Money Savings Advice from PPS Financial Planning

James Mullane, Director of PPS Financial has 15 years of experience in financial services. He has experience advising clients in both the Public and Private Sectors. Here he speaks about trying to lessen the impact of inflation on your quality of life:

While the pandemic has no doubt caused very challenging health and social problems, it has also caused difficult financial circumstances for many. It is what you would characterise as a K shaped recovery, in that some sectors are going up while others unfortunately down.

In our last recession many industries escaped unscathed but other industries unfortunately suffered. This time around it is similar. Many industries are just starting to recover like hospitality, retail, and tourism. While the technology sector and construction sectors are thriving. 

The Irish rate of inflation as measured by the Consumer Price Index has started to move upwards with a rate of 4% expected this year after hitting a 20 year high in December 2021 of 5.5%.

Inflation is not an issue if your income is increasing at a similar rate, if it is not then your disposable income will be adversely affected. Industries like construction and technology are seeing significant wage inflation but the industries mentioned above which are only just recovering from the recession are not.

With growth slowing globally and inflation moving steadily upwards, Central Banks are between a rock and a hard place. They could fight inflation by increasing interest rates and reducing monetary stimulus, but this could further slow economic growth. If they do not increase rates and reduce monetary stimulus then inflation could continue. Our best hope is that inflation subsides, and they can continue with the low rates and monetary stimulus that we have gotten used to.

In the meantime, there are some things we can all do personally to try and lessen the impact of inflation on our quality of life.

1. Mind your Health – doing your best to look after your health is the best financial decision you can make. Eating the right food and getting enough exercise are very important for our long term health. Explore what works for you be that walking, team sports or swimming and then as Nike say, “Just Do It”.
2. Claim on your medical expenses - many people are paying large monthly premiums to their Health Insurance providers but are not claiming back on the payments to consultants, physiotherapists etc. that they can with their policy. Laya, VHI and Irish Life all have an app which makes this process very easy. Also do not forget to call each of the providers every year to review your plan to make cost savings. There are many allowances that can be claimed by doing a tax return. Medical expenses such as doctors and consultant fees, specialised dental treatment, items or treatments prescribed by a doctor or consultant to name a few. Tax relief on medical and health expenses is given at 20%.
3. Rent a room relief – if you live in an area where there is demand for accommodation such as near a hospital or university you could rent a room in your primary residence up to €14,000 per annum tax free. Until the pandemic is under control people may understandably be slow to avail of this.

4. Last Minute AVCs – If you are about to retire, are an employee and a member of your employers pension scheme you may be in a position to make a ‘Last Minute AVC’ as a lump sum towards your pension. You may be able to claim back tax in the current or preceding tax year this payment. The lump sum if you qualify can then be drawn down tax free post retirement.

5. Help to buy scheme – the help to buy scheme has been extended until 31 December 2022. There is now tax relief available of the lesser of €30,000 * 10% of the purchase price of the new home or completion of a self-build * The amount of income tax paid four years prior to making the application * There are some conditions such as a requirement to live in the property for 5 years from the date it is habitable and that the cost is €500,000 or less/
6. Claim your Flat Rate Expenses - Flat Rate Expenses reduce your taxable income to cover the cost of equipment you need for work. People from upwards of 150 different types of employment such as Teachers, Nurses and Chefs can claim this expense. A Nurse for example could claim up to 40% of €733 per year where she/he is obliged to launder his or her uniform.
7. Claim on your Pension and Income Protection plans - I have met many clients who are paying income protection and pension plans for many years who have not been claiming tax back on these payments. Up to 40% can be claimed back on payments to qualifying policies.
8. Review Insurances - review your existing home, life, and car insurance every year. Big savings can often be made on these types of insurance with no reduction in benefit.
9. Work from Home Tax Relief - If you are working from home, you may be eligible for tax relief on expenses like light, heat, telephone, and broadband. If your employer pays you the allowance you can get up to €3.20 per day without paying any tax, PRSI or USC on it. If your employer does not pay you an allowance you can make a claim for tax relief at the end of the year.
10. Joint Assessment - If you recently got married make sure to get jointly assessed for tax. A couple who are married and one person is earning more than €36,800 and the other less than €36,800 can earn substantially more at the lower rate of tax by becoming jointly assessed.

Once we can do so I think we should all try and get back to supporting our local shops and businesses as best we can. While cost savings are very important, we cannot forget the value of these businesses to our communities. They need our support.

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Public and Private Sector Financial Planning t/a PPS Financial Planning is regulated by the Central Bank of Ireland.

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PPS Financial Planning is a trusted financial advisor who builds client relationships that last.

Unit 4C Courtfield Shopping Centre,

Raheen, Co. Limerick, V94 XW88

061 484425

info@ppsfinancial.ie

https://ppsfinancial.ie/

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