets us back and forth to work, it’s the money that can be used to put ourselves and our children through college, but we don’t have to carry this type of debt all our working lives either.
When it comes to getting out of debt, the numbers are the easy part, it’s that change of behaviour which is the hard bit. But with some effort, a little planning, and enough reasons to get out of debt in the first place, making those changes will be easier.

11. Have good insurance in place
Your health really is your wealth, so protect it and make sure if anything happens to you, you have adequate insurance in place
We often plan for our financial futures assuming that we’ll remain healthy and alive which allow us to continue to earn an income. It’s taken nearly as a given, so we focus on saving as much as we can, we pay down debt aggressively etc. and as a consequence we tend to largely ignore protecting ourselves against events that can throw our plans into disarray.
And when I say events, I mean dying early, suffering a serious illness or being unable to work for a period of time because of an accident or illness.
Each of these events can obviously have serious financial implications for you and your family and its likely those goals you set yourself, will probably have to change, if you’re impacted by one.
And they’re impacted because it would be fairly difficult to pay a mortgage, utilities, food, transportation costs, clothes etc. if, 60% or more of your income is wiped out.
No amount of life or serious illness or income protection cover can prevent someone from being diagnosed with something like cancer, but what I do know, is that the financial effects of any of these life changing events can be minimized by some foresight and action.

When it comes to talking about this area, it’s not a particularly nice topic of conversation because it focuses us, into thinking about something we don’t want to happen, which is why we tend to avoid it.
Having said that, I’m sure none of us would want our families struggle to make ends meet, if, we didn’t provide for them in the event of anything happening to us.
The good news, however, is that there are a variety of insurance products that can protect your life, your income and if you were diagnosed with a serious illness.
And having that protection in place is the safety blanket people need in the event they are unable to work and earn an income. It allows them to focus on their rehabilitation without the stress of worrying about money.

12. Improve your knowledge and get help if you need it
Some people believe all things related to personal finances are complicated. And that can be from reading books, newspapers, listening to people on the radio, watching TV etc. It all seems very technical and difficult to grasp what’s being said, and they think becoming financially successful requires knowledge and a skill set that is beyond them.
So, they don’t even make an attempt to learn and understand how they can improve their finances, which is a shame.
Trust me when I say this, you don’t have to be any kind of maths genius to put it to work in your everyday life. The majority of financially successful people I encounter don’t use complex math formulas, but they do understand how numbers can work for and against them.
And maybe math just isn’t your thing, and you might find all things related to money, tedious and boring. But whether you like it or not, you need to work on increasing your financial knowledge, because its’ as important as your income. And you don’t have to have a PhD or have an IQ of 160 to succeed financially. Anyone with normal intelligence can, but you need to work at it, nonetheless.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at or

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