Getting your finances in shape for 2025
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Now, following on from the financial splurge of Christmas, many people are left wondering how to get their finances back in shape for 2025. Now, thankfully, we've got you covered because joining me now to give us some top tips is Robert Whelan, the Managing Director of Rockwell Financial Management. Robert, good afternoon.

afternoon and happy new year to you. And many happy returns to you, Adrian. So yesterday some fairly significant tax changes came into effect. How will Budget 25 and the new changes affect us? Well, the bottom line is it's going to put more money into everyone's pocket. Something we don't hear very often. Well, I think it was not the plan ahead of the election. So, yeah, so no matter where you sit in the spectrum, everyone

whether you're married, single, whether you're a low earner, middle earner or high earner, you're going to see a significant increase in your take home pay this month, which I think is a welcome relief, particularly for those at the lower end of the scale with the increase of the tax credits. And that's very beneficial because obviously it's a very expensive time of year. And the minimum wage, of course, has increased as well. Absolutely. Thankfully. Yeah. And hopefully those people get that as soon as possible because it is a very tough time for people.

OK, so let's talk about 2025 and financial planning. Pensions are being talked about a lot more now than they have in forever, basically. And we're being encouraged towards pensions. We know employers' contributions are going to become a thing, auto enrolment and all of that.

What should I do right now if I don't have a pension? Start one. Honestly, it's the same thing. If you want to get fit, just go for a walk. Don't be worried about how good it needs to be or anything. Just start. So no matter how little you think you can afford, most pensions you can start them from as little as like 50 quid a month. So, you know, if you can afford that, off you go. The reason why it's in the news, yeah, auto enrolment is there, but it's there for a reason, Adrian. So when the state pension was set up,

in Ireland originally. The lifespan for an average male was 73 and a woman was 76.

Now someone is 65 today, they're expected to live until at least 88. So you have a situation where you can't rely on the state pension, unfortunately, anymore. So in order to try and increase pension provision, the government... When you say you can't rely on the state pension anymore, what do you mean? For your standard of living, poverty and retirement is a real issue. Talk to anyone, I'm sure your phones would light up if you got people asking what it's like to live on the old age pension.

So that's what I mean. I mean, it's like my granny was able to live in the state pension 30, 40 years ago, but you just can't now at all. It's just too expensive. So you need to have your own few quid there to decide to be able to top it up. And auto enrolment is a big thing because they're trying to capture that huge section of society which don't have pension coverage, which is primarily those retail, hospitality, casual workers, etc. And

And they are the, in a lot of cases, the low-income workers. What sorts of tips have you got for low-income workers to survive, basically? Yeah, well, I suppose the first thing is if it's this time of year and you're kind of coming in after the Christmas and it's been a very expensive time, the first thing to do is whatever you do, don't find yourself getting into more debt. So if you've had a...

If you have a big credit card bill, take advantage of those interest-free money transfers. All the credit card companies will have some sort of a deal between six months, nine months or 12 months for you to transfer your balance from them, from your current provider to them, interest-free. So at least it gives you a chance to pay it back and not be crippled by interest. The second thing to do is that just...

wherever you need to buy in January, stick to what you need to buy. Don't buy anything you don't need to buy. If you think, if you got into stress regarding something last year, when it was back to school, which is the big thing, which has a lot of parents around the bend, will go, well, if I only took 20 quid a week or something or 10 or a week and I stuck that away, it might just remove that stress, that panic

middle of end of August, you know, trying to get everything back together again. And in fact, we were just talking about it a second ago. Any tips for handling credit card debt? Should I just get rid of it, asks Davey. Well, that is it. But like, if you find yourself in credit card debt, well, then you are where you are and you just need to get yourself out of it. But I said the easiest way, honestly, is to take advantage of it. Everyone knows about it, but very few people actually do it.

interest free, at least you're not getting rid of the balance, but at least you're not being penalised by 22 or 24% interest while you're waiting to pay it back. So, and then the other thing to do is that, and that's the thing I say to everyone, when you come to buying things, always question, why am I buying it? There's that great Netflix documentary, which everyone should watch, Buy More. It's incredible, right? But it's all about the psychology of why we're buying loads of crap these days. And it's more like, why am I actually, do I really need this?

And if you don't need it, well, then just kind of say, well, why am I buying it really? And if you get yourself into that habit, you'll find over a couple of months, you'll try and get your finances back on track. Whereas what got you into the mess you're in isn't to keep going with the behaviour that you had before. I often wonder what is the need to have a credit card, for example? Why do we need a credit card? To buy the things that we want to have that we can't afford.

That's it. And then pay a fortune for the privilege. Absolutely. Because society has deemed that we have to have these things. Thankfully, debit cards have caught up now. They're just as acceptable on all online platforms. But no, honestly, it's to give us a lifestyle that we can't afford. Let's talk about some tips for higher income workers. Yes.

Well, if you're fortunate enough to be in a situation where then you need to sweat the assets. So if you're making more money, well then we talked about it earlier, but pension contributions, if you are paying top rate tax, it's punitive. Top rate taxpayers in Ireland are paying, even with the budget cuts, 50.1, sorry, 50.5 or 50%.

51.5% tax at the very top rate. So if you want to reduce some of that tax burden, throwing it into your pension, particularly at the start of the year, pay rises, etc., is an absolute no-brainer because you're just going to build up a bigger pot for yourself when you do decide to retire. Second thing you need to do is that if you do have any debt, that accelerate your debt repayments, particularly your mortgage.

Anyone who is in a situation where they can afford to pay extra off their mortgage every month should do that because not only are you reducing the amount of interest you repay, but you'll also put yourself mortgage free a couple of years early. And who doesn't want that? So just taking advantage of those would be the number one tips I'd have. Okay, and another question from one of our listeners. By the way, you can send in your questions to 087 1400 106 on WhatsApp.

Why are pension schemes so lucrative for brokers? There are so many of them and they seem to make a fortune. Is there a cheaper way of investing? Well...

That's a great question, isn't it? Yeah, yeah. Defend my industry here. One, to be very honest with you, whatever fees or whatever a broker and advisor might make from it is, is fractional. And I mean, to a decimal point, fractional versus the benefit that the members would make. I suppose advice comes at a cost and getting the right advice around how much should you be contributing? How often should you be contributing? And more importantly, what funds should you be contributing to? What level of risk you should be taking with it? And then advice as to how you're going to draw it down. Well, then, yeah, of course it's in there, but

The bottom line is, is that we have drastic shortage of pension coverage in this country, certainly versus the likes of Australia. So the opportunity for everyone should be taken up whether they want to pay a fee or not. The internet exists.

There are low-cost options there if people don't want to engage an advisor. Off they go. And just back to the auto-enrollment that you mentioned, which is coming down the tracks. Is that to set up a private pension? Is that how that works? Or is this contributing to your state pension? No, what auto-enrollment is... Sorry, Adrian. What auto-enrollment is, is any...

Anybody who's working for a company may be covered by an occupational pension scheme. If you're working for the government, you're a public sector worker, you're covered by their pension scheme, it's called superannuation. There is a tranche in the middle, predominantly people working in small and medium-sized enterprises, where there is no employer-sponsored scheme. And there will have a facility if an employee wants to contribute, there will be a facility there for that.

What auto-enrollment is, is mimicking what happened in Australia in the mid-90s, what happened in the UK about eight, nine years ago. And they're saying, if you are an employer and you have at least three employees on the books of your business, you must set up a scheme for them. And you as an employer must contribute one and a half percent initially of the employee's salary

as a pension contribution and the employee has to match that. So it's a way of saying to employers as well as employees, you need to kind of get your act together on pension coverage. Okay, so it's basically forcing us into having a pension. Yes. Okay.

A lot of questions coming in, actually. Could you ask your expert what he thinks about getting rid of the mortgage? My wife wants to try and clear it over the next five years, but I think we'll struggle and not enjoy life. Now, you did suggest that earlier on. Yeah, but the caller raised a very pertinent question. Like, life is about enjoying a few quid. And I'm not one of these financial advisors who thinks that everything's about squirrelling money away. There has to be a purpose to what you're trying to do. And so everything's about balance.

So I would suggest is in that scenario is, and obviously without knowing the figures, maybe meet everything in a marriage, meet halfway. So maybe... It's a theory anyway. But try and come up with a situation whereby you might accelerate it, that you clear the mortgage in instead of five years, maybe do it in seven. But still have enough money for holidays or lifestyle or whatever. And then therefore everyone in the house is happy.

We've seen energy prices, petrol, diesel prices starting to tick back up again. Would you be nervous about the direction that energy prices are going? There's no point being nervous because it is what it is. I think ultimately it's just around, again, back to the bills and budgeting. A lot of people find themselves in difficulty at this time of year because the gas bill is never as high and the ESB bill is never as high. So what I would suggest there is, again, with your utilities provider,

they all have budget saver plans whereby you can kind of spread your... So in the summer when you're not using your heating, you can still be paying a little bit towards your gas bill, say for instance. So if you find yourself in that situation, get on the phone because they'll be delighted because one, they're retaining you as a customer and two, they won't be chasing you for the few quid. So get on the phone and set up some sort of a budget saver there has been my advice there.

Health insurance is another thing that people aren't... That's going up. Yeah, it is going up drastically. But it is something that if you can afford it, it is worth having, is it? Well, again, I'm a financial advisor, not a medical advisor, I suppose. I'd let the medical professionals give you the... I suppose as someone who's benefited from it, yes. But I do understand that

there's a certainly a societal problem with it. So if you do have it and you are paying it, well then all I do know it's gone up about 30% in the last four years. So, and that is a huge amount of money, particularly if you're putting kids on policies as well. So again, in that instance, there is a brilliant free government-led resource called the HIA. Okay. And in fairness, they advertise aggressively on the radio this time of year. And HIA

It's free and they are experts. And you will say to them, I have a plan with X provider. And they will say, OK, well, this is what the other providers will offer you at a similar level. And this is what it costs. So you can make a very informed decision with independent advice. So the HIA, it's a brilliant resource, health insurance authority. Everyone should use that. But unfortunately, if you have the capacity to pay for health insurance,

it is handy to have, you know, at the end of the day, there's no getting away from it. But shop around. Oh, definitely. 100%. Huge savings to be made. Honestly, you'd be amazed at how much you could save by shopping around. And like many people, I'm sure, you just let the insurance policy auto-renew. You need to be looking around. Everyone, what did I say? Long-fingered itis is the worst disease to afflict. Should it be grand? Should we get to it? And then two or three years go by and you go, how much have I overpaid there? So no, shop around. Right, I'll do that tomorrow.

And just finally then, what would...

be your number one tip to try and get your finances in shape this year? Look at what, I always think if you want to address something going forward, look back. So where did you get into difficulty last year? Was there something, was there a particular pinch point in your finances? Try and avoid that this year. So if it was the family holiday and you just had to, you felt it was miserable because you didn't have enough disposable income, well then try and save a few quid. So try and avoid the stresses you had last year. If you do that,

money shouldn't be stressful. I know it can be, but that's the number one thing I can say. Don't repeat the same mistakes of last year. Squirrel away for the things that happened and hopefully things will be okay. Robert Whelan, Managing Director of Rockwell Financial Management. Thanks very much indeed, Robert, for joining us in the studio. The Hard Shoulder with Ciarán Cudahy. With the MG Hybrid and Electric range. Weekdays from 4 on Newstalk.