Saving for your children's education is one of a number of financial tasks for February
In this article I want to share with you five money tasks to complete this month. They are reasonably simple financial housekeeping tasks, and even if just one of them applies to you, follow through and complete that one.
1 Review your tax relief entitlements
I recently wrote about the huge numbers of people not claiming tax relief on health insurance premiums which are paid by their employer. 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.
A recent survey by taxback.com, asked “Do you know what the Home Carer’s Tax Credit is?” 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.
This is largely down to insuring the property for its market value i.e. what they estimate they would receive if they sold the property, rather than insuring it for its reinstatement 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 society of chartered surveyors website, www.scs.ie to access its house rebuilding guide. Its calculator will tell you exactly what your house should be covered for.
If you were over-insured, contact an insurance broker and ask them to compare quotes or do it yourself through an online 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. If they don’t match the new premium say you will move your policy from them. 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. I was doing a financial review for a client recently and one of his goals was to financially help his four-year-old daughter with the cost of going to college. The amount he would need to save right now I calculated was about €119 per month. If he delayed saving until she was 10, the amount would rise to €218.
Not saving in advance means if they want to help their children through college they’re relying on day-to-day income, or they have to use existing savings, or even borrow money.
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. 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 for expenditure that occurs every 2, 6 or 12 months
Many people I ask to complete an income and expenditure exercise for me are surprised to learn they spend more than they earn. This is because I ask them to take account of 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. Setting up a separate account and having the amount required credited to it each month will improve your finances no end.
Liam Croke is MD of Harmonics Financial Ltd,
based in Plassey. He can be contacted at firstname.lastname@example.org or www.harmonics.ie